Use great market conditions to develop good habits that will help your company thrive during challenging times
When sales goals are being shattered, everyone looks like a hero. But the last 15 years have taught me that how people (and companies) react to slower periods—however brief or lengthy—is a far better indicator of being a true hero.
There are those who react to a slight dip with fear and panic, worrying that the market is turning. They will be relatively powerless to navigate the choppy waters ahead. There are others who react with the calm confidence of knowing that, while they can’t directly affect the market, they can steal market share from those who are in a panic and thereby come out of the slump in an even stronger position.
Yes, you absolutely can market-proof your marketing efforts—if you avoid the pitfalls that a great market can create.
A Truly Great Market
Right now, things are about as good as they’re going to get for a long time to come. There is excessively high demand for new homes; so high that the majority of builders have been able to simply pass along increased land, labor, and material costs without much concern that buyers will balk. Lending requirements have been lowered and capital is readily accessible for well-run companies looking to expand. Finally, improvements in technology and levels of innovation are occurring at breakneck speed, allowing greater efficiency in large portions of operations—marketing included. Though it’s certainly not heaven on earth for builders, it really is a great market overall. But remember: It won’t always be this way.
Avoid the Pitfalls of a Great Market
Your current success can deceive you. It often makes you feel a false sense of security or leads to one of three major pitfalls. If you hear these phrases repeated in the halls of your office, take note:
1. “We’re doing so much better than before.” “Better” is a tricky word. It infers comparison, but often without clear context of who or what you are comparing against. Perhaps your lead count is up 40 percent from last year, which could truly be considered better … unless you’re still 30 percent behind your competition. Of course you want to celebrate improvement, but don’t forget that benchmarking how much you’ve improved against your prior performance can cause blind spots or a superiority bias that you’ve “figured it out.”
2. “We’re taking an across-the-board price increase.” Great markets can let you get away with hitting an easy button on many things. How you handle pricing is one of them. When you find yourself or others in the company applying across-the-board strategies on pricing and product, it creates an enormous pitfall that’s especially hard to dig out from when the market turns. Each community must be analyzed both independently and within the context of the submarket it’s in. This is time-consuming but necessary work. Community A may be able to absorb a $10,000 increase without any effect on sales absorption, but that doesn’t mean Community B can do the same. You can get away with it for a while, but this sloppy approach to pricing will eventually cause a lot of unintended damage.
3. “There’s no need to innovate; just keep investing in what’s working.” When your social media campaigns and paid search are driving swarms of qualified buyers to your online and on-site sales teams, it can be tempting to continue to double down on what’s working. Some people see the health of the market as a wave to ride for as long as they can. But they then find themselves stuck on the shore or in shallow water with a long and painful swim back out to sea to gain momentum or catch a new wave.
Intelligent marketers understand that great markets are a time to invest in new and better processes, systems, content, and team members that will improve conversion ratios—not simply grow lead volume. The funnel analogy is an older one, but it still works: If you have an inefficient funnel where just 5 percent of your leads end up purchasing a home from you, then your sales will be in much worse shape when the market shifts than your competitor who has created a funnel that converts 10 percent of leads. Current examples of areas you should be investing in are virtual reality, augmented reality, artificial intelligence, and more transparency around your product to the consumer as a whole.
Those who fall prey to any of these pitfalls will find themselves reacting to a slowdown with fear because they don’t have a firm grasp of what is truly driving their previous success, other than the market. There’s no firm foundation to analyze and build from when the market shifts, and their confidence quickly shatters.
To increase your understanding of what truly drives results and to position yourself to thrive in any market, you’ll want to work on three key areas:
1. Gain insights into lead and revenue attribution. Having a 100 percent accurate understanding of the value of every advertising channel isn’t realistic, but having only a 10 percent understanding simply isn’t acceptable. Commit to measuring results, analyzing those results, and testing new theories. Gaining this confidence of knowing what’s working and what isn’t is essential to making tough choices about your budget during leaner years. Invest, within reason, any amount necessary to help you get an 80 percent understanding.
2. Make sure you are collecting the right data and keeping it well organized. Artificial intelligence promises to make complex or difficult decisions much easier, and it already is doing so for many companies. This edge will become even more important in a downturn. The ability for A.I. to help you is solely based on your ability to collect the right data points on your prospects and customers and to keep them well organized. At Do You Convert, our partners that have these systems in place are already spending up to 40 percent less on digital ads than those that do not.
3. Stay focused on your customer’s needs instead of what your company needs. This one is less science and more art, but it’s equally important. Marketing is often pulled in many different directions, but keeping your focus on the customer brings amazing clarity to what needs to be prioritized and invested in so you can stay on the leading edge of any market condition. Don’t let internal good intentions allow you to stray from what’s in your customers’ best interests—ever. Your brand, reputation, and trustworthiness will pay untold dividends when times are tough.
Taking these steps to guard against pitfalls caused by a great market and to prepare for the future will allow you to identify challenges and opportunities faster than your competition. Changing direction and implementing solutions will happen faster, too. In short, you’ll become a market-proof builder.