Posts Tagged ‘sales’

A story of limited resources

Monday, February 15th, 2010

Flickr by ChrisEFrost

The other day on the way home from work, I passed a Chick-Fil-A with a stretch limo outside. Now, I really have no idea why the limo was there, but I conjured up my own story, nonetheless. High school prom night. Fella blew the whole wad on a nice tux and cool ride. Something had to give. It was the $150 dinner at Byrd and Baldwin Restaurant.

I figured this guy in so many ways represented today’s marketeers. He had a goal (prom night – I’ll let you figure that one out), had limited resources (money – I think we all can relate to that one) and had to figure out the smartest way to get to the goal with not quite enough jack to cover all the bases. Now I’m guessing he thoroughly understood his target market (his date) and her likes and dislikes (“…she already likes chicken sandwiches, so she’d be a lot more impressed with the limo than a nice filet…”), which we’ll call “psychographics”. Classic marketing stuff on every level! Sorry I don’t know the end of the story (in fact, I don’t even know if my made-up story explaining the limo was even close), so I can’t give you a rousing anecdote about how this all turned out.

But I think everywhere you look, there are subtle messages that speak directly to what we face every day. And when you think about it, our customers face the same dilemma we do – the nexus between limited resources (them: money and mortgage ability; us: marketing and promotional budgets) and big hairy audacious goals (them: that dream home; us: selling them that dream home that we built). Seems everyone in the circle is solving problems with less than perfect information and resources.

Keeping that in mind might just make us a bit more empathetic to our prospect buyers. So…what prom night dilemma are you facing this week?

It’s the Experience, Stupid!

Tuesday, February 9th, 2010

DC3's San Francisco Photostream on Flickr

The epic phrase spoken to Bill Clinton, “It’s the Economy, Stupid!” fueled his rise to presidency. I don’t have any similar aspirations for my title phrase, but I do think it’s one we can all rally around.

We go to Starbucks and pay the equivalent of $30/gallon (if it were gas), for a medium coffee. Why? It’s the experience we crave. The smile and warm greeting when we walk in, and if we’re regulars the simple act of remembering what we ordered last time.

We’ll spend extra time searching for the right restaurant to take our wives or sweeties to this weekend. I’m guessing the food would have been great at any number of places. But if we can find the right experience (the presentation of the food, the lighting, the music, the properly attentive and knowledgeable wait staff), the evening will be memorable!

We pay the big bucks – maybe just once in our lives – to stay at the Ritz Carlton because their stories of the customer experience are legendary.

There’s a common thread to each one of these anecdotes. They all involve people paying more for a truly authentic experience. When the experience meets our ever-increasing standards, do you really ever hear about the cost being the only selective parameter? Almost never. Make no mistake – the product has to deliver. But that’s simply the price of entry. No one expects any less than that the product will meet, and hopefully exceed, their expectations. The trump card in the pile is their experience – which is what you deliver. They don’t know quite what to expect, having been disappointed so many times in the past. And therefore your opportunity to surprise and delight them is more available than perhaps ever before.

It doesn’t matter that we’re in this wonderful retail business called real estate. It’s just Starbucks at a different price level, frankly. Do you want to put an end to the ongoing assault on your homes’ prices and your commission? Just deliver an experience that has them talking about that, and you’ll find them bragging about the great service they got for the commission they paid, and about the incredible house they just purchased and what great value they received. Make that the topic of their next cocktail party. It’s a better conversation starter than, “Hey, can you believe the great price per square foot I just paid for my new home!”. It’s time to turn the discussion around.

It’s All About You!

Thursday, February 4th, 2010

Flickr by NCLee1955

Wow – can it really be all about “me”, when everything I read tells me it’s all about our customers? The reality is, it’s a little of both! As I often said to my mother when I was little and in trouble, “let me splain.”

For years now, information has been ubiquitous. The Internet democratized just about everything for everyone. Want to find out what homes are on the market? Just go to REALTOR.com; Zillow.com; Trulia.com; BDX.com – the list goes on. All free, all a click away. The push was to get information into the hands of our customers. And through that progression of information distribution through the Internet many predicted the demise of the REALTOR, or at least a significant chipping away at the conventional commission structure that followed the transaction. And certainly there’s been some of that.

But what strikes me is…the agent is now more important than ever. Sure, the customers don’t need you in the same way as they did in past years when you kept a firm grip on the 300 page book of MLS listings until they agreed to work with you. They know what’s on the market. They can practically do their own CMAs with the tools that are out there. But their need for you, in reality, is greater than ever before.

The pace of change is astounding. New FHA regs seem to hit the street about once a week. New building codes are affecting how we design and build homes. Contract language becomes ever more complex in this era of chinese drywall and other hot construction litigation topics. And the very devices – from Blackberries to iPads – that are designed to make us more productive eat up more and more of our day. So while our customers may think they can go it on their own, the reality is quite different.

They need you – because time is such a valuable commodity. They need you – because their fear of making a mistake is greater than ever. They need you – to help them navigate the complex world that real estate continues to be.

It’s true in new homes and I’m sure equally true within the resale community – people are a lot more responsible for generating a be-back/return visitor than the builder’s model homes will ever be.

You are the real value in the transaction. Start small, build your tribe of raving fans, let them spread the word about the extraordinary level of service and expertise you provided (and – subsequently – notice how the debate on your commission never comes up) and take some consolation that, every now and then, it really is about you!

Copycat Marketing

Tuesday, November 17th, 2009

Coming home from an out-of-town trip this weekend, I passed a billboard (aka “outdoor advertising”) on the Interstate. It was a 3d board with a guy wearing a yellow cape reaching up to the graphic of the Super Yellow Pages. I immediately had two thoughts: 1.) Wow…are the Yellow Pages still relevant in the Google era? and, 2.) Are you really going to advance market share and brand awareness by ripping off the Chick-Fil-A cows?

And therein lies the problem with a lot of marketing. Something is successful and we rush in to copy it. I get the whole “imitation is the sincerest form of flattery” and all, but does it really work effectively in marketing? My experience is that the first person in owns the brand/concept (in this case for me, the 3D cows touting “Eat More Chikin”) and everyone else is viewed as the also ran.

It’s a problem I face every day in marketing new homes. Even I have had to go through the Saturday Home section a second time looking for my ad. That’s not a knock on my “agency” – certainly one of the most talented people I’ve ever worked with – it’s just that real estate has a formula we all follow for where the headline, copy and photos go. And pretty quickly, it becomes something easy to ignore or pass right by.

As I sit here pondering my 2010 budget, I was thinking my challenge was two-fold: How much to spend? Where to spend it? I’m quickly realizing the challenge is much bigger and will require a lot of creativity: Just how do I stand out from the crowd in a meaningful way to my target audience in this era of look-alike marketing compounded by the explosion of media outlets? Thank God I work with people emminently smarter and more creative than I am! I see some late-night candle burning in my future…

Working the Plan

Tuesday, October 27th, 2009

As 2010 approaches, I’m sure we’ll all be reminded of the old saw, “Plan Your Work and Work Your Plan.” As trite as it may sound, there’s something to it. Ever wonder what separates a lot of the top performers from the “also-rans”? It’s often the existence of a focused, written plan that serves as the daily roadmap for where they’re going (and how they avoid getting lost along the way!).

If you’re in the new homes business (not that this exercise isn’t beneficial for all), you have to start your 2010 planning with a look back at some key metrics.

How much traffic (and that includes incoming phone calls and emails) did you generate in 2009? What was your conversion ratio of that traffic? How many of your sales were co-brokered? What was the difference in conversion between site traffic and agent-accompanied traffic? How much was spent on traffic-generating promotion from all sources? How does that break down between cost/traffic unit generated and cost/sale? What was your average closed sales price? What was your cancellation rate (as we all know – only net sales pay the bills)?

Once you’ve quantified these metrics, forward planning can emerge. What we know from years of experience is that rarely do these metrics change radically from one year to the next (outside of significant swings in the economy that may have an overriding dampening or accelerating affect on your sales).

A good place to start is with a net sales goal. Market research can augment your daily experience as to whether that number is realistic. Then apply your cancellation rate and you know what you really have to sell in order to get to your net. If you know your breakdown of where the sales are coming from and how much each unit of traffic is costing you, you can quickly, and quite accurately, develop a marketing budget for the year. It may not answer where you need to spend it, but it will tell you how much you’ll probably have to spend to get there. In an economy that is forcing us all to do more with less, we are tempted to challenge the metrics, to think we can nudge them from their historical levels. But the numbers almost never lie. The most tempting metric to think you can change is the conversion ratio. Sure, there are superstar agents out where who can make a difference in conversion ratios. But with the myriad elements that influence the sale (location, product type, price point, buyer trepidation and the builder’s acumen as a marketer), there are often many things working hard to keep these metrics in check. I’m not saying it can’t be done – we all have stories where we beat the system. But it’s a bad assumption to make when starting your annual planning. Its parallel in our industry is the builder who falls in love with a piece of land, overpays for it and then thinks he/she can force the numbers to work by simply raising the sales prices. Time and again we learn the same lesson when we fail to hit our annual sales goals – that the real challenges is simply not being able to drive enough traffic to the site. It’s a push and pull game, but builders and their agents have to meet in the middle somewhere, with each party having a clear understanding of their role in this whole process.

I was introduced to the X-Factor concept (the fancy name for everything I’ve been talking about) early in my building career by Frank Spadea of Franciscus Homes. 30 years later, it’s still one of the most valuable, tried-and-true tools I have in my planning basket. 2010 is almost upon us. The planning for it needs to be started now, if you haven’t done so already. If you’d like to chat more about X-Factor planning or get a copy of a blank form to start working on your 2010 plan, just email me at tgear@terrypeterson.com.

The Power of Brand

Tuesday, October 20th, 2009

To be certain, these are confusing times. Business is being done in new and exciting ways. Companies striving to market their products are finding that New Media has tipped the scales and traditional media is being challenged to compete. Customers are being courted in a one-on-one environment, not as a homogenous group of non-discriminatory purchasers. And the centerpiece of any great marketing plan – “the brand” – is having its viability challenged and debated at every level.

From my standpoint, I think “brand” is more important than ever. Its value in terms of top-of-mind recall and positive association helps move a consumer from confusion to clarity to decision. So I wonder…if it’s so important, why do so many companies struggle with it? In a world where most things appear on the path to lowest price and commoditization, isn’t your brand one of the most powerful tools you own to differentiate yourself from the pack? I think so.

All this was swirling about my head recently after reading some great articles on branding. Yup, I’ve got some work to do on this subject right here at our corporate home. But in the broader view of our industry, I thought about the recently-launched “I AM ONE®” campaign by the Hampton Roads REALTORS® Association’s. If ever there were a great opportunity for member REALTORS® to glom onto a brand that can really help differentiate their business model, this may be it in these economic times.

The housing crisis has placed many potential buyers in stasis. Fear holds them back from making good decisions at a time when the housing market should be surging thanks to low interest rates, incredible incentives and bottom pricing. Over the last few years, the people they thought they could trust failed them. Suspicion and cynacism is sky-high. Can branding help overcome this? I think it has potential. And what does the “I AM ONE®” brand say to consumers? That REALTORS® subscribe to a Code of Ethics to which non-REALTORS® don’t. That if you are looking for someone you can trust to help counsel you towards the right decision, it’s a REALTOR®. That your confidence in re-entering the market guided by such a professional is well-placed. I think if consumers can simply find people they can count on once again to help them with this expensive, emotional and important decision, they’ll start sticking their toe back into the water.

If I were a REALTOR®, I wear the pin and include the I AM ONE logo in every promotional piece I put out. While it may not be your specific or sole brand, it’s a darned good one to associate with. And I’d solemnly work to uphold my commitment to those ethics, to prove that trust was well placed. It’s a good and necessary first step toward our much-needed housing recovery.

The Magic of Team

Tuesday, October 13th, 2009

As long as I’ve been in sales management, the most elusive challenge I continue to face is building a successful team. Let’s face it, it’s a difficult dynamic in the best of times and one that is really difficult when times are tough and incomes are down. I’ve tried them all. Site Manager with Site Associate (affectionately known as the “backup” agent), co-Site Managers, and sole Site Managers with paid hosts/hostesses. Then there’s the group sales approach with the famous “walk wheel”. Oh, let’s battle over the next up! They all have their merits and downfalls. Sales management is tough most of the time as you are always serving two masters: proper site coverage (which invariably calls for more people) with adequate compensation for the players (which invariably calls for less). No matter which you choose, at some point you are probably wrong. All you need is a big traffic week with low sales and you have a coverage problem. But if you load the site up with commissioned salespeople hoping to address the coverage issue, at some point someone starves and change is thrust upon you anyway. And even if you get it mostly right (usually “mostly” is as close as you can get), you still have to deal – in a team environment – with the dynamic of personalities, selling styles and administrative capabilities. It seems that those who often sell the best are the worst with their paperwork, and vice versa. And you know us builders – we want it all, and we want it all right (and usually right now as well!).

I’m not sure I’m the one to give advice since I’ve had more failures than successes. But perhaps that qualifies me a bit, so I’ll try to share what I’ve learned. First, unless the “team” (and in this case I’m referring to a co-managed site by two equally-compensated professionals) had successfully worked together before they got to your site and had already ironed out all the kinks – this is rarely a great way to structure a site. Usually one of the two is the stronger salesperson and eventually starts feeling like they are carrying the load yet splitting the income. I’m becoming more and more convinced that there needs to be an alpha dog (excuse me, ladies, but I think you get my point – someone in charge). This fact would seem to then speak clearly to structuring the site with a Site Manager and a licensed backup. We seem to feel more comfortable if the person covering the site two days a week (and one always-critical weekend per month) is licensed in case that potential buyer stumbles in on a Thursday or Friday. But we builders are a paranoid group to begin with. Did we spend money to generate traffic to the site only to have the backup agent set an appointment with them to show them property off-site that weekend? Is that backup’s goal to eventually move into full time new home sales as a Site Manager themselves? If so, invariably they get frustrated serving the Site Manager and start clamoring for their own site.

Maybe all of these challenges are why we sales managers still have jobs. Someone’s got to deal with this. But a lot of quiet-time thinking on this subject continues to lead me to many of the same thoughts I’ve shared with my peers over the years. First, I think we have to deal more effectively at some point with how we compensate the people who represent us in new home sales. It’s past time that these folks earned a fair living in the form of a base salary with some benefits. Enough to pay the bills and be able to focus on the task at hand and not worry if the next commission will be coming in soon so the kids can get new clothes. Then put a spiff for each closing on top of that. If you’re a really strong agent with great sales and closing skills, you ought to be able to outperform your peers. Yes, we have to temper some of the really high incomes that can come with a boom economy and seek balance by providing a decent living even in the difficult times. My guess is, though, that the real chargers will never want to see a top-end limit, which is why this conversation is generally a non-starter for most agents, even though they are tempted during the lean years. Secondly, I think we need to bring a whole new level of creative thinking to the topic of coverage. There are great administrative people out there who could be paid to manage the site and learn the business while doing so. Among them I think we’d continue to find great people who would then be willing and interested to step into sales. And through this experience, the Site Manager would have the opportunity to gauge how this person could fit into the team and benefit it. A erstwhile paid training ground where we could find the gems out there, without the revolving door of semi-committed people who may or may not work out long-term. And every bad staffing decision we make only keeps a talented Site Manager off-balance and less than focused on the tasks at hand while they are forced to deal with the daily drama.

As I said when I opened, it’s a challenging task – welcome to sales management! I’d love to hear from others who have labored with these same challenges and have perhaps reached some epiphanies they’d be willing to share. For me, that would be magic.

What’s it cost?

Thursday, September 10th, 2009

After thirty years in this business, everywhere I look I see irony abounding. I was meeting with a media rep the other day. She calls on a lot of builders and she was expressing her frustration that she rarely even gets started with her “needs exploration” before she is asked, “What does it cost”? She hasn’t even dived into her pitch yet; hasn’t even gotten a feel for whether her medium is a good fit for the customer. But in my experience, this is where most builders start the discussion: the cost of any proposed media. I’m amazed that with that single-minded approach to investing in one’s business, you’d think the allure of “free” social media would be a bigger drawing card for more builders. But that’s a topic for another day.

So where’s the irony? Simple. We deal with prospective buyers every day who walk through our models and whose first question is, “What does it cost?” And we get angered that they don’t understand the difference between cost and value. Sure, cost is one component. But value is built through differentiation and if the builder/developer has done his/her job well through creative land planning and well-targeted architecture, the value should be obvious. But to the untrained consumer it rarely is, so we engage sales professionals to help tell our story and create the value that the prospective buyers sometimes don’t see on their own. We’re proud of what we do. We quite often do it well. But we get miffed at our prospects when they ask, “What does it cost” (which is a tip off quite frequently to the cost/sq. ft. mentality). And yet we turn around and ask the same question to our media reps.

Let’s shoot for some parity on both sides of the aisle. Hopefully we can get prospective buyers to understand the value we’ve created in our community that may actually make it worth a few sheckles more than the guy across the street. And maybe when the media reps come calling to try to help us solve our problem of low traffic and lagging sales, we can ask some better questions than just, “What does it cost”, and move into a more salient conversation about things like target markets, distribution/reach, CPM (in whatever form it takes) and ultimately how to measure results post-placement to tell if a reinvestment makes sense. Test, evaluate, test. In this complex and fast-changing world of how we promote our homes these days, it’s simply not good enough to only come with the cost question.

Sometimes marketing isn’t an art or science…

Sunday, September 6th, 2009

…it’s something much simpler. Let me explain. This weekend offered a primer in great marketing in the guise of the Rock and Roll Half Marathon. Nearly 20,000 people, most not premier athletes (and I proudly count myself among them) are convinced to go out and pound through the pain to complete a race whose length probably inspired Henry Ford to envision the horseless carriage. Great marketing is all over this event – from Virginia Beach’s pitch as the best place to wrap up the waning days of summer, to the gear hawkers at the event’s Health and Fitness Expo promising faster shoes and sweat-shedding gear. And it worked. We forked out big bucks to be in pain for a couple of hours to taste the glory of crossing the finish line and having stories to tell over the beers that followed the event. As a guy who has spent thirty years honing his marketing craft, I was impressed.

But there’s always the anomaly that sticks out like the a sore thumb, and it occurred for me at the Health and Fitness Expo that preceded today’s race. As I strolled among the thousands of people picking through discounted gear and trying samples of everything from lite beer to frozen fruit and the new miracle energy drinks – there it was. The guy sitting in the booth selling vinyl replacement windows. In the middle of runner’s world. By comparison, the Maytag repairman was a busy guy. I can see the marketing talking heads in their planning skull session. “Sure, people who run need replacement windows and what a great captive environment to talk to 20,000 of them! We’ll probably even do better than that booth we had a the Home & Flower Show!” Bad fit. Bad marketing. Waste of money. I hope the salesman at least got a deal on some new running shoes. He deserved better and should have gotten it from his company’s marketing department.

What Wins the Battle?

Thursday, July 23rd, 2009

Through all of my years in this industry and having listened to a lot of the top sales trainers from across the country, there’s a resonate theme about what brings prospective buyers back to your community after their initial visit. It’s either the product you have or it’s the processes you use. And the pundants will tell you, quite correctly, that processes bring back more people than great product ever will. Probably not something we builders want to admit (after all – we designed and built these homes, they must be spectacular!)

So…since most prospective buyers won’t know much about the builder’s processes until they close and experience everything from weekly communication to selections, closing and warranty, processes in this context must mean something else. And it does. The processes referred to here are our front line salespeople. At the end of the day, they make a tremendous difference. Always have, and speculation about people buying their home over the Internet notwithstanding, they always will.

So time for some good soul-searching. Are you providing a customer experience that is memorable…designed to keep your community in the buyer’s “keep pile”? In these times of much buyer fear about dipping their toes into the new purchase waters, are you successfully executing your role as a couselor/consultant to calm their fears, add value to their buying process and being the kind of person they want to deal with in this uncertain environment. Take hold of that concept – youwill bring more people back to your builder’s site than the builder’s fabulous model homes ever will. Own that concept and work to improve upon it every day, and you’ll find yourself start to inch your sales past all of your competitors who assumed it was the builder’s model homes, pools and clubhouses that were creating those “be-backs”.


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