CONSIDERING THE CURRENT PRESSURE TO SUSTAIN margins, it makes no sense that many builders continue to leave money on the table when it comes to selling digital technology to new-home buyers. Retailers collect billions each year from the sales of plasma televisions, iPod audio systems, home theaters, security, and automated lighting systems. Yet too many builders seem content to wire the home for automated equipment, often at razor-thin margins, and leave the sale of high-margin extras to others.
Digital technology, much easier to install in a new home than retrofit into an existing one, can be a major point of sales differentiation. Thankfully, a growing number of progressive builders are seizing this advantage, striking precedent-setting arrangements with installers and suppliers, bringing digital technology into the option process, and training their sales staff to actually sell the lifestyle benefits.
NEW DIGITAL PLATFORM We're working on three fronts to help you mine this fertile new territory. First, we are conducting a technology benchmarking survey to find out exactly which digital technologies builders are installing and how much they are making from it. Second, we are launching a new magazine for production and custom builders, Hanley Wood's Digital Home, that debuts in April. And third, we are having a conference to bring all of this information to you April 1–3 at the Rancho Bernardo Inn in San Diego. You can register by going to www.digitalhomeonline.net.
The conference begins with an eye-opening housing tour. We'll visit digital design centers at two major new-home communities in San Diego—4S Ranch and Del Sur—where buyers work with specialists to pick out home theater, home automation, security, and other digital options. Then we'll visit builders' model homes that show the lifestyle benefits of these technologies in action.
Throughout the conference, we'll hear from companies at the forefront of this digital push with innovative marketing arrangements. Some give buyers discount coupons at move in and then receive rebates from retailers based on how much digital equipment buyers purchase. Others, such as Orleans Homebuilders, sell a local electronics retailer's gear through their own home design centers with remarkable success.
MAKING A BUNDLE Bundled services is another area ripe with opportunity. Telecoms and cable companies are locked in a battle to sell a triple play of video, audio, and data services to new-home buyers. They will negotiate an up-front fee for granting exclusive access, a residual payment per user, or co-op advertising support. Pulte Homes recently inked such a deal with BellSouth.
Digital technology can be such a major point of differentiation with existing homes that some builders now standardize on it. Harris Homes of Brentwood, Tenn., for instance, builds all of its homes with structured wiring, home theater, distributed audio, and central vacuums. Then it goes for 30 percent margins on all add-ons: speakers, volume controls, lighting, and additional RG6 or Cat-5 outlets.
Demand for digital technology in homes is only going to increase. We've all read stories about how younger buyers—who are more technologically sophisticated than their parents—demand high-tech features in their homes. Well, unpublished Census Bureau reports show that people born after 1965, members of generations X and Y, account for the majority of new-home buyers today.
It's time to seize your digital future. Don't get left in the analog dust.
Boyce Thompson, Editorial Director
Learn more about markets featured in this article: San Diego, CA.