Tips from the Home Building Sales Pros

Professional Builder held a one-hour discussion with three leading sales consultants, and what they said is worth a listen. A highlight of the discussion follows, but you can also listen to the entire one-hour conversation, which fleshes out their thoughts and insights.

{Professional Builder} Bonnie Alfriend, you're talking to builders, and you're seeing all kinds of things. What are the biggest mistakes they can overcome immediately?

Bonnie Alfriend, MIRM, Fellow, Alfriend Sales & Marketing Solutions, Pebble Beach, Fla.

{Bonnie Alfriend} The one that comes to the top of my list is seeing so many builders joining the panic and pandemonium of discounting and "Let's Make a Deal." We all know it is driven by fear and, of course, panic. They have gotten caught up in the frenzy of desperation.

Many of us have lost control. Certainly of our profits and control of our business — kind of lost the sense of self, if you will. Discounting has not increased sales or we would not have the inventories out there that we have.

{PB} Rick Heaston, are you seeing the same kinds of things with discounting or are you seeing some other mistakes out there?

{Rick Heaston} Bonnie is absolutely correct. I looked at the question in terms of salespeople. What I noticed is that salespeople are panicking a bit. They're selling discounts rather than the products or the community. The discount becomes the product. And they're actually selling that when people walk in the door.

The other thing is that if somebody is going to give you $400,000, they have to be able to justify that. The third thing is the lack of deep discovery. We find out what someone's after and then immediately go into a presentation about why they should buy our product.

{PB} Bob Schultz?

{Bob Schultz} I have suggested for years and years and years that as builders we should not think we are in the real-estate business; we must think we are the retail business. I suggest that discounting is bad because discounting simply says, "My price once was 250; now it's 200. I was

Bob Schultz, MIRM, Fellow, New Home Sales Specialists, Boca Raton, Fla.

overpriced to begin with." It also says that 200 discounted price is the new point of beginning for the person that wants to deal.

We suggest that an incentive is a better term to use — even though it may be a discount — because an incentive is an incentive only if the buyer has to do something by a certain date or time.

The biggest mistake I see builders make is about their inventory. They come up with a number — say 20 percent — then discount everything 20 percent. Why would you want to take 20 percent off the best inventory you have?

{PB} All three of you have mentioned panic. It seems to have seeped into the culture of sales teams and builders. How do managers overcome the panic in their sales forces?

{Schultz} You've got to take a step back and assess where you are in your marketplace. Then you've got to have a significant insight into how you are positioned in terms of your competition. Builders also have got to be willing to be unreasonable. I see builders still refusing to make some of the changes they need to make, whether it's reducing their overhead or clustering sales centers together.

{PB} They're afraid to make these hard decisions?

{Schultz} Well, yes. Fear, panic, whatever it is. You just don't walk into your bank and say, "I can't make my payment." You've got to go into them with a plan, and in order to have a plan, you've got to know where you are in the market, how are you going to compete, and you've got to know how you're going to do it better than anyone else. That often gets down to the people you have in your sales organization.

{PB} Rick, there are a lot of people in this industry who have never seen anything like this in their lives.

Rick Heaston, MIRM, Touchpoint Selling, Greenwood Village, Colo.

{Heaston} I think Bob's 100 percent right as far as the research. As far as sales are concerned, I think it falls on management's shoulders. You have to start with a process guide that says what a particular strategy means, why they want to accomplish that and the techniques they use. That's coaching. Managers today really have to get out in the field.

{PB} Bonnie, are you with us still?

{Alfriend} I am. I wanted to start back a little bit with the sales manager's most important job, and that is recruiting and getting the best team. Unfortunately, we're going to have to replace any weak links. Selling new homes is hard work, and everybody must be ready, willing to do the right things now. That's not always the case.

{PB} I thought the weak links would have been gone by now.

{Alfriend} No. They are not.

{Schultz} I'll double ditto that.

{Alfriend} I'm amazed that they still have some very weak links controlling the whole thing. There're some great sales champions out there without jobs. To me, it's absolutely inexcusable for management to be still holding on to someone who is not teachable, who is still doing the same things.

{PB} What's the biggest complaint you're seeing from the ground up, from the salespeople?

{Alfriend} I don't know if you want to know this, but they're saying our prices need to go down. It's interesting to me how people panic when there's no traffic. You don't want 200 people at the shop. You want one person every hour and half. That's qualified.

{PB} Bob, would you agree? Is that what you're seeing as well?

{Schultz} I see the same things Bonnie sees. Unfortunately, it's not the salespeople's fault. When the market was hot, if you just showed up and didn't screw up, you could make a lot of sales. Then because of grossly improper compensation process, far too many new home salespeople were equating the size of their paychecks with their skill. So they carried around an attitude. We call it an attitude of entitlement. Now this is not all salespeople, but it's a lot of them.

I'm a firm believer in recruiting people who have no new home sales experience or minimal — that have experience selling things that are a lot tougher to sell and where they make a lot less money because they have an attitude of excitement.

In today's market, I could care less what their traffic is. If they have some traffic, they don't have a traffic problem.

{Alfriend} Right.

{Schultz} People are not coming out today in Indianapolis because they've got nothing else to do with their time. They're coming because they have an interest or they have a need or combination of both. Conversion ratios today are equal to if not greater than they were in some instances when the market was hot.

{PB} Rick, that makes sense to me. Do sales people recognize what a qualified lead is anymore?

{Heaston} You have to think about today's visitor. If somebody shows up today, they have an agenda. If we want them back, we've got to have the best sales process.

Second part of that is that today's customer is more knowledgeable and, unfortunately, more confused. They trust us less. Our sales process has to follow the customer's decision process. There has to be a tangible benefit for them spending time with you.

{PB} What kind of value-add can a salesperson offer?

{Heaston} We show them how to compare a floor plan. We show them how to define what a perfect decision might look like. We show them how to justify that decision. We're adding value to their visit. We're just not making a presentation and trying to make a sale. We're different.

{PB} Bob, Rick's describing this idea of building a level of trust. Is that the most important characteristic of a salesperson?

{Schultz} I think it has always been one part of it. The challenge I find with that is to try to build an entire sales process or philosophy around that idea. The simple fact is the smart salesperson today has to have high energy, has to be a rather persuasive individual.

We teach to ask the question, "How long have you folks been looking for a new home?" If the person tells you they don't like looking and have been doing it for 3 weeks, we want the salesperson's radar to go up and say, "If I can put everything together, there is a possibility of a sale today."

They have to trust us but not in the absence of asking for the sale.

{Heaston} I tend to disagree. I stated four or five things salespeople must do. If you show them what to look for, you're differentiating. If you show them how to judge a floor plan, you're gathering information to close.

{Schultz} That's your presentation skills.

{Heaston} If you show them how to define what perfect means to them, you're building value. You're preventing them from going home and deciding on their own. You're closing. So actually, what you're doing has nothing to do with trust. It has everything to do with making the sale. What better thing could you do in today's market?

{Schultz} I've been doing that for 40 years. I get it. I understand that.

{PB} Bonnie, I'm going to let you jump in here.

{Alfriend} You asked where in the sales process do we see the biggest breakdown. I'm going to say the word "closing." Kathy Kelly, president of Personnel Profiles, Boulder, Colo., breaks down the performance of salespeople into categories of approach, qualify, demo, close, presentation and the general attitude. The lowest of all of the categories have always been the closing.

I've been doing surveys with Realtors doing both new and resale homes. In every single incident the answer was, "Buyers are in a wait-and-see mode. The long process from looking to making a decision is the thing that is keeping the market slow."

That says to me that consumers need assistance in making a decision.

{Schultz} What are some of the phrases you have taught salespeople to use that, in politeness, is a closing question?

{Alfriend} When we're out on the veranda and they say, "Wow. This is a great setting," I'm going to turn around and say, "So it seems to me you like this setting. Is that correct? Let's make it yours today." Any time they have any positive, they are saying they like that part, so we sell the veranda. We sell the living room. Does this make sense?

{Schultz} They're going to say yes or no and if they say yes, you move forward. If they say no, it's an objection.

{Alfriend} It's an objection, and we want to know that before they leave so we can clear that.

{Schultz} Rick, what do you mean when you say there's too much proof that asking for the sale doesn't work?

{Heaston} I really believe in closing, but I think we have to go back and say, "How do we make closing easy." All the things that happen prior to asking for the sale is where we fall down

{Alfriend} We do fall into bad habits. Bob had said earlier that he is seeing so many closing ratios up. Salespeople lose control of the presentation. That process is so critical, but they let the buyer have their own process.

It's tough. They're out there by themselves, and that's the coaching you talked about, Rick. The people are coming to eliminate, not to include. People want to see your prices and houses. If you know all of that, the presentation has to start with, "I bet you came for all of our price points, our pricing strategies; we're going to get into that but first let me tell you a little bit about ourselves."

{Schultz} What I find more often than not is salespeople who don't close at all. We see people who close too soon, but it's far easier to rein in the thoroughbred than it is to get an old nag to run the Kentucky Derby.

{PB} Rick? Give me your final word on the closing issue.

{Heaston} Actually, I don't believe in fear of closing. I have to go back to say that we as an industry have to work harder in making closing easier.

{PB} Bonnie, we started with you. You get the final word.

{Alfriend} I want to make sure that when the presentation is over, the salespeople can look back and identify specific questions that demand a yes or no answer. A lot of times people think they're closing when they say, "You know, $10,000 will hold this for you."

{Schultz} "Is this the home you'd like to own?"

{Alfriend} Absolutely.

{Schultz} "Yes or no?"

{Alfriend} Right. Make sure we do ask questions, and they must be a yes or no answer.