One of my favorite Broadway show tunes is “I Am What I Am”, a song from the Tony Award-winning Broadway musical La Cage aux Folles (1983–1987). Although the song was originally sung by the amazingly talented George Hearn playing a female impersonator, it has a universal message – “Who cares what other people think, be yourself.”
While I certainly agree with that message as it relates to “who you are”, one’s inner being, self esteem and ego, I do not believe that it is nearly enough in the realm of homebuilding, any other business or even life in general to just be content with “what you are”. Instead, I would suggest that it is necessary to “be all you can be” to borrow the slogan of the United States Army.
Life and business are subject to inertia while the external world is changing constantly and we need to adapt and, hopefully, improve every day in every possible way if we are to truly maximize our existence. If we merely stay “what we are” we do not learn, we do not grow and, in the end, we do not survive and that is true for people as well as for businesses.
The city in which I live is holding local elections next week. I am not quite certain why anyone would want to run for the city council as it is a poorly paid and thankless job but this year we have a plethora of candidates, all trying to get their message out to the voters in the hope of securing their approval. One candidate’s original mailer suggests that he is worthy of my vote because he has been a resident for twenty-five years, is married and has five children. His latest mailer promotes his success as a local businessman. An incumbent candidate’s mailer proclaims that she has “worked over the past eight years to ensure that our city remains safe and the quality of our lifestyle is preserved. While each of these people may be comfortable with who he or she is, and I assume that each is promoting what he or she thinks are their best qualifications, neither has come close to convincing me that they are all that they could (and should) be to represent my best interests and neither will be getting my vote.
For a homebuilder to achieve success today, the company must be able to demonstrate that they are better than the competition in some meaningful, significant and visible way. This is further complicated as the competition currently includes an abundance of resales at attractive prices and, often, in a more desirable location. To be better equates to a superior benefit, be it location, community, home design (interior and exterior), features, value, price or even a better buying experience. Yet as I travel around the country looking at new home operations I continue to see a majority of the builders still competing head-to-head with virtually identical locations, developments, product, price and value, thereby failing to create the Unique Selling Proposition (USP) essential to positively differentiating themselves from the competition and force the purchase decision.
One successful community that has been open for five years originally had two large local builders competing head to head offering a traditional move-up line of homes. One of these builders introduced several new product lines three years ago featuring home designs unique to the market while the second builder continued with the same old designs that they had been offering throughout the market for the past five years. The pricing and value was still comparable for both of these builders but the first homebuilder’s sales grew exponentially while the second builder continually lost market share and ended up selling his homesites to the first builder at a discount.
It is just not the local builders that have succumbed to inertia as one of the larger merchant homebuilders, active across the country, has a different market position in each of the areas in which they operate as they had bought several local builders and continued those operations “as is”. Without a definable company identity in all of their markets they are unable to take advantage of the potential economies of scale in design, construction and marketing and their market performance varies widely by location and the company suffered an overall operating loss last year.
How many homebuilders, big or small, have failed to optimize their operations within a given market, operating too many or too few communities and thereby either competing with themselves or losing market share by failing to properly cover the market geographically? How many builders still have yet to optimize their pricing spread and again are either competing against themselves or losing sales by failing to satisfy the full market segment? And how many homebuilders, continue to try to spread themselves too thin across multiple pricing quintiles failing to meet the necessary price points at the lower quintiles or the necessary value perception at the higher quintiles?
Many of the new home sales and marketing personnel I see have also failed to work toward being “all that they can be”, not taking the time and expending the effort to learn the new skills necessary to sell to the new market segments and to compete against the resale market. NAHB’s well-regarded CSP (Certified New Home Sales Professional) course has been totally rewritten for today’s market but very few have taken this course. Social media marketing is essential to sales success today but the majority of sales people still do not adequately or correctly utilize this tool. Qualifying for mortgage financing will continue to become increasingly difficult in the months and years to come but many salespeople working for homebuilders are willing to totally turn this function over the their lenders and accept defeat when their buyers’ financing applications are rejected.
When I started in this business many years ago working for a homebuilder we had to sell each home several times: first to find and close a ready and willing purchaser; then to sell that buyer on all of the work necessary to obtain the mortgage; and then on an ongoing basis as interest rates rose or gas prices reached outrageous levels or appraisals came back low to prevent buyer remorse. I believe that we are back to that multiple sales process now and facing several of the same challenges yet how many of us are truly prepared to succeed?
Life is a journey, not a destination, and that journey hopefully will be toward becoming all that we can and should be. But that’s just my opinion.
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