By Pat Curry. Todd Stevens saw the cars drive by and knew something was wrong. "We'd find ourselves in a subdivision right across the street from another subdivision," says Stevens, co-president of Hacienda Builders in Phoenix. "We'd see a car pull into the lot across the street. We figured, 'They're in the valley looking; they'll come here next.' But half the time, they'd get into their car and drive away. When only half the people come over, you say, 'What's going on here?'"
Stevens and his co-president, David Cohen, had built the company on a reputation of quality construction and good customer service. But they still heard, 'Who's Hacienda?,' despite their yearly volume of more than 500 houses. To make people drive across the street, they realized they needed a broader message than "We have extra lumber, we have extra concrete," Stevens says.
Working with Phoenix-based Thelan Pollick Advertising, the company made a $1 million investment to explore what made it different and then communicate that difference to its marketplace. Hacienda settled on the message 'Give Your Dreams a Home,' with an image not of homes but of two very happy people sharing a champagne toast amid their moving boxes.
When customers did finally make it to a model, they discovered a familiar image. In one of the rooms, the ad has been blown up on one wall. The half-opened moving boxes are there along with the champagne bottle and glasses.
That is branding -- a consistent message from start to finish, with an experience that's designed to match the desired impression. "The idea is not to sell a 2x4 or a 50-by-110-foot lot or a concrete slab," Stevens says. "It's selling the emotion and excitement of building a new home and moving in. We're trying to romanticize that, I suppose."
That's exactly what builders should do in their branding messages, says Kevin O'Donnell, managing partner of the strategic consulting firm Prophet, based in San Francisco. Bar none, builders have the most compelling product available for branding because of the emotional investment in the home buying purchase.
"When people make the decision to purchase a home, they're imagining their future lives," O'Donnell says. "Not many industries can come close to that depth of investment in emotion. What people are buying are future life experiences. I don't know that all the builders are selling that."
Latecomers to branding
Most big builders have only recently -- within the past three to five years -- begun to explore what they want the world to think about their companies. Why? Some experts say it's because there's been so little difference between builders, there hasn't been much of a story to tell.
"If you look at brands as personalities, there are few [builders] who really stand out in a crowd," says Ami Levi, president of Strada Advertising, a Denver company that specializes in brand building for builders and developers. "You walk through a floor plan that's been knocked off 10 times, and you see sameness."
If it's that tough, some might ask, what's the point of trying? Jim Lesinski, senior vice president of marketing at Pulte Homes, says he can think of about two billion reasons. That's how much he reckons the Volvo brand added to the selling price when the automaker was purchased by Ford.
Getting top dollar was, in part, what drove Hacienda in its brand-building efforts. Its executives had studied companies, such as Starbucks, that achieved success by consistently delivering a quality product and a pleasurable experience. As a result, customers bypass other coffee vendors and pay extra for one of the most basic products around.
"For so many years, home building became a commodity or price-driven thing," says Stevens. "We'd like to have a competitive advantage over other builders who don't work very hard on brand or don't have a very good customer service orientation. For that, we can command a higher price."
Lennar COO and vice chairman Robert Strudler attributes the industry's increased interest in brand building to three things: industry consolidation led by publicly held companies, the Internet, and J.D. Power and Associates. All three focus on a company's name. Add to that consumers' insistence on superior quality.
"It used to be quality was something more of a warranty thing at the end of the deal," Strudler says. "We no longer wait for a complaint before we start customer service. You want the customer to know you're there, standing behind the product. You can get enough free publicity in a day that you can't pay for in a year because there's a premium on doing it right."
J.D. Power's most recent survey bears that out. Customer service and the sales staff -- both brand-related items -- were two of the top four factors driving satisfaction. The remaining two factors -- quality and home readiness -- also relate to brand because they reinforce the company's desired identity.
Paula Sonkin, senior director of real estate industries at J.D. Power, says builders are paying much more attention to brand today than when the company started its home buyer satisfaction study in Phoenix in 1997.
Builders can enhance their brand just by "tooting their own horn a little more effectively," says Sonkin, who works in the company's Agoura Hills, Calif., offices. "I tell builders, 'Take out a piece of paper and write down everything you do for your customers that they don't know about.' The list is enormous." The benefit of sharing that with customers, she says, is increased market share, loyalty, and superior operating results.
First in, wins
Despite doubts by some about builders' ability to brand, Lesinski sees a phenomenal branding opportunity. Here's why: In Pulte's own surveys, 60 percent of heads of household could not identify a single home builder. Virtually everyone can identify the kind of car they drive and where they bought it, but 35 percent of new-home buyers couldn't remember who built their house.
But what really convinced Lesinski to dive into brand building was his own personal study. Posing as a hot prospect, he visited 70 communities -- 35 of Pulte's and 35 of the competitors. All he needed, he told the salespeople, was a good reason why he should buy their house instead of a similar one from Builder X down the street.
"Everyone used the exact same form of differentiation, which means there is none," he says. "One particular salesperson I pushed pretty hard finally caved and said, 'You know what? You're right. There really is no difference between us.' Talk about inspirational. What an opportunity."
With that as the mission, the company looked for points of real differentiation. Meanwhile, a new logo, a name change from Pulte Corp. to Pulte Homes ("it says what we do"), and a mandate for all divisions to use the same standards for signage and collateral materials, have helped strengthen the brand.
While Pulte has opted for a stronger national play, others prefer to think locally. D.R. Horton, for example, uses a dozen different names, including Cambridge Homes, Dobson, and Continental. In local markets, Centex trades not as Centex, but as Fox and Jacobs, Wayne Homes, CityHomes, and so on. The decision-making for advertising and marketing is largely in the hands of division presidents.
Centex has brand identity guidelines for advertising, but their use isn't required, says David Sasina, Centex's senior vice president for strategic planning and marketing. He would like the divisions to spotlight the company's tradition of quality construction and customer satisfaction, but again, it's strictly voluntary.
"We've opted not to force feed them what their advertising program needs to look like," he says. "Is there a national Centex brand? Absolutely. It's grounded in the fact we've got 50 years of home building experience."
Beazer Homes chose the best of both worlds when its Colorado division bought Sanford Homes, a local builder known for high-end homes. Soon after, Beazer announced it would begin building starter homes in Colorado. Local real estate agents, who sell 80 percent of Sanford Homes, begged Beazer's regional president Peter Simons not to put the Sanford name on 1,200-square-foot houses.
The company listened. "We emphasize that Beazer is national and has the resources to stand behind it, but we think people are buying local name recognition," says Simons. "Tim Sanford founded the company and established a reputation. We didn't want to throw that away. We also didn't want to confuse the public perception of that name with $129,000 townhomes. If people think of Sanford Homes as solid, high-quality and high-cost homes, we'll play off that."
In the end, the company's solution was to keep the Sanford name but add the tag "A Beazer Company." Beazer's mortgage operation and design center serve both brands. They use the same sales system and the same graphic standards, but the goal is to create two different images with the two different product names.
Pulte is also managing its business as a portfolio of brands, aiming to have Del Webb, Sun City, Divosta, and Anthem each mean something distinctly different to consumers.
Putting a single national brand against a cluster of distinct regional offerings isn't an either/or choice, says O'Donnell. "Even in industries with well-developed brands, there's no single method that works. Procter and Gamble has a house of brands blanketing the category and, to a certain extent they compete. Kraft has much more of a single, master-brand strategy. They both work. The only mistake is to not be really thoughtful and not pick one of them to develop."
If a company does break out and become the brand leader, Lesinksi predicts that the point of differentiation will be the buying experience, citing Saturn as an example.
"Our tag line is 'The way it should be,'" he says. "Implicit in that is an understanding that the industry is not perfect as it is today. You won't differentiate yourself on product. You can have the best floor plan in the world, but two weeks from now, the builder down the street will have the same model. The company that will break free in this industry is the one that will establish itself in process."
Some builders engaged in brand building say it's too early to identify concrete benefits, but others have seen tangible results.
Beazer Homes Arizona's marketing, which includes a humorous radio ad campaign, has yielded high name recognition both in and outside the business, says regional president Joseph Thompson. "It's all centered around building a relationship with the buying public," he says. "We felt taking the light-hearted approach would at least posture us in the market to be believable and fun-loving so people think of us as real people they'd like to do business with."
Pulte's efforts have been encouraging as well, Lesinksi says. Along with boosting referral rates, the brand-building effort has helped Pulte staff "with its own legitimacy," he says. In addition, unaided consumer awareness has shot from 3 percent in 1999 to nearly 10 percent.
"I don't want to ever have to pick up the phone and spell our company name and explain what we do," he says. "That's happened before, but it hasn't happened once this year."
The team at Hacienda Builders got some validation of its own this year when it made Arizona Business Magazine's "Ranking Arizona: Best of Arizona Business" list for the first time, debuting at No. 8. The rankings are based on quality of product, service, and companies the readers would recommend to others.
But the proof of their brand-building success is at Rancho El Dorado, "which is, for the most part, 15 miles from anything," says Stevens. Without any models built, the company has sold more than 50 homes there in two months.
"That, to me, is absolutely mind-boggling," he says. "They're not buying because there's a house they can look at. They're buying on the faith in Hacienda, what they've heard and their perception of us."
--Pat Curry is a contributing editor based in Watkinsville, Ga.
Published in BIG BUILDER Magazine, July 2002