Now that the U.S. Department of Energy’s new residential water heater regulations are in effect, it’s important to understand the new challenges builders and remodelers may be facing. The U.S.
Managing Both Sides of the Balance Sheet
The articles in this issue are about the other side of the balance sheet -- the income side -- and the focus is on finding ways to grow revenue and not just manage costs.
Consider this issue an antidote to the daily corporate and financial news offered by The Wall Street Journal, Investor’s Business Daily, CNNfn, Bloomberg and the local business sections in most major newspapers. There isn’t a single article in this issue of Professional Builder about layoffs, companies slashing earnings projections or shuttered manufacturing facilities. The articles in this issue are about the other side of the balance sheet — the income side — and the focus is on finding ways to grow revenue and not just manage costs.
I would like to tell you this is a deliberate occurrence, but that would be less than truthful. Certainly, sell is one of PB’s information pillars, but this issue is unique for the many types of articles and approaches to this single topic. Coincidence or not, in proofing all these articles in page form one last time before going to press, I can’t help but believe that the residential construction industry and home builders in particular, all already experienced cost managers, can continue to outpace the overall economy with a few lessons in ways to grow revenue.
Lesson #1: Everybody is a customer. As consultant Rick Heaston points out in his first installment of a new series on Interview Selling™, nine out of 10 shoppers have problems, concerns and dissatisfactions with their current situations that are severe enough to make them consider a change. Think about this for a minute. Nine out of 10 isn’t a number bandied about by salespeople in this business. Turning two out of 10 shoppers into buyers is often cited as a more realistic target.
What Heaston is teaching us is that we’re setting our sights too low. In asking questions to qualify consumers, we’re knocking out lookers who could well become buyers. Instead of working from a list of questions designed to separate one person from another, the rewards can be infinitely greater — and the costs to acquire buyers lower — by asking different questions altogether. These questions elicit the information shoppers need to answer the one question that can convince them to become buyers: Do the rewards of making a change outweigh the risks?
Lesson #2: Once is never enough. Look through the Saturday real estate section of any newspaper, and you’ll know why home builders are such valued clients to advertising sales reps. Builders spend hundreds of thousands of dollars each week to woo shoppers. The investment continues with take-away literature on the community and the new home offering. The investments pay off; consumers come and look. Then they leave, and more often than not, that is the last time the builder and the buyer hear from one another.
That so much money and creative energy are spent to attract shoppers and so little to retain them makes little sense in an industry that sells the largest purchase most people make in a lifetime. Making the decision to purchase a home is by necessity a long one. But research conducted by California-based advertising agency Nelson & Gilmore found that if people do not buy at a community within 30 days of the initial visit, there is less than a 1% chance that they ever will.
The way to change those odds is to change our industry’s communication and investment paradigm. Yes, upfront dollars are necessary to attract buyers, but a program of ongoing communication designed to make prospects into buyers is too. Finish the selling job that has been started.
Lesson #3: Medium matters. The Internet can be an effective, low-cost tool to market new homes. It can also be a black hole that sucks money out of a marketing budget and offers little in the way of worthwhile leads. Knowledge and expectations — developing a strategy and measuring success — are old tools that work just as well when applied to the Internet as a new marketing medium.
None of these lessons will do much to deliver dollars to the bottom line unless and until we invest in the training and development of those people charged with building revenue. This is the most important lesson of all.