A panel of experts on sales at the Big Builder '07 Conference in Las Vegas on Nov. 27 had a simple, if radical, recommendation for builders besieged by the housing market downturn: Fire the laggards on their sales staffs.
Martin Freedland, CEO of The Berke Group, a sales consulting firm, said research conducted by the company indicates that 50% to 70% of salespeople in the new-home business cannot sell in a competitive environment.
Along with his colleague Jon Fogg, who recently retired as a senior sales executive with Centex and is now a partner at The Berke Group, Freedland said the results of analyses of sales data and results from aptitude tests given to sales personnel indicate that the top 25% of salespeople produce 57% of sales, the next quarter produce 24%, and the bottom half generate 21%. "Half of our experienced people are selling 20% of our homes," said Fogg. He suggested that a builder can increase sales significantly, simply by getting more production out of the bottom half.
Kim Shelpman, CEO and president of Holiday Builders, which is currently working with The Berke Group on an evaluation and restructuring of its sales team, said her company has much the same sales staff now as it did in 2002, during the housing boom. Many on that staff, she said, were ostensibly order-takers. The company attitude has been, "We're such a nice company that we just let them work for us," Shelpman said. But, she added, "All they could do was transactional sales."
The problem, according to all three, is that many salespeople are not equipped with the necessary personality traits and abilities to sell successfully during a downturn. The good news, according to Freedland, is that "this is the best recruitment market in years." He added, "You want to take action right away. You can't go month after month."
Paige Hall, CEO of AboutFace, a sales consulting and so-called "secret shopping" company that uses undercover evaluators posing as home shoppers, said her organization has found that even once competent salespeople are on staff, they must be trained and a comprehensive sales system must be installed. "Training is important, but it isn't enough," she said. "Salespeople need practice and reinforcement."
Shelpman, who noted that the evaluation of Holiday's sales organization is still in progress, said, "I fully expect that I will have to replace 40-50% of my sales staff." For those who remain, she said, "the heart of the matter is practice, practice, practice."
Fogg said that salespeople now need to generate 75% of their own sales leads through referrals, Internet contacts, and Realtors. He also asserted that sales staffs need to change the way they approach customers from selling the options and amenities of a particular home to establishing a relationship with customers and discerning how each individual wants to buy.