AT A PRESS CONFERENCE THE CONSUMER Electronics Association (CEA) held last summer to release home buyer research, one of the reporters asked a CEA researcher about workable business models or marketing strategies for selling digital homes to new-home buyers, and he couldn't immediately point to any.
That's changing as builders are teaming up with home-tech integrators to sell digital homes. One strategy that's working well centers around selling brands people are familiar with such as GE and Sony, and then getting buyers in front of the technology and having them make selections before the drywall goes up.
Paramont Homes in Manteca, Calif., about 45 minutes east of San Francisco, is using this strategy, and the company's home-technology sales now average $12,000 to $14,000 with gross margins of 20 percent to 25 percent on most products. The company expects to build 400 homes this year, with prices starting in the high $300,000s range.
“We used to sell about $1,000 to $2,000 in home-tech options for the structured wiring and to prewire audio,” says Dan Valencia, Paramont's purchasing manager. “Now we have a better sales strategy with brand-name products that have better name recognition,” he says.
Valencia says everything changed for the home builder about a year ago when it started working with Interactive Home, an integrator based in Livermore, Calif. Through Interactive Home, Paramont began offering buyers a full home-tech package that includes Sony's Wallstation CD and DVD systems; GE security and structured wiring; Dirt Devil central vacuums; and Klipsch audio speakers.
Greg Barker, vice president of Interactive Home, says one big reason the strategy is working is that Paramont lets the home-tech integrator meet directly with the home buyers right after the home is framed.
“From that point we tell the buyers that the drywall is going up within two to three weeks, so they have to make their technology selections,” says Barker. “The sheetrock doesn't go up until there is a walk-through, and we make sure the buyers have everything they've asked for,” he says.
The day the buyers move in, a technical person from Interactive Home is on hand to teach the customers how to use the technology. And, an Interactive Home sales rep typically follows up with the new owners a week or two after move-in to make sure all the gear is working properly.
Another builder that has worked out a successful marketing strategy with an integrator is SeaCountry Homes of Carlsbad, Calif., which works closely with ONteriors, an integrator based in San Diego. SeaCountry builds about 250 homes a year in the $360,000 to $650,000 range.
Buck Bennett, president of SeaCountry, says his primary strategy is to get buyers to make their options selections on flooring, countertops, and windows as well as home technology before the company's sales shows each Saturday morning.
He encourages prospects to visit the ONteriors showroom for home technology and SeaCountry's showroom for flooring and other traditional new-home products before the sales event. The showrooms are located close to one another, so buyers can make the two appointments in a morning or an afternoon.
“By the time they come to the sales event, if they are buying surround sound and TVs from ONteriors and selecting flooring there's a high probability that they will stick as buyers,” says Bennett. “Builders have had problems with cancellations, so if I do it this way, I won't have to resell the house two and three times,” Bennett explains.