One of the biggest areas of interest in home building during the last two years has been the concept of “buy online.” After all, we’ve been purchasing items online for more than a decade now—why not a new-construction home?
Buying online has the potential to improve the customer experience, simplify processes, and lower sales and marketing costs—all at the same time. No wonder so many are excited about the idea. But in today’s reality, those promises are falling epically short for both customers and builders.
Just because you can create a “buy now” button and ask for credit card information doesn’t mean you’ve successfully tackled the buy-online challenge. In fact, I’ll go so far as to say that you’ve solved just 15% of the equation, while simultaneously causing a whole bunch of new headaches. Perhaps this is an unintended consequence of tech-savvy people failing to understand the basics of how home building works, yet desperately wanting to sell home builders a “buy now” online sales solution.
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Inconvenient Truths About Buying Online
If we are to make meaningful progress toward having even a fraction of homes purchased online, we need to acknowledge three inconvenient truths:
1. It requires drastic simplification of the product offering.
2. It requires real-time updates flowing between the back end (database) and front end (website).
3. Humans will need to assist with the online process at a moment’s notice when requested.
Ignoring these fundamental aspects of true “buy online” opportunities will lead to upset, disappointed customers and employees. When you tell a prospect that you offer the ability to buy a home online, but in practice the experience is little more than another glorified call to action to capture their contact information, you instantly lose credibility. The degree of loss will depend on the prospect’s own understanding of technology and expectations. (By the way, the impact will only become greater over time as younger buyers look to purchase homes.)
Drastic Simplification of the Sales Process
Tesla—a name synonymous with innovation in the auto industry—has offered the ability to purchase a car online for many years, shifting exclusively to online purchasing in February of 2019.
When going online to design and buy your Model 3, you’re presented with a grand total of five choices to make. You select the range of the vehicle, make three cosmetic choices (exterior paint, wheels, and interior color), and then have the option to add on “full self-driving capability.” That’s as easy and quick as Tesla could engineer its product offering to get up to $60,000 or more from a Model 3 customer.
Most production builders can’t fathom limiting the number of floor plans and options to allow the kind of simplification necessary to make an “add to cart” experience work. When you consider a purchase price of $400,000 (the average new-home sales price as I write this) most consumers will expect more than five choices, or even 15. This is at the core of a home builder’s challenge because those willing to streamline their product offering are often those selling homes for well under the average price point. “Buy online” is a closer reality for them than for the majority of home builders.
Why Real-Time Updates Are Essential
There are two main components of a successful “buy online” system. The front end (website/user interface) and the back end (enterprise resource planning [ERP] system/database). Right now, the back end is infinitely more important because it contains all of the data that allows the front end to display accurate information, such as how many home sites are available, at what price and that fit which floor plans, the cost of each option, and the logic of what options can be combined. Most ERP systems don’t allow real-time communication with outside systems. This is an intentional “defect” in their software to try to prevent anyone else from playing in their sandbox.
If the front end remains “dumb” and relies on separate manual updates or nightly data dumps from the back end, the system won’t function smoothly, creating massive inefficiencies—but even worse, opening up the opportunity for incorrect pricing and availability information, and more. If that doesn’t sound terrifying to you, it should.
I recently went online to a national builder’s website and “reserved” a home site online for $0. It took me about 60 seconds. Then I tried to reserve another. It worked. In 2 minutes, I had reserved (taken availability away for other purchasers) two home sites four states away from me that I had no intention of purchasing. It seems that if I wanted to, I could make the front end display “sold out” if I continued for a few more minutes.
Just because you can create a “buy now” button and ask for credit card information doesn’t mean you’ve successfully tackled the buy-online challenge.
These two home sites continued to be shown as reserved for over a week; proof that no updates occurred to the ERP. If they had, a manager would have been immediately asking for updates on the buyers of those two home sites. A month later, no one from the builder has sent notice of cancellation or non-acceptance of my reservations.
This is only one of a dozen nightmare scenarios that can easily occur without real-time updates between both systems. ERP providers are slowly trying to offer their own “buy online” solutions, but they aren’t used to building slick, modern interfaces for consumers. Their implementations have so far been clunky, ugly, and ignored by consumers when presented as options.
Human Assistance Still Required for Buying Online
If your main goal in chasing “buy online” is to reduce human capital and sales expenses, this last truth may hit especially hard: In the sales process, humans aren’t going anywhere anytime soon, and customers will still require some amount of additional off-line (read: live, in person, with another human) interaction with your brand.
Despite having just five choices to make, Tesla must employ salespeople to help its customers through those choices. The carmaker also continues to offer retail galleries, showcases, and Tesla information centers so prospects can get up close and personal with the cars they’re designing online. It took more than a decade of extensive investment by Tesla in sales teams and supporting retail locations before reaching a breakthrough—an estimated 46% of the company’s sales were made online in 2018.
The future of selling is one where the consumer will be able to self-serve themselves but also raise their hand to ask for human interaction or assistance at any stage of the shopping experience.
Buy Online Is Coming, Just Not Yet
I do believe more homes will continue to be sold online every year, and yet I don’t believe we are close to any kind of watershed moment. The homebuying process is too complex, and buying online requires both adoption of technology and a change in business practices that most home builders aren’t willing to accept.
We need to stop pretending this will be as easy as adding a “buy now” button to your website and must tackle the challenge with our eyes wide open to the inconvenient truths before us. Only then can we start having a real impact on how new homes are designed and purchased online.
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