What it takes to be an X Factor builder in the New Year.
By Jason Forrest
We’ve turned a corner.” It’s the phrase I’ve heard over and over again from my clients. As we head into 2013, things in the home building industry are changing. Low prices are rising and builders are getting back in the game. While on the surface, this is all great news, these changes are not without their challenges, including increased competition among builders and fewer eligible buyers. In order to have the edge, builders are going to have to make some strategic leadership choices and also be the best at selling value.
Prices have been low for a while, but they’re creeping back up. One contributing factor to this trend is that there is more demand as consumer confidence increases. As a result of that demand, builders are getting back in the game, going back into communities where they had shut down when sales dropped or buying back the land that they impaired. One client described writing off lots when the prices were high and now re-buying it at a much higher cost. So community count is up and demand is up, but all that hustle and bustle of land development brings challenges of its own.
Increased interest in land drives up prices, but there are other factors pushing the fixed costs up as well. One client noted that since they sold out of the cheaper lots, they’re back into buying land. And since the prices are higher, their cost of business is higher. That drives sales prices up for buyers, which in turn eliminates a buyer segment on the lower end.
All these factors mean builders have to be even more compelling. In 2013, they’ll need to be able to communicate why buyers should pay a higher price than they would a year ago, or that they might with a competitor. All these changes mean raising the competitive bar among builders. So in 2013, I expect we’ll see more builders investing in good training because the best thing anyone can do is be better at selling value. The X Factor builders aren’t going to rely on shifting circumstances to make or keep them successful. They will not succumb to the victim’s mindset that says, “If the market is up, we’ll bump our goals up. If it’s down, we’ll bring them down.” In 2013, the most successful builders will be the ones saying, “The prices are higher, cost of business is higher, and our competition is getting better. That means we’re going to have to be better at showing customers how our box is different than everyone else’s.” This focus on strong training will lead companies to shift toward outsourcing and hiring sales-specific trainers to bolster their sales skills.
In addition, a lot of builders are considering whether they should stick with the traditional model of a vice president who covers sales and marketing or if they should take the approach of having a VP of Marketing as well as a VP of Sales — whose job is to focus on the people, process and presentation. It’s a philosophical debate I’m hearing a lot about right now and my prediction is that for the first time ever, we’ll start to see VP of Sales as well as Chief Sales Officer positions in homebuilding companies. Builders will also recognize the need for a National VP of Sales (separate from a head of national sales) who will also report to the CEO, but will clearly distinguish the marketing and sales roles. Companies that take this leap will be ones that recognize the need for boots-on-the-ground sales professionals and training. Along with this cultural shift, we’ll see more and more builders who will promote sales leadership from within the sales team instead of from marketing.
Another shift expected to see is decreased dependence on incentives. They are crazy right now because there’s market panic and lack of strategy. As Forrest Performance Group’s National Sales Trainer Jeanne Conger says, “An incentive is an apology for pricing whatever you are selling too high,” but X Factor builders will move away from overusing them.
Here’s the bottom line — to maintain their position as a leader in the marketplace, X Factor builders will recognize the need to step up their game and will do so through training and culture change. Here’s to 2013!
Jason Forrest is chief sales officer at Forrest Performance Group. He may be reached at Jason@ForrestPG.com.