Forest Avenue Project, Roselle, IL

Selling Quality Over Price

It is all about price? Only if you let it be!

I recently made a sales call on a former customer. The company several years ago found a cheaper alternative to our product; cheaper not better. Before I even began my pitch she said, "It is all about price today. No one cares about quality. They only want the cheapest price." 

Today small locally owned companies, many who have done business for many years, are being attacked on two fronts. Big box stores advertise "low priced leaders." and "more saving, more doing." They use their buying power to negotiate lower prices but the vendor changes the product to meet the price sacrificing quality. 

Locally owned companies are also facing competition from new companies springing up many owned by employee laid off in the current economic recession. These companies have no business expertise, no commitment to the future, do not have the right equipment, no insurance, no resources to honor warrantees and often do not even have the basic skills to product the product. All they understand is low price. 

For example; I had a customer who sold a brand name faucet. She discovered through a customer that a Big Box store down the street was selling the same brand name faucet. She went and looked. the faucet had the same picture and even the same box but the part number was different. My customer bought one of the faucets. She compared the Big Box faucet to the one she sold. The Big Box faucet was four pounds less than the one she was selling. 

This retailer could have given up on selling the product because it was a tack on - do you want fries with that - and not her primary product. Instead she bought two postal scales. She set up the two scales in her showroom and placed her product on one and the Big Box product on the other. This display demonstrated that the add on product was worth more than a look alike even under the same brand. She also showed her customers that she sold quality not price. She was able to use this display to demonstrate that others were selling low priced versions of her primary product.

Look at your own product. Make a list of what you do better than the low priced knock off. Be ready to educate the customer. As you educate the customer you will likely discover that they are indeed willing to pay for quality if they understand it. When you sell quality you will also learn what they are willing to spend money and you will be able to modify your product if necessary or you pitch if your product already includes the benefit. 

Being the low price leader is easy. You just lower the price. If you lower the price you will need to lower the quality and cut corners or go broke. When you lower the quality you put your reputation and your company at risk. You cannot afford to be the lowest price so sell quality. If a customer is truly only interested in price than maybe they should not be your customer.

Sales: Ten Keys to Sales Success

               Sales is an art not a science. You can do everything right and not close the sale and sometimes the sale will just happen seeming magically and effortlessly. The following is a list of keys to sales success. These keys will not always open the door but will give you the best chance of making the sale. 

               Ten Keys to Sales Success

1.      Sell a good product with good service.  If you do not believe in your product you will not be enthusiastic. Constantly apologizing for your companies customer service or having to handle it yourself will limit your success.

2.      Be enthusiastic. If you are not excited about your product you will never succeed. See rule 1.              

3.      Be persistent. If you first contact does not succeed it may have been bad timing. Keep trying until you are sure you talked to the right person at a time when they were open to your product at a time when they could use your product.

4.      Know when to back off and regroup. Regrouping is not the same as giving up. Will a new strategy work.

5.      Learn to indentify leads who will never convert to sales. This is not giving up it is learning not to waste time on low value leads.

6.      Know your product and the value it brings to your customer

a.      Unique selling proposition

b.      Features and benefits

c.      Technical data

7.      Know the competition

8.      Know your customer (individually and collectively) and understand their needs.

a.      Not all customers are the same.

b.      What motivates them.

c.      What value does you product add to their product

d.      If you are selling wholesale know your customers customer

9.      Know how your customer uses your product

a.      Is your product your customer's key product, a secondary product, a component or a expendable tool or product

b.      Does your customer need your product? Does it make their process easier? How does it add to their bottom line.

10.   Be likeable, friendly and trustworthy. 

               Luck is when opportunity meets preparation. These keys are the preparation you need when you meet opportunity.

Working with Real Estate Agents

Tribbles hate Klingons and Klingons hate Tribbles. This little knows fact from Star Trek might very well been written builders hate real estate agents and real estate agents hate builders.  Ok so it is not that bad but real estate agents and builders have very different perspectives.

For Real Estate agents the product is the customer. For the Builder the product is the house.  This can be a critical difference particularly in overcoming buyer objections. If a buyer object to a window placement the builder will often have a detailed explanation ready why the window was place where it was or ways to relocate the window, a builder will overcome the objection. Too often a real estate agent takes the customer to his or her car and is off to look at anther home built by someone else. Rather than risk the customer they want to meet every need the customer expresses whether valid or not.

 Real estate agents like to get paid quickly and if they have to wait until a home is built than the commission is delayed.  Some agents will steer customers to existing homes just to avoid the delay.

When you work with a real estate agent you are working not only with the agent but with their office and also with all the subscribers to their multiple listing systems. If a customer is interested in seeing a house and they call the listing office they will likely get whoever is on desk duty that day. The desk agents are often the least experienced agents.  Experienced or not the desk agent may know little or nothing about your project.  If the customer is with an agent who found your project in the multiple listing service they may know nothing about the product and have absolutely no loyalty to you.  

We were having difficulty with a spec home that had been on the market longer than the rest of the neighborhood. I was so concerned that I had a friend of mine and his wife shop the real estate agent for me.  The couple called the agent and was referred to the desk agent.  When they told the person answering the phone they would rather talk to the listing agent they were told that the agent would be busy all day but Joey knew the project well and had shown the house several times this week.

When they met the agent at the house he showed them through the house getting in the way rather than adding to the presentation. Near the end of the tour my friend looked out the window at the back yard. He was looking at the yard when the agent said, "and behind that tree line is the highway.  In the winter you can see it and if you think that is bad wait until they widen the road. " Joey was not someone we wanted showing our homes.

Most real estate agents have little or no more expertise regarding home construction than the general public. What they do know often comes from word of mouth from other agents who have the same limited information or even faulty information.  This does not, however, keep many from offering an inexpert opinion on things they do not understand.

So how do you deal with these varied perspectives?  If you can set up a program to pay the real estate agent at contract instead of closing you may gain a few sales.  Even with a real estate agent doing the bulk of the lifting you need you own sales people to do the presentations of the homes and be ready to overcome objections. WE found the process went best when we registered the customer to the agent then got the agent out of the house. Many will object because the customer is the product but try. Paying the agent is painful enough but having to pay an agent who almost screws up a deal is worse.

Do training programs for agents in the area. You will not get everyone but you will get some and you may build some loyalty. It has been my experience that if you have a luncheon you get the agents looking for a free lunch not those interested in selling your homes.  I found you got more return for your effort if you did a training presentation.

The current market has driven out many of the weak agents but it has also driven out many of the good ones. If you are going to turn over such a critical business function as sales remember you still need to control the process. The more you can do in house the better it is likely to work.

Of course, like many things in the housing industry, use of real estate agents vary by region, some areas use agents nearly exclusively and some not at all. If you are in area where it is a necessity it is even more critical you control the process.

Original content copyright 2011 Thomas Robinson

How to Prevent an Ice Dam

An ice dam is a condition which develops along a cold eve where snow on a roof melts over the warmer living area then runs down and refreezes at the gutter or eve. Water then backs up under shingles and leaks into the living area. Most new home warrantees exclude this condition but try explaining to a new home buyer who just spent hundreds of thousands of dollars on a new home that the water leaking into their living room is not covered.

There are a number of steps that can be taken to reduce the number of incidents if not prevent them all together.  Cold well ventilated attics are less prone to ice dams because the roof is not as warm a vaulted ceiling area or an area that is not properly vented. Try to avoid vaulting roofs all the way to the underside of the rafters and provide good ventilations.

We installed a membrane such as Grace's Ice and Water shield above the eves. The membranes prevented backed up water from entering the living space. This simple detail virtually eliminated the problem. It worked so well that we added the membrane to other problem areas such as roof valleys and where dormers me roofs. We also used it on roofs with shallow roof pitches.

If the membrane is not installed during construction there are a couple things you can do. First us a roof rake to remove the snow before it builds up. This can be problematic in heavy snow of overnight snow fall.  The only prevention is installing a heating cable in the gutters, downspouts and in diagonal patterns above the eve. These cables will form paths for water to run off.  This method works reasonably well as long as you remember to turn on the cables.  Your new homeowner will likely not appreciate the cable on the roof.

Original Content copyright 2011 Thomas Robinson

New Home Sales Back to Basics

With new home sales somewhere between mission impossible and nonexistent it is more important than ever to get all the basics right. With every article in the media telling the home buyer that they can buy homes at pennies on the dollar it can be easy to fall into the mindset that sales is all and only about price.  It can be if you let it be. In this article we will discuss selling the area first.

New home sales start not with the home but outside the home. The saying goes the three most important ingredients in home value are location, location and location. That has not changed. Find out if the new home buyer is from the area. In our sales office we always had a large scale map that showed the area around our projects. The scale was large enough to include nearby shopping malls and other important facilities.

Next in progression we had a map of the more immediate area including the most important ingredient of location; schools, schools, schools. Make sure you get all the information on the local schools that are served by your location. The school districts will likely be eager to help you with information from test scores to number of National Honor Society members. School districts have to sell the public on their value so they will have the information for you. 

The immediate area map should also include recreation opportunities. We always believed the recreational opportunities for the children were the leading attractions; little league, soccer, dance studios, parks, even movie theaters. Do not forget the adults; golf courses, bowling alleys, etc. We once sold several homes in a subdivision because of a nearby snowmobile trail including to several customer who had never been on a snowmobile but liked the idea.

The municipality, park district (if different) and Chamber of Commerce will also have information that can help you sell the area.  Hospitals and medical facilities are important. Access to assisted living facilities for elderly parents of your customers may be appropriate. Even if you do not display it on your map have it on hand should the topic come up in conversation.

Once you have sold the area move into the benefits of the neighborhood in which the home is built; all cul-de-sacs, near transportation, wide streets, wood lots, etc. Pay particular attention transportations to major employment centers such as train, highways even busses if price range appropriate. Without selling the neighborhood you may find that you go through the entire process to lose the sale to the deal killer that you could have discovered within minutes.

If you do hit a roadblock can you sell a built to order on their lot in a location that may be better for them? Are you set up to build on an individual lot instead of only in one of your projects? If not what does it take to set up to do individual lots.  Building only in locations where there is corporate infrastructure can be more comfortable and even less expensive but in this market you need to be flexible and be ready to take advantage of opportunities as they come. It may take some emotional strength to avoid trying too hard to sell a location that will never work for the customer so you can move another lot but losing the sale does not help your bottom line either.

Once you have sold the area, municipality and neighborhood you are ready to begin selling the home. In future articles we will deal with selling the home.

Original material copyright 2011 Thomas Robinson

Three Types on Two Story Homes

It is an over simplification to say that there are only three types of two story homes but the vast majority of the mid priced homes follow simple logical patterns  that divide homes into three basic types. By asking questions of your customers it is likely that you can guide them to one of these three types making design easier for you and still letting them believe the home has been custom designed just for them.

A typical home has either five or six rooms on the first floor; kitchen, breakfast, family room, living room, dining room and sometimes a den.  The kitchen and breakfast area are next to each other for obvious reasons and in nearly every case adjacent to the family room. Because kitchen is more enclosed due to cabinets and cooking areas the breakfast area is almost always between the kitchen and family room. While I have done the opposite – kitchen separating the family room and breakfast – it has not worked as successfully. Even the home owner for whom I built it regretted the decision after the fact.

The kitchen-breakfast-family room area makes up the primary family living area. The family will spend most of its' waking time in these three rooms and even when entertaining this is the area most often used.  For privacy these three rooms are nearly always at the back of the house away from the street.  

The dining room will logically be next to the kitchen.

The resulting layout has the family room, breakfast and kitchen along the back of the house with the dining room in front of the house next to the kitchen and the living room the other side of the front door in the front of the house. This is a very functional and therefore popular plan. Nearly every builder has a version of this plan in their portfolio and it is usually their most popular five room plan. 

This layout also places the family room adjacent to the living room. If the client likes having additional entertaining area you can open the living room to the dining room. If the family likes separate spaces so one member of the family can escape to read in the living room while the rest of the family watches action movies the family may want to close off the opening and create separate use areas.

If the family wants a "den" you need to determine why they need it. If it is to be an office work area with possible client visits the buyer will likely want the office den at the front of the house. If this is the case you put the family room behind the garage with the breakfast and kitchen along the back.  To create more room at the front of the house the den is placed next to the kitchen but at the back of the house.  The den office and the dining room are then placed either side of the front entry. If the dining room is placed next to the living room so that a single large room the dining room table can be expanded into the living room to accommodate large gatherings.

If the den is really a guest bedroom then the room can be created by sliding the garage forward and placing the family room behind the garage.

There are any numbers of variations most significantly the location of the powder room and first floor laundry, if desired, but  the vast majority of two story homes will fit into one of these three templates.  When we designed a custom or semi-custom home before we started the plans would ask the family a couple of questions:

·         Do you need a den? If no we started with the first plan.

·         If you want a den what is the purpose; extra bedroom or office

o   If bedroom we would start with the plan with the den behind garage

o   If an office we would start with the plan with the den in front.

·         If the family is usually together we would open up the family room to living room. If the family wanted two separate areas we would either close off the family room or put it on the opposite side of the house.

Select the first floor plan that meets their need and you have a semi-custom template from which to work.