Three years ago, two executives with Atlanta-based Scenic Homes broke away to start Savvy Homes of Raleigh, N.C., a production builder which sold 98 homes last year. Recently, though, Savvy’s owners have shifted their company away from its production-driven business model and toward a marketing-driven platform that places greater emphasis on building homes the way customers want them.
“We brought all of our marketing and production people and processes together and are letting marketing drive the decisions,” explains Darrell Daigre, one of Savvy’s managing partners, who spoke with BUILDER yesterday. His company has been executing this strategy since January, and as of yesterday it had sold 65 homes in its two subdivisions in Fayetteville, N.C., and another 14 in its seven subdivisions in Raleigh. Daigre projects that his company will sell 150 homes in 2009.
A number of high-volume production builders—KB Home most notably—now let customers have more say about what they buy. But it is unusual for a builder to let marketing dictate production to the extent that Savvy seems to be doing. The goal, says Daigre, is for marketing to influence all of its other departments—architectural, engineering, design, and construction—so that none of them is operating in a vacuum.
Savvy’s homes range from 2,200 square feet to 3,400 square feet, and are priced from $175,000 to $300,000. Daigre says the company is now set up to accommodate buyers who, for example, might want a wall in a particular room moved, or an archway opened up, or a bathroom expanded, or a TV niche added. “There’s nothing we wouldn’t consider doing,” he says, although the builder's flexibility would not include adding rooms or floors.
Savvy’s business strategy works best when it can get buyers involved early in the design process. That way, explains Daigre, buyers know upfront how much more a house might cost if changes are made to accommodate their tastes. “We get all this in writing and manage their expectations,” he says, adding that making design changes is relatively easy. And, depending on how extensive the change requests are, Savvy is willing to extend its production cycle time beyond its current average of 55 days. “If [flexibility] causes us to slow down our process, but increases our margins, we’re okay with that," Daigre says.
(As an aside, Daigre observes that making design changes during construction is relatively painless up until the drywall stage. “But we’ll tear out drywall, too, if [buyers] are willing to pay for it.”)
To spread the word, Savvy has redesigned its Web site and is looking at other social media, says Daigre, who has a marketing background. Savvy also promotes itself as a green builder on its site, under the trademarked (and creatively spelled) tagline “Resourcefull Living.”
Daigre is convinced that customized production building gives his company an edge in an uncertain time when buyers are clamoring to control their purchases. “We’re looking for a happy median, as long as we don’t lose sight of providing a high-production, high-value home that is prepared to sell every day.”
John Caulfield is senior editor with BUILDER magazine.