Last month, I attended NAHB’s midyear meeting in Miami and had the pleasure of sitting in on a presentation by Daniel Swift, president and CEO of Des Moines-based architecture group BSB Design.
How to Monopolize Your Market
The home building game is not unlike America's favorite board game:
|C.P. Morgan's branded vehicles are hard to miss, especially the moving vans outside apartment buildings, from which a fair share of the company's first-time buyers comes.|
Catch Prospects on the Road
Dan Horner refers to his company's unique marketing program as moving billboards that build brand equity. Horner is the vice president of sales and marketing for C.P. Morgan, which built 2,200 homes in Indianapolis last year. With the help of Miles Real Estate Brand Development in Denver, C.P. Morgan branded each of the 15 Nissan Xterra SUVs that its sales representatives, customer service reps and others drive by wrapping them in its signature yellow, black and red color scheme with the company's slogan painted on the side: More Square Feet. Less Money.
C.P. Morgan introduced the fleet to Indianapolis in January 2001 by driving all 15 vehicles in a caravan twice around the Interstate 465 loop at rush hour. Live radio broadcasts from inside the vehicles included a drawing offering free gas money for a year, as long as the winner had counted the number of SUVs correctly.
Taking the idea further, C.P. Morgan purchased and branded six used moving vans with the same treatment and rents them for $15 a day to new home buyers. What's so brilliant is not just the customer service aspect but that the brightly colored vans are seen all over town.
Horner considers them an excellent investment. He spends his budget on nontraditional marketing methods rather than the home building mainstay - newspaper ads. "I may not be spending any more dollars than anyone else," Horner says. "I'm just reallocating them."
|Midsummer advertisements such as this one make a strong emotional appeal to shove buyers off the fence and into a new Emerald home.|
Summer Buyers Take Plunge for Pools
To boost spec home sales during the slow summer season, the Houston-based Emerald Homes division of D.R. Horton tempts buyers with a free swimming pool in a promotion that isn't as costly to the builder as it appears. It all adds up to higher visibility and a boost in perceived value.
"We do the promotion cooperatively with Anthony & Sylvan Pools," Emerald president Brian Binash says. "We usually involve a couple of other vendors to help underwrite the deal. Sylvan gives us a small commission for selling the pools, and they put a lot of dollars into the promotion, so it costs us very little. We offer the $15,000 base price of the pool. Most people who take the offer upgrade and end up spending $20,000 to $30,000, but they negotiate that with Sylvan. The discounts other builders have to offer to move inventory homes at that time of year are likely more than our pool costs."
Spring and fall are the peak selling seasons in Houston. During the long, hot summer, many builders drop prices, especially on standing inventory. Emerald's billboards offering to add a free pool to an inventory home make a potent emotional appeal. "We do ads, billboards, direct mail and some special promotions, as well as point-of-purchase displays that include sketches that help people visualize what it would be like if they bought a house and put a pool in the back yard," Binash says.
Binash came up with the idea three years ago. It works so well, he's sticking with it. "We know the summer heat will come back every year, and so will the buyers," he says. "If they want to apply a comparable price to other options rather than a pool, we let them, but the whole idea is to get them thinking about buying and to visit our models. The pool ads increase our traffic when we really need that."
Emerald sold 75 pools last year out of a total of 650 homes sold, and 15 of those pool sales came during the promotion. "We think we'll sell 100 pools this year," Binash says. "Without this promotion, we might sell 60. Last year the promotion generated 108 home sales between July 13 and August 31. That's about a 20% increase over same-store sales before we were doing the pool promotion."
Golf Now, Move in Later
Jim Doyle, vice president of marketing for Jacksonville, Fla.-based developer LandMar Group, came up with a unique incentive to boost home sales in the company's two Jacksonville golf communities: Sign a sales contract for a spec home, and LandMar will spring for the initiation fee for a country club membership that allows the customer to begin playing golf and using club facilities immediately.
"We call them 'Express Address Homes,' and we really did it to encourage our builders to build more spec homes," Doyle says. "Jacksonville is a hot relocation market, and relo buyers need houses fast. We want to have more homes ready to capture more of that market."
The initiation fee at LandMar’s North Hampton community, featuring an Arnold Palmer-designed golf course, is $6,000. At South Hampton, with a Mark McCumber-designed course, the fee is $3,000. Spec houses at any stage of permitting or construction can qualify as Express Address. The program has been so successful, Doyle extended it to include Hampton Park, a community with no golf course. Buyers there can join North Hampton or South Hampton.
"Somewhere between 30% and 40% of our buyers are golfers," Doyle reports. "For them, this is a big incentive. The bottom line is we've sold 41 Express Address houses since beginning the program in October 2002, and our total sales in the three communities over the same seven-month period were 163 houses."
The Kid Connection
There is a lot of conversation on women's influence on new home purchases. Far less is known or understood - in any scientific way at least - about children's influence and impact on their parents' decision to purchase a new home.
However, supporting evidence suggests that influencing kids' hearts and minds can exert the nudge factor that separates one model home from another. Consider the money, energy and creativity devoted to merchandising kids’ rooms in model homes. Little girls are treated to scenes of fairy princesses, jungle hideaways and beautiful ballets. Racetracks, beach scenes and ballparks capture the fancy of little boys. Even in move-up markets where targeted buyers most likely have teenagers, special themes are concocted to create memory points for the whole family.
Neal Custom Homes in Sarasota, Fla., taps the kid connection to influence adult buyers in the community and to give something back to the town that president Pat Neal calls home. Much of the company's marketing efforts center around partnerships that benefit children. One of the most successful programs is "My Favorite House," which involves kindergartners through fifth-graders at Kinnan Elementary School in Sarasota. In the Neal-sponsored contest, each student draws a picture of his or her favorite house. A panel of judges including representatives from all the local newspapers, county officials and an art league selects winning designs from each grade level as well as one overall winner. The overall winner is featured on Neal Custom Homes' holiday card.
In addition, each Kinnan student receives a T-shirt touting participation in the contest, with a Neal Custom Homes logo on the front and a colorful graphic of a house on the back.
"This project is a joy for us on so many levels," Neal says. "It gives students an opportunity to express themselves creatively, it demonstrates how businesses can effectively partner with schools and educators, and obviously it raises awareness for the company. It's a win-win experience for everyone."
Kids can be seen in the My Favorite House shirt all over town, says Linda Gross of ADWorks, Neal’s advertising agency. "It's never-ending PR."
"Supportive communities expect and deserve something in return for their loyalty," Neal says.
Benefits of Saying 'No!'
New home marketer Chris Spiro of Spiro & Associates Advertising in Fort Myers, Fla., is a master of building urgency to buy by denying people information on a coming housing project. "We set up a sales trailer on the site, put up signs that tease the market with very minimal information about what's coming and then have the salesperson say no to every request for more information," Spiro says.
"We ask people to fill out registration cards and tell them we're going to release the information on pricing and lot availability when we open pre-sales on a specific date. By that date, we've got a line of campers outside the trailer."
Spiro says this marketing ploy works best when the site is choice. He used this approach at Grosse Pointe Development's 150-acre waterfront project near Tarpon Point Marina in Cape Coral, Fla. Single-family lot sales in the Tarpon Estates portion of the development began Feb. 15, 2002, and by March 22 that year, all 44 quarter-acre and half-acre lots were reserved.
"Buyers showed up at 8 a.m. the day before sales began, ready to plunk down $50,000 nonrefundable deposits, and all we spent on promotion was $834 on direct mail."