By Christina B. Farnsworth. Final installment in our three-part series about what motivates new-home buyers and what builders and contractors think motivates them.
Avid readers of this series may remember that our last chapter revealed that the main reason people choose to buy a new house versus a used one is to avoid maintenance. Interestingly, once buyers decide to buy new and settle down to product selections, their perspective changes. Our Housing Continuum research shows maintenance doesn't much influence their decision about the products making up that new house. Right or wrong, buyers seem to presume that all new items will require very little upkeep.
Maintenance is not the only criterion to drop off the radar when buyers choose products for their new house. When those surveyed were asked to rank the importance of seven criteria--brand, design and appearance, durability, price, quality, required maintenance, and warranty--neither brand nor warranty mattered much either. These are among the most surprising findings of Builder's Housing Continuum survey. (See first two parts of the series: "The Weakest Link," January; "The Main Attraction," March).
This story is based on a study BUILDER did last year with Harvard's Joint Center for Housing Studies. We surveyed 507 buyers who had purchased new homes between August 2000 and December 2001. For many of them, the "new" in new home had rubbed off; they had been in their homes for almost two years. So by the time we asked our questions, these consumers had had plenty of time to process their new-home buying experience.
So, what are new-home prospects looking for in the products that go into a new home? What are they thinking? How do builders satisfy them?
When asked to rank the most important characteristics of all product categories, 34 percent of our surveyed buyers put the design and appearance of a product first, 25 percent chose quality, and 19 percent selected durability. Only 9 percent confessed to deciding on the basis of price, and 5 percent picked by brand. Even fewer, 4 percent, based their decisions on the need for required maintenance or warranty. These rankings varied somewhat across product categories, as shown in our charts. (See "What Matters Most").
But wait a minute. Buyers already told us they bought new to avoid maintenance. So what gives? Why is maintenance or its avoidance suddenly a lesser issue when choosing the products and materials for their new homes?
Bob Schultz, a sales and management expert with Boca Raton, Fla.-based New Home Specialist, thinks BUILDER's results about what buyers are looking for in products are unsurprising, considering where in the sales cycle we asked our questions. Our survey asked buyers about their homes after they had lived in them for a while. We may have found that product maintenance or brand name mattered more to buyers had we questioned them right before they committed to a particular builder. At that time, brand-name recognition among products can differentiate one builder from another.
Many products, such as bath fixtures and appliances, last a very long time with little maintenance. Consumers, especially experienced homeowners, know this. When comparing builders, prospects think, "Oh, I've heard of that brand," Schultz says. After a brand satisfies the consumer's comfort and reliability needs, design, appearance, and quality begin to matter more, he says.
Marketing and development consultant Daryl Spradley also sees quality as an ill-defined, but all-inclusive concept. "Quality is the summation of everything that occurs--all that the shopper can see, taste, feel, and hear," the Maitland, Fla., consultant says. Indeed, as the dictionary defines quality, it includes "any of the features that make something what it is ... the degree of excellence which a thing possesses." And our respondents may well have thought the term quality inclusive of reliability, no need for maintenance, and an implied warranty.
Manufacturers, by and large, have far better brand recognition than builders. Schultz notes that most people, if asked what company makes faucets with a funny name, or has a founder who pops up in air-conditioning commercials, would correctly answer Price Pfister and Dave Lennox. That kind of brand awareness may rub off on builders, keeping them on prospects' shortlist as they narrow the field--or might disqualify a builder who uses less-known products.
In another example, Schultz further analyzes the same process: "Ask a woman what her favorite color is. Maybe she says blue. Maybe she doesn't like red. So she immediately rules out any red dress, but there may be seven blue ones she likes. Which of the blue dresses will she choose? And that is where the narrowing process occurs."
So, once buyers have decided to choose among new homes, differentiation among new-home builders is often among intangibles, Schultz says. New-home buying prospects are ranking hard-to-quantify elements: "perceived quality, integrity of design, and the builder's commitment to customer satisfaction," Schultz says. The important point Schultz sees is that consumers are establishing rankings using their internal perceptions (and misperceptions).
|Quality vs. Durability|
|Mostly even: In products such as insulation, consumers clearly chose quality over durability. In a few product categories, such as paints and stains, however, the choice between the two was a close call.|
|Decks and patios||30%||24%|
|Paints and stains||28%||27%|
In our survey, we found that consumers seemed to re-order their criteria depending on the product under discussion--whether it is seen, unseen, or frequently touched.
When asked to rank characteristics from brand to price for exterior and interior surfaces, consumers rated durability most important. Design was the second most important characteristic for these categories, ahead of quality and well ahead of brand and price. (See "Durability by Design".)
But for vital products that remain unseen, such as insulation, 54 percent rated quality most important, versus 13 percent who cited durability as their prime concern. Quality also came first in HVAC systems, windows, skylights, decks, and patios but only narrowly edged out durability as the most important attribute of paints and stains. (See "Quality vs. Durability," right.)
Just as we saw with appliances, kitchen and bath fixtures, and entertainment systems, design rates highest when buyers choose highly visible products such as lighting, moldings, and kitchen cabinets (50 percent or better).
How important are brand and product type to consumers? (By product type, think about choosing between natural stone and laminate countertops.) When asked to rate brand and type in choosing products, 51 percent of respondents found both important, while 19 percent found neither important. Twenty-six percent of consumers selected type of product over brand, and only 4 percent said brand was most important. Pros have a pretty good handle on what consumers think in this area--67 percent said both brand and product type figured into consumer decision-making. (See "Brand vs. Product Type," right.)
|Brand vs. Product Type|
|A toss-up: In choosing products, brand and product type were equally important to 51 percent of the consumers surveyed, (whereas 67 percent of builders thought brand and product type were equally important to buyers). Just 4 percent of consumers said brand was most important.|
The brand was more important: 4%
|Neither was important: 19%|
|Both the brand and the type of product were equally important: 51%|
|The type of product was more important than the brand: 26%|
No matter what they say about choosing products, less than half of buyers actually tell their builder what type of product or which brand they prefer. What we discovered was that even when consumers believe the final product decisions rest with them, often they are actually choosing from types and brands that builders have pre-selected. (See "Choosing Brand".)
Another startling finding of our survey is the difference between what products builders and buyers want to splurge on. It seems that splurging means largely different things to builders and consumers. Consumers see their splurge items as the big-ticket house parts--windows, refrigerator, stove, flooring, and insulation. Builders think splurge items mean option upgrades--countertops, cabinets, kitchen and bath fixtures, lighting, and stove. The stove was the only common splurge point between builders and buyers. (See "Something Extra," right.)
|Defining splurge: It turns out that new-home buyers splurged on different things than builders thought they would. The difference is in order of magnitude--windows top the consumer list but don't appear on the builder list--and only stove shares billing on both lists.|
|Consumers say the top five items they splurge on are:|
|Builders say the top five items consumers splurge on are:|
|3. Kitchen & bath fixtures|
So what does all this mean and how do you use the information to sell homes? Schultz and Spradley say there is plenty of meat in the survey to create sales associates' presentations. It should give savvy builders insight into how buyers go through the final sorting process in choosing a new home. Their first piece of advice is to include brands shoppers have heard of. Buyers are making complex comparisons, and their weightings shift depending on context and content--quality applied to choice of a faucet may not have much in common with the quality of insulation.
Second, remember that new-home buying is a process of elimination; those that got away often chose existing housing. Also, buyers think they're choosing products when they're really only choosing from builder-pre-selected items.
Show and tell is vital: Shoppers want models and displays. Also, keep your Internet site fresh; buyers will eliminate you with a click of their mouse if you don't. Use our results to design your sales presentations. (See "The Final Take-Away".)
And don't forget the lesson of part one of this series: Without a post-sale relationship, you will lose happy customers. Buying a home is as big a life event as marriage or parenthood. Half of marriages end in divorce. Some new mothers fall into postpartum depression. So why should builders be surprised that buyers are unhappy after new-home excitement wears off? The best lesson? Stay in touch. Within three to five years, your happy new-home buyers will be back, buying new from you again.
Hanley-Wood, LLC, publisher of BUILDER and REMODELING magazines, and the Joint Center for Housing Studies at Harvard University produced the Housing Continuum Research project. Media, Pa.-based International Communications Research (ICR) surveyed, via telephone, 1,509 U.S. consumers during the spring of 2002. Within the past two years, 507 had purchased a newly built home, 502 had purchased an existing home, and the remaining 500 had spent $5,000 or more on a remodeling project done with remodeling contractors. ICR also surveyed, via the Internet, 459 contractors: 324 home builders and 135 home-improvement contractors. The Joint Center assisted with the project's research design and did data analysis. Whirlpool Corp. and the National Association of the Remodeling Industry sponsored the survey.
* In March we noted, "When it comes to sales tools, nothing beats the real thing." Home shoppers select products and materials for their new homes by shopping models (65 percent) and checking out samples and displays (more than half). Nearly 20 percent use the Internet.
* A strong Web site, product samples, and model-home center help consumers choose the right stuff in a meaningful manner, although you do have to create a sales presentation story with your sales associates to enhance the models and product displays.
* Learn what individual prospects value in specific products by training your salespeople to ask, and listen. Use the information buyers share to tie in with your presentation. With no evident general consumer guideposts, relying on your own assumptions will prove wrong (at best) for one in every two prospects.
* "Use the survey results to craft sales presentations," says sales and management expert Bob Schultz. He provides the following examples of how BUILDER's survey results can lend you authority:
"Mr. and Mrs. Smith, a consumer survey showed that quality mattered most in insulation, so based on that we chose the best-quality insulation for your home. ..."
"Mr. and Mrs. Smith, you are right in line with the most prudent buyers, who, surveys show, picked quality as the most important factor in choosing a heating and cooling system. The system we chose to heat and cool your new home is the highest quality system. ..."
"Mr. and Mrs. Smith, surveys show that durability, followed by design, rated most important in choosing a roof. We searched the market for the most durable and attractive roof for your new home."
Looks count: When ranking the seven criteria, kitchen fixtures, bath fixtures, appliances, and entertainment systems are the categories in which design and appearance were most important. Quality came in second, except under entertainment systems where it came in third, behind durability.
|Calling the shots: Builders control consumers' choice of product type and brand, although sometimes their influence is so indirect that consumers barely feel it. For example, 85 percent of consumers polled said they picked the brand of entertainment system their builder installed. But when those same consumers were asked a follow-up question about how they made their choice, 84 percent admitted that they picked from among brands pre-selected by their builders. This dynamic was in evidence in every product category.|
|Product||Say they picked brand||Actually chose from brand selected by builder|