Opportunity Knocks

BUILDERS NEED TO GET PAST their skepticism about home technology and see that networked consumer electronics and home control products will soon be as common in new homes as microwave ovens and granite countertops.

New-home buyers are asking for these high-tech items, and builders who don't offer home networks, entertainment options, and home control systems will find themselves stammering when buyers pose questions like: “What do you mean I can't run a wireless network or have video in several rooms in my new house? Your competitor across the street says I can.”

A recent study by the Internet Home Alliance found that 76 percent of new-home buyers surveyed thought at least one home-technology product should be standard, with prewiring for cable or satellite television and home security being the most popular items, followed by structured wiring and a multi-zoned HVAC system.

So now that more customers clearly want home-technology options as standard, it's time to take a closer look.

“Roughly 30 percent to 40 percent of our buyers already have home networks in their existing homes,” says Bob Micho, who heads up the TechTouch division at Village Homes in Littleton, Colo.

“Too often, builders get locked into their day-to-day functions, [working on tasks] like lumber costs, contract labor, and warranty management,” says Micho. “Builders tend to lose sight of opportunities to generate new revenue streams that have pretty healthy margins as well as producing net profit.”

Village Homes is still very unusual among builders in that the company has its own home-technology division. Amore typical setup for a builder is to have two or three local home-technology integrators that they can refer to their home buyers.

Joe Piccirilli, managing director of Avad, a home-technology distributor that works very closely with consumer electronics integrators and builders, says one of his great challenges is to get builders to think about the sales possibilities of home technology.

“Structured wiring isn't a cost,” says Piccirilli, “it's an opportunity. Once you install a panel, the other home technology modules just snap in,” he explains, adding that builders also leave a lot of money on the table by not following up six months to a year after the home buyer moves in to a new home.

In discussions with Piccirilli, Micho, and Tim Woods of the Internet Home Alliance, we fleshed out a five-step home-technology sales plan for builders. Think of them as the five sales opportunities.

Now that roughly 75 percent of home buyers use the Internet to search for a new home, it's clear that the first place to start selling home technology is on your Web site. Take a look at other builders' Web sites around the industry, and you'll see that very few builders use their Web sites to promote home technology.

But to check out ones that do, start with Village Homes. Go to www.villagehomes.com and click on “Enhancements,” and you'll be drawn to the “TechTouch” icon. On the tech pages, Village Homes posts a diagram of a wired house and links to full descriptions of the entertainment, communications, and home security options home buyers can purchase. Another good site to check out is www.joetowns.com, the Web site of Jacksonville, Fla.-based St. Joe Co.

Although it's not as comprehensive, the “Home Technology” link is clearly identified at the top of the home page, and the lead tech page makes it clear that St. Joe is committed to offering its home buyers home networks, automation, and entertainment. A second link reveals that St. Joe's offers structured wiring; integrated home automation of lighting and interior climate thermostats; home security systems; audio and video feeds throughout the house; Ether-net-based home computer networks; home theater; telephone lines; intercom capabilities; and connected appliances.

This year, find a way to start marketing home technology on the Web. Printed brochures are fine, but new-home shoppers are a savvy, well-educated slice of the population. And many do their shopping online.

Always remember that buying a new home is a major life-cycle event. It's a big deal to the buyer, as big as a wedding or the birth of a child. Many buyers want technology, but more often than not, they're more focused on picking out kitchen appliances, carpet colors, window treatments, and countertops or deciding whether they can afford that backyard pool they've always dreamed of.

Since home buyers are apt to be distracted by the endless stream of choices, selling technology requires a specialist who can get them to focus on home-tech options. You won't get good results if the same people selling carpet and tile are also selling structured wiring and security. If, like most builders, you don't have a home-technology division, try to have a representative from the home-technology integrator you work with conduct the initial meeting with new-home buyers. Have the integrator meet with them to explain the basic offerings as early in the process as possible.

If your company has some of its home-tech products posted on its Web site, ask customers if they saw the promotional material and if they have any questions. Don't overload them with geek speak. Talk in terms of the lifestyle benefits of home networks, climate control, and entertainment. Point out that lighting control is a great lifestyle enhancer, but it's also a security feature. Ask buyers to list the top three items that interest them. Streamlining the information for buyers lets them digest it more easily. It will also give you an action plan for the next meeting.

One last point: This is also a good time to explain the relationships you have with phone, Internet access, and video providers. Some builders are starting to partner with carriers, but partnerships with service providers are typically the province of large developers and builders. The average builder will simply refer the home buyer to local service providers and carriers.

Be sensitive that many new-home buyers need to sell their existing homes. What that means is that they may be cash poor the first time you meet with them. Try to stay in close touch with buyers, because one of the best times to sell is after they sell their existing house. Relieved of the stress of having to both buy and sell, buyers can focus more on the new-home purchase. Now that some cash is freed up, don't overload them but get them to consider one or two upgrades. Good options are increasing the number of rooms that have audio or upgrading to a 55-inch plasma screen from the 42-inch model.

Now that the buyers have closed on their new house, most have already made their consumer electronics purchases, with that new plasma screen usually first on their lists. Assuming a structured wiring panel has been installed, which it is in a majority of new homes, explain to them its vast potential. This is a good time to sell security, upgraded phone lines, lighting control modules, or adding audio, video, and speakers in extra rooms. Some people may not have sold their old homes yet, so offer them 90-day financing deals that can get them through the interim period. If they are still unprepared to add on, tread lightly, determine what they are interested in, and ask if you can get back to them in six months to a year.

At this point, some of the dust has settled and home buyers have a better feel for what they want. Customize a letter or e-mail based on their history. Don't waste time with form letters: Buying a home is a personal experience, so you'll get better results if you tailor letters to each buyer's needs. For example, you may have a note that the buyers expressed interest in a home theater but wanted to live in their house for a few months before they made a decision. In the letter, ask if they are ready to explore home theater options. Another good approach is to send seasonal communications. Send a letter in the mid-spring that talks about how since summer is fast approaching, this would be a good time to consider outdoor patio speakers. You also may want to consider special promotions, such as buy a home theater and get a DVD player free.

Here are some standard terms you'll need to know if you want to sell home networks and home theaters: