The year 2016 was an eventful one for home building.
Do Include Sales in Strategic Decision Making
Selling is a critical skill every home building company must cultivate.
Selling is a critical skill every home building company must cultivate. Nothing happens until and unless a sale is made. And that’s especially important for a start-up organization, such as the one we profile in this series. But sales people can do more than sell. They can be a valuable source of information...the kind of information you need to make strategic decisions.
Management consultant Martin Freedland puts it succinctly: "Why not talk to the people who have 100% control of your revenues -- before you make the big calls on land buys or product design?"
The trouble is, most builders don’t trust sales people. They think selling is a black art, and the practitioners are necessary, but probably not trustworthy. Good sales people can go anywhere, and sell anything. That kind of skill brings freedom from management control. It’s probably natural that many builders fear that loss of control. They often doubt the loyalty of even their best sales people. And so, they don’t use them as an information resource nearly as much as they should.
"It’s true," says Freedland. "Builders usually don’t regard the sales people as highly as their construction people. But the builders who do include sales people in their market research activities get good information from them."
It’s been done. Giant D.R. Horton Inc., PB’s most recent Builder Of The Year, is an organization founded by a salesman and built on the primacy of insight and information flowing from the sales office.
"That’s where you get close to the customer," says Don Horton. "You can’t have your finger on the pulse of the market without closely monitoring what’s happening on the sales firing line.
"When I started out, I used to spend most of my work day, and all weekend, selling."
Horton says he would get his trade crews started on-site every morning, but by 9 a.m. he’d be in his car, visiting Realtors in their offices. By mid-morning, he’d be back in his sales office.
"Sales are everything. When the sales stop, the wheels fall off," says Horton.
Evaluating sales talent and training and managing the sales force are among the critical tasks a start-up builder can perform. Spend as much time as possible in the sales office.
But you can do much more than that. A startup builder can’t afford to make many mistakes, maybe not any, in critical strategic decisions like land buys, product development, and pricing. Sales people, sales managers -- and the buyers themselves -- are great sources of market intelligence to use in making those critical decisions.
"You want them to land the plane," says Florida-based sales trainer Bob Schultz, "so let your sales people and sales managers in on the take off. They should be a big part of the market research. For instance, they can help measure the depth of buyers in specific market segments and geographic locations proposed as subdivision sites."
Success comes down to local market knowledge, and the house-hunting public is the best source of such knowledge, as well as the objective of it. Cleveland high-end builder Rick Puzzitiello tells how it can work:
"When I first talked to the developer of a golf course community where I’m now building, he wanted me to build million-dollar single-family homes there. I sell houses myself, and I stay very close to my sales people and the Realtor community. I knew that wouldn’t work, at least not before the community was well established. I said no to that offer."
Even if you use an outside market research firm to come up with demographic numbers, sales people can often add insight to the data. They meet real people. Face to face. They may have opinions that run counter to the research. When that happens, test the research with a focus group.
Product development definitely should include sales people and managers. You will find the sales force much more enthusiastic about selling a product line if they help develop it. Give them a look at pricing strategies and preliminary designs. Listen to what they say about them. Sales people often see things that architects miss.
Even advertising campaigns, ad copy and media choices ought to include the sales force in a feedback loop. The first weekend that an ad campaign runs, the sales force should be surveyed for first-hand feedback on how it impacted traffic and the quality of prospects walking through the door.
"Builders need to understand that they are not in the real estate business or the building business," says Bob Schultz. "They are in the retailing business. Every model center is a retail store. They should emulate Sam Walton’s approach: management by walking around."
Amen, brother, and the best time to walk around is Saturday and Sunday afternoon.