Despite a challenging economy and crashing housing market, LGI Homes of Conroe, Texas (northeast of Houston), just completed its third consecutive year of increased sales thanks in large part to an abject refusal to participate in the market downturn. It's a lesson every builder could use today.
LGI moved up to No. 278 last year in Professional Builder's Giant 400 report. In 2008, the firm hit 475 closings for $63 million. This May, we'll learn just how high in the rankings LGI will jump this year, but our money is on another big leap.
LGI president Eric Lipar and executive vice president Mike Snider, who heads the home building side of the business, attribute their success to a customer-focused corporate culture and extremely aggressive marketing and sales. All the closings come from just three subdivisions, two in Houston, one in San Antonio. “Our goal is to get people out of apartments and into home ownership,” says Snider. “We don't wait for them to come to us. We go after them.”
LGI spends $60,000 per subdivision each month on direct mail advertising to area apartment complexes. All of LGI's homes are priced between $95,000 and $160,000, but the firm never mentions price in its marketing — only the dollars required to carry a home in monthly payment. “It's often less expensive for a customer to buy from us than to continue to rent,” Snider says.
On the construction side, LGI keeps everything simple, offering only six floor plans per subdivision with no options. The firm builds spec homes, ready for move-in, but no model homes. “They tour the home they'll buy,” says Snider. “Our average build time is 45 days, and we build three or four at a time. The trades never leave the subdivision,” Snider boasts.
In sales, the emphasis is on striking while the fire is hot: sales offices are open 8:30 a.m. to 8 p.m. seven days a week. “We spend a lot of time training our sales people,” Snider says. “We give them 100 days of training before they are ever allowed to serve customers and start making sales.
Snider's words of wisdom: “Two areas where builders should never cut their budgets are marketing and sales training. If you do the marketing right, the phones will start ringing. Once that happens, you'd better have a great sales staff, because when they call is the moment their desire to buy is at its highest.” — Bill Lurz
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