A new survey of sales managers for home builders finds a serious disconnect between how they think their sales teams are performing and the actual results those sellers are producing.
Shore Consulting, a sales and marketing consulting firm based in Northern California, conducted the online survey, which drew 285 respondents last month. Jeff Shore, the firm’s president, presented the findings from that survey during the International Builders' Show in Orlando, Fla., on Tuesday.
In an interview with Builder, Shore observed that builders often aren’t tracking their sales teams’ performance quantitatively, or frequently enough, to be able to draw objective or even realistic conclusions. For example, 74% of those polled rate their sales teams above average, but only 20% say their companies are exceeding their business plans.
“You need to understand this ‘superiority bias,’” said Shore, adding that builders who mystery shop their sales offices regularly are far less likely to rate their sales teams above average and—more important—are more likely to exceed their business plans.
The causes of this success were one of five things the survey focused on. The others included:
• Why margins erode. The 3% that builders typically pay Realtors to manage their buyers doesn’t always reflect the true cost of outsourcing sales. The survey finds that builders relying on brokers the heaviest also report that they were more likely to end up negotiating the selling prices of their houses.
• Keeping sales teams competitive. Mystery shops definitely keep sellers on their toes. But the survey also found that sales managers had more effective teams when they were compensated individually, based on their production, as opposed to receiving “shared compensation,” based on the productivity of the office.
• Using Social Media. Nearly seven of 10 sales managers polled say that social media is a top priority for their companies. But less than two in five have found social media to be useful, at least so far. Shore pointed out that only two-thirds of the respondents says they’ve budgeted for search-engine optimization on the Internet in 2012, which to him raised questions about whether builders ad spending is being misdirected. (He’s particularly perplexed by builders’ fascination with Twitter over YouTube, which Shore contended is easier to execute and generally reaches more potential customers.)
•You’ve got mail, maybe. More than 90% of the sales managers polled have conducted an email marketing campaign. However, only 24% have a mobile app prospects can download. “We view this as a huge opportunity for builders,” said Shore, given how many potential buyers use smartphones—sometimes to the exclusion of other devices or electronic equipment—to capture all kinds of information.
The point of this survey, explained Shore, was to encourage builders and their sales managers to measure the performance of their personnel and businesses with greater precision. “They need to get real and do this scientifically.” Shore thinks that such measurement would lead more builders to intensify their training and coaching of their salespeople, as well as weed out the weaker performers. And it might also bridge the perceptual gap that sometimes exists between the rank and file and their sales managers.
For example, Shore Consulting conducted a second, 100-person survey of sales managers, 72% of whom said they were satisfied with their customer relationship management (CRM) systems. But when salespeople were asked the same question, only 42% viewed their CRM systems positively.
John Caulfield is senior editor for Builder magazine.