New Home Discount Rack

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To sell in today's market, builders are forced to do the one thing that they dread most: discount. Maybe they should be teaching their sales people how to position your company and the homes you build to be different.

June 01, 2006

Things were bad. I just didn't realize how bad. I'm referring to the state of selling in the home-building industry. No wonder builders feel the way they do — they have no choice. I last mentioned that builders were nervous. I just didn't realize how nervous.

I've been to a lot of places and met a lot of people in the last 30 days. Guess what they all said? Builders believe their associates aren't prepared to make a sale. And in addition, they feel that unless their associates have a customer who's elbowing their way to the front of the line they don't know what to do. So in the end, the realities of today's selling skills leave builders little choice.

To sell in today's market, builders are forced to do the one thing that they dread most: discount. Combine knowledgeable customers, look-alike products and soft selling skills, and you've defined both the problem and the solution.

'But mine is different ...'

What would you do if you were the customer? In other words, what would you do if you went home shopping and all of the designs, materials, floor plans and locations seemed the same? How would you decide which home to buy? Wouldn't you pick the lowest price or best deal — especially if it seemed like there wasn't much difference between one builder and the next? Sure you would — and it's what your customer is doing, too.

As many times as I hear, "But mine is different," I have to think to myself, if you only knew. Matter of fact, I'm almost willing to make a bet. I'd bet that if I went out in the middle of the night and switched signs, that most of your sales associates would show up for work the next day none the wiser. I'm kidding of course, but if your sales people showed up at the wrong place, they'd continue to doing what they do and you'd continue doing what you do: discounting.

Wanna' know why I'm absolutely sure you'd keep discounting? It's easy. First, I've watched your sales associates sell. Second, I've watched your customers shop.

'They all look the same to me.'

Customers seem to have one thing in common: when they're finished with their new home tour, they have one response to almost any question we seem to ask: "I don't know; they all look the same to me. They look so much alike I can't remember two hours ago, let alone two communities ago." And it's no wonder. The home-building industry has an identity problem — or should I say a "commodity" problem?

Commoditization is running rampant in our industry, and it's running rampant for one reason: builders and managers aren't asking themselves the right question. The $64,000 question isn't the "if" question; it's the "why" question.

You shouldn't be asking yourself if you need to be discounting or how deep your discount should be; you should be asking yourself why you're discounting in the first place. Or better yet, ask yourself why your customers can't tell the difference between your product and your competitors'. The answer is as simple as the question.

Think back to my original statement. I told you that almost every customer I interviewed told us that all of the builders seemed the same to them. Why do you think that's true? Why do you seem the same as everyone else? Why do your customers feel that you aren't much different than your competition? Is it because you really aren't different? Or is it something else?

You don't seem any different from your competition because your sales people don't position you to be different. That's their fault. And they don't position you to be different because they haven't been taught how to do it. That's your fault.

Differences vs. Discounts

I'd almost bet that each one of you have unique differences; and I'd almost bet that those differences are defendable. Heck, if you didn't have a defendable position, you wouldn't still be in business. Theadore Levitt, author of the "Marketing Imagination," says it best: "There's no such thing as a commodity." If a customer doesn't perceive a substantial difference between you and your competitors, you'll probably need a discount to make the sale.

Your customers are clueless. They don't begin to understand the differences between one builder and the next. And worse yet, your sales associates haven't been trained to make it happen. Associates typically have no idea of how to make your community concept, position and value proposition "stand out" from your competitors'. And unfortunately, that's one of the things that's missing in their training no matter what anyone tells you.

Food for Thought

I talk to lots of people around the country and I can tell you one thing for sure: most builders have an unusual opinion on selling. Seth Goodin, author of "All Marketers Are Liars," describes it best. He'd tell you that everyone on about every topic has a self-crafted "world view." And he points out that having a world view is a pretty normal thing to do — as long as it doesn't get you in trouble.

The world view of selling in the home-building industry is at least 30 to 40 years old. But don't listen to me. Just look at the results that your current selling process is producing, especially when things are tough. I don't know about you, but it's seems that whatever is happening out there isn't working.

There seems to be a popular notion that presenting and closing are the keys to more sales in today's marketplace. Little do builders know, if they look closely, they'll find that the more a builder believes in presenting and closing, the deeper they're forced to discount.

Sure, I understand that discounting is sometimes a strategy, like when you want to buy market share, achieve a specific position or diminish a competitors place in the market. That's not what I'm talking about. I'm talking about discounting because you have to make your numbers. When you have to discount to make your numbers, you're discounting because your sales associates aren't doing what they need to be doing. And it all boils down to three or four selling skills, and one in particular: building value. What worked in a buyers market won't work today.

If you still believe that your sales process is on target, I want you to play a game with me. Let's play a game of "What if ..."

How Would You Answer?

What if you were the customer and, after extensive shopping, felt that one builder stood apart from all the rest? And what if, after having the sales associate help you define what value meant to you, you found that your definition exactly matched what this builder was offering?

In other words, you defined and then discovered what you believed represented the perfect decision. And because you believed that your decision represented the perfect decision, would you:

  • Be willing to pay a little more?
  • Make your decision faster?
  • Go out of your way to provide referrals?
  • Be willing to stick to your decision and be less likely to cancel?
  • Want to provide high satisfaction scores?
  • Be easier to work with if something went wrong?
  • Make and stick to appointments?

Sure you would — and so would your customers. Show me a sales associate who understands how to build value and I'll show you a sales associate that's making you money. It all relies on your training program, because using features and benefits to build value no longer works.

If your sales associates aren't building value, it's their fault. If they don't know how to build value, it's your fault. Think about it.


Author Information
Rick Heaston is president of R.A. Heaston and Company, a sales training and marketing firm. You can reach him at rick@touchpointselling.com.


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