NBA legend Pat Riley once said, “Success can be the biggest breeder of complacency, and complacency leads to acceptance of the status quo.” To that pearl of wisdom, and specifically related to our industry, I would add that the acceptance of the status quo as a benchmark for performance can lead to missing significant sales revenue, and the worst part is that you might not be aware of it. Why? Because the rising tide of the market helps float more sales for all, and using those sales as your gauge rather than measuring your success against the highest of standards and the appropriate metrics and benchmarks can provide for a very false assessment of where you are. I call it the “trap of success.”
Having been involved in four previous housing boom-bust-and-back-again cycles, I know firsthand there are far too many factors, almost all of which we have no control over, that ultimately determine how well the housing market can do. On a macro level, Federal Reserve Chair Janet Yellen was quoted recently as offering an upbeat outlook for the economy, but also added a cautionary note about housing risk.
To avoid the trap of success, I believe that it is critical to measure, evaluate, and improve those things we can control, and one of the most important is the sales process. In recent articles I have provided time-tested strategies to not only avoid this trap, but more importantly, to ramp up sales revenue to its highest possible level. Two recent articles, “Preparing For The Main Event” (Professional Builder, April 2014) and “The Hawthorne Effect” (PB, March 2014) have received a lot of comments and questions as well as reports of some very interesting responses by readers. Two home building companies, Marrick Homes in Maryland and Neal Communities in Southwest Florida, will begin to “Inspect What They Expect.” Both have challenged and prepared their sales teams for a round of mystery video shops, or as I call them, See-Me-with-the-Customer evaluations, to take place in the next few months. I believe that from this group of shops, we will see some of the very best, most professional, and appropriate new-home sales presentations ever in our industry. As presented in “The Hawthorne Effect,” simply as a result of preparing for their main event, sales production and conversion ratios measurably improved. For example, Sherri, new to new-home sales at Marrick Homes, reports that as a result of preparing for mystery video shops, she caused nine sales to occur on the customers’ first visits to her sales center, and these sales were in the $500,000 to $600,000 range.
Another way to evaluate your organization’s sales process is to employ Sam Walton’s credo of MBWA (Management By Walking Around). A phone call I recently received from a woman in Atlanta and a subsequent message tell the story best. Her name is Chrisann, and she is in the process of looking for a new home for her family. As a result of looking at four different builders—national, regional, and local—in the Atlanta market, and visiting at least two different communities of each, she decided she wanted to go into new-home sales. I asked her why, and she said that as she shopped around her observations led her to think it must be very easy to make a lot of sales and money. I asked why she felt that way. She said, “Each place I visited they appeared to be selling lots of homes.” I asked her to send me a brief summary of her “walking around experiences” and this is her report. Remember, this is the point of view of a real buyer in a hot market. Her comments:
• I visited at different times of the day, morning, afternoon, and late afternoon.
• The first thing each and every one asked when I walked in the door was something like, “What can I help you with?”
• The first place I went, mid-morning on a weekday, no onewas there. I waited about 15 minutes with no sign of anyone. There literally was no sign posted to indicate that maybe they were out showing homes or a “Be back in...” Nothing. I left because I was uncomfortable. The sales office was, of course, one of the new homes. I did look around, but decided to leave because I had no clue when and if anyone would return. Not to mention that it’s a huge safety issue leaving the office unattended like that. So much could go wrong in that situation.
• I was sent to walk the property alone on several occasions.
• Only two agents asked me to fill out a guest card and one of them just did it because the area sales manager was in the office. He was kind enough to walk the property with me but told me he only did it because he had to put on the dog-and-pony show for his manager. He even joked about going through the dog-and-pony show with her as well.
• One property was supposed to email me some measurements of the backyard. It never happened.
• On one of my recent visits, the agent who approached me looked as if he had just rolled out of bed, wrinkled clothes and all. I asked to use the restroom and there was no toilet paper. Luckily, I carry Kleenex in my purse. I let the agent know, and he laughed it off and blamed his builders. He did follow me through the model giving me some details on features and possible options, although he never offered to walk me through any of the other models. He then handed me a pamphlet of stapled papers and that was it.
• A few agents asked me if I had been pre-approved.
• One asked me if I was waiting on a home to sell.
• Two asked me my reasons for looking for a new home, but most had no interest in my reasons, needs, or requirements.
• None asked if I had kids to see if maybe schools were important.
• Not one followed up with me.
There you have it. Management By Walking Around and Mystery Video Shops, two current real-world examples of the need to “Inspect What You Expect. “ Both are easy and now inexpensive to accomplish. You can get friends to walk around like Chrisann did and provide you with feedback. Mystery video shops can be accomplished for approximately $50 to $75 per shop.
This all goes back to the importance of focusing on your answer to this question: Doing what you are doing, the way you are currently doing it, how many sales and how much revenue and profit are you missing?
If you would like to contact Sherri or Chrisann, or to learn how to accomplish inexpensive mystery video shops, just let me know. PB
Bob Schultz is president and CEO of Bob Schultz & The New Home Sales Specialists, a management consulting and sales firm based in Boca Raton, Fla. Schultz is the author of two best-selling books, “The Official Handbook for New Home Salespeople” and “Smart Selling Techniques,” and was named a Legend of Residential Marketing by the NAHB. He can be reached at email@example.com.