Depending on your age, the phrase “You call that a knife? This is a knife!” will tend to evoke either the familiar line from the 1986 Australian comedy film Crocodile Dundee or the title of the 2009 rap song and music video by Capture the Crown. Either way, the visual image is clear. And while a larger knife is probably beneficial in a knife fight, it will not do you much good in a gunfight.
Make no mistake about it, homebuilding is a gunfight and similar rules apply – bring all of the weapons that you need and make certain that your team is similarly armed.
The first weapon is research, thoroughly examining the marketplace and the competition to create the USP, the “unique selling proposition” that is the basis of any effective homebuilder’s strategy to bring to the market what the buyers want and can afford and is different from and visibly better than the competition. Even today, many homebuilders still fail to invest the necessary time, effort and assets to do the research and create the strategy.
Once we have identified the “hole in the market”, the opportunities that exist waiting to be served, then we must expeditiously implement the strategy, providing the solution indicated and bringing it to the market while the competition is still loading their guns.
Homebuilding has five key drivers of sales – the other “weapons” that we can bring to bear to create a competitive advantage to generate sales. Many builders fail to properly implement the strategy in all of the key elements of success, creating an “opportunity vacuum” waiting to be filled.
Place. An effective strategy not only determines the correct location in which to build but also defines the character and features of the site to provide the lifestyle environment that the market desires. Properly utilized, this “weapon” creates a superior community environment that establishes a market position that is relatively immune to competitive attack. As this is one critical element for success that is still failing to be properly implemented by homebuilders in markets across the country, a substantial opportunity exists for competitive superiority and increased sales.
Product. The correct housing product provides the design and features that the market wants at a price the buyers can afford. Lifestyles have evolved over the past several years; new household formations and new target market segments require different design and utilization and many potential homebuyers have been financially as well as psychologically impacted by the recent housing downturn. All of the these factors require new home designs and features and properly provided these are another “weapon” to successfully take market share from the competing homebuilders who continue to offer the “same old” tired and stale home designs.
Promotion. Now more than ever before we are living in the information age where almost everything is available “on line”. The consumer markets are accustomed to the web and over 90% of all potential home purchasers begin their search on the Internet. To be successful in reaching the potential market, we must grab the attention of the prospective purchasers and create interest in our communities and homes so that they come out to the sales offices predisposed to what they will see and ready to buy. Every homebuilder must have a great web site, effective SEO and a comprehensive social media program. Without having and properly using this “weapon” there is no opportunity for success.
Price. Creating the optimal pricing strategy is much more than just identifying what the market can afford and proper positioning based on competition. To satisfy a complete market segment, typically a quintile, we must deliver a pricing program that blankets the demand segment with full coverage and forces a choice of a specific home based on the customer’s value determination. The pricing “weapon” must be maintained, just as you need to clean and oil your guns, regularly reviewed and adjusted to reflect the indicated consumer response, opportunistically implementing increases and adjusting the value proposition of the respective homes to assure all homes sell as equally well as possible.
People. The people on your team comprise your “posse”, the extra people carrying the extra “weapons” that guarantee you will win the gunfight. Having the best possible sales team, professionally trained, supervised, coached, mentored and motivated is essential to success in homebuilding. But don’t stop at the sales floor, make certain that all the other members of your posse, your lender’s staff, your customer service personnel, your subcontractors and trade partners, also have their “weapons” ready to use – knowledge, competence and, most important, the people skills that the purchasers require and appreciate and which will translate into referrals.
Most housing markets are already seeing a visible recovery and that recovery will continue and expand over the next several years providing abundant opportunities for homebuilders who understand and utilize intelligent strategy and appropriate tactics, bringing to the market and utilizing the right weapons. Personally, whenever possible I would prefer to avoid a gunfight but when that fight is necessary, I want to win. But that’s just my opinion!
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And if you are planning to attend IBS (the International Builders Show) in Las Vegas, please consider adding an event on Tuesday night, January 22nd and attend The Nationals – the National Sales and Marketing awards that will recognize the best and brightest in the housing industry.