Why Homebuilders Need to Change Their Sales Strategy

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As a homebuilder, you’re trying to sell to a customer who has a lot of choices, is confused, is scared of making a mistake, doesn’t have time and doesn’t trust you. Selling today is different because our customers are different. Rick Heaston helps home builders wrap their heads around a different way to sell.

December 01, 2007

Ever wonder what shopping's really like for your customers? I happened to be channel surfing one night and heard an old familiar song:

Everybody's talkin' at me

I don't hear a word they're sayin'

Only the echoes of my mind ...

It's the theme song for "Midnight Cowboy" and quite possibly the theme song for today's customers. And if what I say is true, it isn't good for them — or us — either.

High-Ticket vs. Low-Ticket Decisions

Buying a high-ticket product is completely different than buying a low-ticket product. And the reason it's different is decision consequences.

If a product doesn't cost much money, your customers' decision consequences are inconsequential. On the other hand, when a large amount of money is involved, the consequences of a bad decision could be staggering.

Let me show you what I mean by asking a question: How do customers react when they're closed early and often? For instance, what do they say if it's a product they kind of like and it doesn't cost much money? Don't they say, "Ok, you win. I'll take it"?

On the flip side, what do your customers say if it's a product they kind of like but costs a lot of money? Don't they say, "We need to think about it"?

See what I mean? They have one response for a product that doesn't cost much money and another if it does.

With that in mind, let's look at some of the things that affect a customer's decision to purchase a product that costs a lot of money:

HIGHER CONSEQUENCES: In a small sale, your customer's decision is not affected by the risk of making a mistake. But with a high-ticket product, it's your customer's biggest concern.

MORE DECISION PARTS: Where a low-ticket decision doesn't require much consideration, a high-ticket decision has a lot of components your customer must consider and then reconsider.

MORE INCENTIVES: Low-ticket decisions generally happen in one visit but might take a few days, a few weeks, or even a few months when customers are spending a lot of money and trying to determine if they are getting the best deal.

MORE ADVICE: Small-sale decisions are normally made independently, compared to a customer's purchasing a product that costs a lot of money. Customers will rely on everyone — parents, friends, lawyers — to help with their decision.

MORE CHOICES: Lots of choices aren't decision stoppers when a product doesn't cost much money but paralyze a customer's decision process when communities, homes, sales associates and incentives all look the same to them.

LESS TRUST: Trust isn't a factor in low-ticket purchase decisions, but not having trust has serious consequences for a customer about to spend a lot of money.

All of this means the problems you face as a seller are different than ever before. And worse than that, the selling techniques that work for products that don't cost much money have the reverse effect for products that do.

High-Ticket vs. Low-Ticket Selling

You're trying to sell to a customer that has a lot of choices, is confused, is scared of making a mistake, has less time and doesn't trust you. All of that boils down to one thing: selling today is different because our customers are different. And that's because the problems our customers experience are different than ever before.

Let's take a look at the problems you face as a seller.

PROBLEM: Because there's so much money involved, customers are scared they'll make a bad decision. And customers scared they're going to make a mistake keep on shopping or don't decide at all.

SUCCESS STRATEGY: Customers who are prepared to spend a lot of money don't want to make a good decision or a great decision; they want to make the most perfect decision possible. This requires that you have a sales strategy that helps your customer define what perfect means to them.

Presentation and closing techniques don't do anything to help customers understand if they are making a perfect decision.

PROBLEM: Customers are sensitive to the risk involved with purchasing a product that costs a lot of money. The risk of a big decision and the fear of a bad one go hand and hand. This combination causes customers to shop and shop and shop some more. And as before, it even causes customers to delay their decision — if they make one at all.

SUCCESS STRATEGY: Risk goes hand in hand with decisions that don't make sense. Selling to your customers' needs or solving their problems, which is popular in our industry, isn't the answer.

Your sales strategy needs to help your customers think about the things they haven't thought about. Those are the things that reduce risk and bring your sales process to a conclusion.

In a large sale, assuring customers they are making the right decision isn't the answer. Again, it's because of the amount of money they're going to spend. Customers need proof they are doing the right thing. When there's a lot of money involved, your assurance isn't enough.

PROBLEM: Customers claim everything looks the same. They say that it's hard to differentiate between your homes, communities, sales associates and incentives.

SUCCESS STRATEGY: Early in the shopping process, customers narrow their choices to the products that stand out the most. In other words, customers narrow their many choices to the two or three alternatives that stand out most.

What's interesting is that it isn't always the product that gets your customers' attention. Most of the time, especially early in the shopping process, it's their experience with the sales person that creates the difference.

This means that your sales strategy needs to focus on your selling process even more so than your product.

And that means that your selling process had better focus on your customer's shopping agenda.

PROBLEM: Customers don't like sales associates. Matter of fact, they'll do about anything they can do to avoid contact. As recently as 10 years ago this was not the case. Back then, they needed sales associates for information. Today the opposite is true.

Today's customers hate to be sold; if they feel they are being sold to or closed, they'll back away and choose another alternative. Closing early and closing often, which worked when you didn't have to sell, now has the reverse effect.

SUCCESS STRATEGY: Today's customers have to know that their agenda is more important than your agenda. Selling isn't the way to make that happen.

Today's strategy requires a technique that allows a customer to decide for themselves.

Does Your Strategy Match Theirs?

The home building industry is making progress — that's the good news. The bad news is that we still haven't reached the point where we've matched our selling process to our customers' decision process. And that's hurting our results. But more than that, it's increasing the incentives we need provide to make a sale.

So if you keep doing what you've always done, you'll continue to get the same results.

And that means you're not much more than a Midnight Cowboy.


Author Information
Rick Heaston is president of R.A. Heaston and Co., a sales-training and marketing firm. You can reach him at rick@touchpointselling.com.

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