Dialogues for Results

THE 3 INGREDIENTS FOR SIZZLING SALES...PRICE, PRODUCT & PEOPLE

We all agree that today’s customer is looking for the best deal. What we don’t necessarily agree on is what that means. Some builders equate “looking for the best deal” as “looking for the lowest price”. But if that is true and PRICE alone is the determining factor for sales, then the communities with the lowest prices would be the only ones netting sales. This article could be reduced to one sentence: “Continue lowering prices until sales pick up, and continue the beatings until morale picks up.”

Long term survival depends upon doing whatever it takes to get the largest possible slice of the sales pie today, as well as positioning itself for the recovery of tomorrow. There are still customers showing up to buy, and the builders that are faring better than the rest are showing up to sell with “the best deal”… the right mix of the 3 key ingredients for sizzling sales …PRICE, PRODUCT, & PEOPLE.

The PRICE ingredient is not cost, or cost plus/minus, or $ per square foot comparable to the nearest competitor. PRICE is whatever the market is willing to pay for your PRODUCT as represented by your PEOPLE. Your PEOPLE must guide customers to the belief that owning your PRODUCT will make meaningful differences in their lives that far outweigh the PRICE or the risk. The percentage of customers who purchase and the PRICE they are willing to pay are in direct proportion to the strength and quality of your PEOPLE & PRODUCT.

In Lake County Florida, there stands a community that has defied the odds by posting 30 plus net to be built sales in the first two quarters of this year. Ok, it must be a hot little pocket…great location, location, location. No, this is an area that has been particularly hard hit by the market. This builder is offering its customers “the best deal”… the right mix of PRICE, PRODUCT & PEOPLE.

How did they do it? Last August, armed with market data and buyer profiles, the VP of Sales & Marketing and the VP of Operations sat down together to create a new product line for this community that would be unique in the marketplace and would appeal to both first time buyers and move ups. To differentiate themselves in the ‘sea of sameness’, they featured master suites down and back stairs in their two stories. The new plans included corner tubs, architectural details, well proportioned secondary bedrooms, covered lanais and fresh elevations. By December models were under construction and the strategizing on PRICE & PEOPLE began.

This builder’s PEOPLE strategy is to hire experienced professionals. What does that mean? ‘Experienced professionals’ is an overused phrase that may include prima donnas or jaded hangers on. For this builder, the phrase describes those exceptional team players who see the big picture and who are willing to do more for less now in order to reap the benefits in the future. Like the homebuilding company who employs them, these sales professionals are grateful for the wildly lucrative years, and accept that they are paying the price for those years now. These experienced professionals are never satisfied with the status quo, and are constantly seeking opportunities to improve their performance. They are salespeople whose passion for the industry and pride in their work results in their fearlessness to “chase and capture” every customer.

Although costs and margins are factors, the driver of this builder’s pricing strategy is the market. They opened under the competition with a superior PRODUCT represented by exceptional PEOPLE and are letting the market dictate where they take the PRICE.

Remember when publicly held homebuilders could choose to emphasize volume & velocity over profits, or vice versa, or, my preferred strategy, achieve a balance between the two? We’re not afforded that luxury today. Short term, the right mix of PRICE, PRODUCT & PEOPLE is needed to fuel the engine driving this train with volume, often at the expense of profits. Each Builder must determine the ‘price’ they are willing to pay to survive this cycle and come out the other end. In addition to profits or lack thereof, the ‘price’ includes the costs of investing in their PRODUCT and PEOPLE today.
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