My favorite story about the homebuilding industry relates the tale of a prospective homebuying couple sitting in a builder’s office negotiating the details of their new home purchase. The builder keeps excusing himself as he goes to the window to yell out “green side up!” After the 6th time this occurs the wife can no longer control her curiosity and asks the builder what he is doing. And the builder explains that he has a landscaping crew outside laying sod and, after 20 years in the business, he has learned that he must take personal responsibility to be certain that they do it correctly.
And that is my thought for today – personal responsibility in the homebuilding industry, starting from the top down.
Our industry lost a legend and a wonderful individual and I lost a good friend several years ago with the passing of Bob Strudler (http://tinyurl.com/y9etf4a). I remember one specific occasion when Bob’s words of wisdom to me were especially poignant. We were sitting together in the lobby of a hotel during the Builder 100 conference, unwinding after having just completed our seminar presentations in adjoining rooms, and Bob mentioned that he thought the best use of his time (he was then Chairman of U. S. Homes) was going out into the field and talking with the sales people for they were the ones that truly had their hands on the pulse of the market. We chatted for perhaps half an hour during which time people wandered over and joined our group and at the end of our visit there were probably 50 people sitting around us, many of them on the floor including the presidents of several of the country’s leading homebuilding companies, all listening to our conversation and hoping to learn from Bob.
Returning to the present, I had a meeting with a builder this week who was complaining that his sales staff was not performing to his expectations and he wanted to make a change. Now I might agree that his sales team is not stellar and I too was unhappy with their recent results. But prior to voicing my opinion I posed what I thought were two simple questions:
- On what did he base his expectation?
- When was the last time he was in the sales office either watching and listening to the traffic or just chatting with the salesperson?
His answers were immediate: “Sales are off 25% from my projections; it has been several years since I have been in the sales offices as I really do not have the time”.
What ensued was a monologue (I chose that term instead of dialogue as I probably did not give him the chance to get in a single word) after establishing that his projections were constructed without any input from the sales people. First, I relayed the story about Bob Strudler. And I then asked this builder why he thought that he was smarter or more experienced than the man who had run two of the largest and most successful national homebuilding firms.
The fact is that having created a sales goal without participation from the sales staff was simply unwise. Forgetting for the moment the need for the entire team to be operating from the same playbook, not involving the sales team and hearing their comments on the market and the competition can produce nothing but a wish list, a target that has no basis in reality. While the builder certainly has the right to set whatever goals he may wish, failing to utilize realistic target goals based on the market cannot be a successful strategy and sets the sales team up for preordained failure.
How can he judge sales performance when he has not been on site to see what actually occurs? He really was not prepared to engage in a productive discussion as he was unaware of current conversion ratios (either his or the competition’s) and he really had no idea of what was the quality of the traffic being generated. He did not wish to consider that the lack of sales could be due to advertising or promotion, competitive positioning, or any other factor unrelated to the quality and ability of the sales staff. This is not uncommon in our industry, the first fatalities when sales are slow are usually the sales people followed shortly thereafter by the rest of the marketing team.
Condensing a ten minute diatribe, I suggested that this builder spend all day Saturday and Sunday in the sales office before he made any decision. And perhaps he will learn something – something about his visitors, something about how hard his salespeople are working to sell his homes which don’t enjoy the best location in the market or a superior price position.
We are scheduled to meet again next week after his weekend in the field. Regardless of what he finds (if he even goes), I will then suggest that prior to taking any action with the sales staff, it would make sense to update his competitive analysis and review the marketing program. I am not betting on the outcome but I am hopeful. After all, as Scarlett said, “tomorrow is another day”.
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