Home builders should stop worrying about disruption and become the disruptor
There’s a reason why most of us are in the home building industry: There’s nobility in it. We’re building places where lifelong memories will be made. It’s not just about structures and land.
But over the years, very little has changed about how we build and sell homes ... until now, in the disruptive climate of the Age of the Customer.
Millennials and Disruption
Two words that strike fear into the hearts of many builders are “Millennials” and “disruption.” I believe both symbolize the same thing: Change is coming fast. And most home builders aren’t set up to respond to it in a systemic way.
When most of us think of disruption, we think of what Netflix did to the video rental industry (Blockbuster who?), how Uber disrupted taxi services, how Airbnb changed hospitality, or how Amazon upended pretty much all of retail.
When you think about the housing industry, are builders disruptors or are they the disrupted? If you’re honest, it’s the latter.
The Age of the Customer
We’ve gone from the post-war Age of Manufacturing (where housing really came into its own), through the Age of Distribution of supply chain management, to the Information Age of the internet digitizing and standardizing our processes, selections, and pricing.
In the current era, the Age of the Customer, homebuyers have access to all of that information, changing the way they think about buying everything. They research products and read reviews online before setting foot outside ... or, increasingly, they simply buy online with just a few clicks on a smartphone or by asking Alexa to order it. In fact, more than half of American households own a voice assistant, and 60 percent have Amazon Prime. The Age of the Customer is here. So, how will you react?
The Buying Experience
The disruptive empire at Amazon has always held to this principle: “We’re not in the business of selling. We’re in the business of helping people buy.”
Consider how that mindset applies to new-home sales. For most of us in home building, a customer journey looks like a funnel—a symbol we’re in the business of selling, where success is measured by the number of people that flow through the funnel.
We invest a lot of money in that process. To get buyers, we build big, beautiful, expensive models so prospects can visualize a life there. Most builders still invest heavily in models because they don’t see a direct correlation between sales and the increasing availability of virtual tours, virtual reality, and similar visualization tools. It’s less about builders giving consumers what they’ve come to demand or expect from their other buying experiences and more about simply taking advantage of an emotional state after touring a model home.
In the Age of the Customer, digital-savvy buyers don’t want to be sold to, they want to drive the process. Sure, they need help personalizing their home and navigating the complicated journey of construction, but what they really need is for someone to simply help them buy. We need to shift from being leaders in the business of selling to becoming leaders in the buying journey and with it, customer satisfaction.
When a builder becomes known for delivering memorable customer experiences, it’s a real competitive advantage in the Age of the Customer. That sense of purpose may also improve employee satisfaction and lower turnover, and also result in shorter cycle times, fewer warranty claims, and higher margins.
But the most important benefit is the ability to disrupt instead of being disrupted. Based on the Amazon model, here are three ways to become a leader in customer experience.
1. Be Customer-Obsessed
The primary Amazon principle, according to company founder and CEO Jeff Bezos, is: “We’re not competitor obsessed, we’re customer obsessed. We start with the customer and work backwards.” In the early days at Amazon, Bezos would bring an empty chair into meetings to remind executives that even though the customer isn’t physically present, their needs should always come first. It meant sacrificing short-term success for long-term gains. Few builders are willing to make that sacrifice.
How can builders be customer-obsessed?
Move beyond the funnel.
Don’t get me wrong, the funnel is important. We work with builders every day to improve sales-funnel conversions. But we want to move beyond the funnel (which now ends at sale) to focus on the entire experience, illustrated above.
Customers love designing and envisioning their new homes. It’s the best part of the sales process for them. But the part of the entire customer experience that matters most to buyers is the Delight phase, which comes after the builder has recorded the sale. And that’s where most builders fall short.
Even the largest home builders in the country struggle with the most basic customer needs during this phase: communication during construction and service requests during warranty—the time when most buyers are writing reviews. I can’t tell you how many times I’ve read a buyer review that starts with, “Everything was great—until I signed on the dotted line.” If we want to become customer-obsessed, we need to focus on the entire experience, and namely after contract.
2. Invent and Simplify
This Amazon business principle denotes a strong willingness to challenge the status quo. Not only did Amazon redefine how we shop online, it is reinventing how we buy in a store, applying this principle via its Amazon Go convenience stores, the first of which opened in Seattle in January 2018. The cashierless stores use artificial intelligence and what’s called “sensor fusion” to let shoppers walk in, fill their bags, and walk out, charging their credit card as they exit. As of May 2019, Amazon has opened 12 Amazon Go stores nationwide, with another planned for San Francisco.
Builders can invent and simplify by “journey mapping” the entire buying experience. You may think you know what it’s like from the customer’s standpoint, but every journey mapping session I’ve led with builders has revealed they have little idea of what they’re really putting their customers through.
Mapping a six- to 12-month customer journey can seem overwhelming, but start small, with areas where you know customers are unhappy or where you’re getting bad reviews. Align your processes with customer touch points to determine what they’re thinking, feeling, and doing along the entire way. It’s a visual representation of what buyers experience, similar to the chart above. With that journey map in hand, the entire organization can look for ways to innovate and simplify the journey at given points toward overall improvement and bring more joy and confidence to the experience for buyers.
3. Think Big
The best symbol of this principle is Amazon’s drone delivery service. Amazon knows its customer journey inside and out, and the No. 1 question buyers have that can affect the customer experience is, “Where is my stuff?” So Amazon constantly looks for ways to decrease the time it takes to deliver purchases.
In 2013, Bezos shook the world when he unveiled a plan to use drones to deliver Amazon orders. Despite several challenges, Prime Air made its first delivery to a customer in December 2016. Amazon even holds a patent for docking stations that would allow drones to land and recharge on top of city streetlights. That’s thinking big.
Housing is an industry known for being averse to change and risk, so thinking big can be a challenge. But a good way to start is by rethinking how we sell new homes. It’s only a matter of time before buying homes completely online becomes far more common, so we need to plan for this “self-service” model instead of resisting it.
Just by asking, “What will it take for me to be able to sell homes without a salesperson?” opens a floodgate of ideas that could improve the customer experience well beyond sales to sophisticated online visualization and completely digitized financing to self-service warranty/customer care. The idea is to stop saying “yes, but …” and start saying “yes, and ...”—a mindset shift to turn fear into thinking big and reinventing how we do things.
Housing has obstacles to overcome to really innovate the customer experience. Becoming the Amazon of home building requires a significant transformation, but if you make it your mission, you can stop worrying about being disrupted and instead become the disruptor.