Assessing the Housing Recession
by Jerry Rouleau
We can complain all we want about the economy and justify how our business is fairing. But the reality is, no matter how much you complain, it's not going to get any better until you do something about it.
Why is it that some homebuilders are finding it tough in these changing times while others seem to keep on selling? Now is not the time to cut back your advertising and marketing budget-but it may be wise to reallocate how those monies are spent. Our industry is changing rapidly and we need to adapt. How we connect with customers and sell our homes has changed radically.
How have you changed? Are you still stuck doing things the same way you did five or 10 years ago? What hasn't changed is that the number one lead source is still referrals. What has changed is that the second best lead source is the internet. Every dollar you spend on the internet may be worth 30 times more than money spent anywhere else.
It's now about generating traffic and leads, and then following up. The sad part about this changing market is that four out of five new-homes sales people may not be capable of selling in today's economy. What good is it if customers call or visit but you don't make the sale? The solution may be to reallocate more of your budget to training. Then once you become the one out of five businesses that can adapt, increase your advertising budget.
Although this has nothing to do with housing, let me take you outside of your world and talk about two clothing retailers who are in the same business in Hartford, Conn.This may allow you to take a look at marketing from a different perspective. Let's call the first retailer, Retailer A, and the other, Retailer B. Focus on the concept and avoid the temptation to say, "Well, my business is different."
Retailer A is in a much higher income demographic market and in a better location. Retailer A decided that, because of the business climate, they would promote big savings and discounts by slashing prices. To compensate for the big discounts, they did little promotion or marketing. The result for Retailer A was that sales were down, and they made little or no profit because they gave so much away through discounts.
Retailer B, on the other hand, decided to reallocate advertising dollars to a special promotion that would drive previous customers back to their place of business and target potential customers within a 10-mile radius of the store. This special promotion consisted of sending their target audience $50 gift cards for any purchase over $100. Retailer B did not discount any of their merchandise.
The result? Traffic was up. Customers came in and spent more than the $100 minimum. Once customers used their gift cards, the card was returned to them once more with a "thank you for shopping at our store," and customers were told they could come back and use it again or pass it on to a friend. Results: sales were up, with increased profits and new customers.
Retailer A, however, is now out of business.
So, does success hinge on the market or on marketing? Yes, it's about marketing; it's about providing your customers added value and it is about excelling in customer appreciation. In these challenging times, we need to think out of the box and become proactive.
What can you do with your homebuilding business to make things happen? How can you change the way you do business? How can you show your customers that you truly appreciate their business?
Concentrate on follow-up and stay in touch with your customers. It's not about the market; it's about marketing.
Jerry Rouleau is the founder and co-host of the popular weekly radio program, BuilderRadio.com. He is also the author of four books and a frequent article contributor to numerous building trade publications.
Change Your Business Approach:
- Make it about the customer.
- Make it about the next step.
- Stay in touch with your customers and follow up.
- Have your website evaluated by an outside housing expert.
- Make your website consumer friendly-sell the lifestyle.
- Optimize your website with the right key words.
- Get your website listed on local search engines.
- Use the social networking system to promote your company.
