SEAN DEGEN SAYS THAT HOME BUILDING IS THE ONLY discipline that requires absolutely no training to be an expert. People develop strong opinions simply from living in a house for any length of time. Before long, everyone thinks they know what goes into a great house.
“When you have division presidents who are product experts, you get product proliferation,” says Degen, vice president of architectural services for Pulte Homes. “It gets really inefficient.”
“Plan proliferation” has pushed Pulte's number of plans to more than 1,800, Degen says. Deciding that enough was enough, Pulte has scaled back the number of plans it offers by 40 percent, but Degen says there's “still a lot to go.”
It's a strategy that's gaining traction among some national builders despite consumer research that points to a strong desire for more, not fewer, choices. For Pulte, the effort is directly related to the increasing cost of buying and entitling land.
“Something's got to give,” Degen says. “We're trying to simplify and get better at building the structures we build to provide the best value to the consumer. We're trying to take money out of the production cycle.”
Beazer Homes USA also has reduced its number of plans by 40 percent. President Ian McCarthy told industry leaders at an investment conference in September that it doesn't make sense to have the back office keep lists of materials and suppliers for plans that just don't sell. It's also easier for trade contractors to provide the best price by zeroing in on the plans that are sold most often.
Degen says that cutting back on the number of plans doesn't result in lower customer satisfaction. It just cuts redundancy.
Builders are also working toward streamlining the options process. Beazer is standardizing option offerings at various price points to create the best possible packages. The goal is to improve efficiency from negotiating national contracts from installation through warranty—and to increase customer satisfaction.
Pulte has reached the same conclusion and is working on an options model based in part on the practice of luxury auto manufacturers.
“When you go into a Mercedes dealership and look at their top-of-the-line car, there's like two options,” Degen says. “They understand what the customer wants and provide it. This is where we're moving.”
Learn more about markets featured in this article: Los Angeles, CA.