When sales do not appear in the numbers anticipated and budgeted in a new home community, the prevailing solution among homebuilders is often to first blame and then change the sales staff. If sales still do not materialize then it is time to blame and then change sales management. And if sales still do not appear then it is time to change the advertising and promotion and then change the ad agency.
Many years ago I interviewed for a position as regional sales manager with a national homebuilder. The position was located in their largest region which had 32 operating communities. As part of the decision process I was invited to attend one of their regional sales meetings which were held on a quarterly basis and led by the person who would have been my predecessor in that position. The meeting was an elaborate affair, held in the ballroom of an upscale local hotel as there were over sixty sales people in attendance and a very nice breakfast was served.
The current sales manager opened the meeting by welcoming the attendees and then said “I hope that everyone enjoyed the breakfast as for some of you it may well be your last meal”. This company had what I believe to be the unique philosophy of terminating the two lowest performing (per budgeted sales) sale people every three months and, in what they apparently believed to be a motivating experience for the remaining sales personnel, did so at these breakfasts.
I declined the sales manager’s position when it was offered to me. I did not disagree with the belief that there are certainly times when the sales staff should be changed nor that weak sales people should be replaced. In fact, I am an advocate of a “power line” in sales situations where applicable. And I did not necessarily disagree that a pro-active course of action is usually far more effective than a reactive one. But I did not (and still do not) believe that terminations should be public affairs, similar to the use of the guillotine in France during the revolution, nor that proper and positive motivation can ever be derived from fear. More importantly, I did not believe then and continue not to believe today that the sales staff, sales management nor the advertising agency is necessarily responsible for poor sales performance.
When following the principle of “management by exception”, the approved practice to determine opportunities for improvement is to first examine tactics rather than strategy. The underlying concept assumes, however, that an intelligent and proper strategy based on through research was, in fact, created and is in place and that the tactics are derived therefrom.
In my travels around the country as I examine housing markets today, the opposite appears to be true as the absence of intelligent and appropriate strategies is the rule. Many smaller homebuilders continue to provide the “same old, same old” tired and dated housing products in unexciting subdivisions, apparently ignoring the entire experience of and failing to have learned anything from the recent housing crash. The larger builders that believe they are responding to the new, “post crash” markets seem to have skimmed the research reports and gleaned only that price sensitivity is the new key to success so they have designed smaller new homes without any “bells” or “whistles”, placed them in subdivisions without costly (or any other) amenities and believe they have satisfied all of the current demand.
The fact is that just as was true 20 years ago, there is no single, universal homebuyer profile. Each buyer is unique and each is looking to satisfy his or her specific needs, wants and desires. Price sensitivity is a more common and visible concern today than in the heyday of the boom but it is not the only issue that needs to be addressed.
Buyers still want to live in attractive, conveniently located communities (convenience being a growing factor with gas prices at $4.00/gallon) with appropriate albeit affordable amenities. They want well-designed, livable homes that offer something more than basic shelter. And they want those things at affordable prices. The best salespeople in the world will fail to achieve budgeted sales without the right “place”, the right “product” and the right “price”. And to satisfy the widest range of purchasers possible, homebuilders need to offer a full range of home designs, styles and sizes with a well spread range of pricing targeted for a specific, identifiable and viable market segment. No success can be achieved without the creation of a “USP” (Unique Selling Proposition) and that has to be created by the homebuilder.
Then and only then can proper advertising and promotion generate qualified traffic and then and only then can competent, well trained, well managed and properly motivated sales people achieve or, better yet, exceed budgeted sales goals.
I had Italian wedding soup for lunch today, one of my favorites. The typical recipe is chicken broth with onion, carrots, celery, dill, garlic, spinach or escarole, pasta stars (stelle) or orzo, and tiny meatballs. It is reasonably dietetic and, with all of the little “goodies” included, there is a treat in every spoonful – effectively providing something for everybody to like. And that is just what we need to provide in our new home communities today to be successful. But that’s just my opinion.
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