The home building industry has been struggling to “go digital” like other industries.
Compared to the auto industry, where car manufacturers allow shoppers to personalize the features of cars online with user-friendly applications, many home builders still do not showcase their homes, floor plans, and options online.
Why does home building lag behind? I believe the reason is one of pure economics. The costs of building actual models are shocking, especially to those not familiar with the business. On average, a builder spends about $500,000 to build and finance a typical production home model, and another $75,000 to $120,000 to merchandise it. Given that a builder will only utilize the model for approximately 2.5 years, and only sell an average of 20 homes per model built, the expense for builders over a relatively short period of time is hefty (and is even worse for custom and small volume builders).
Compare this to Ford Motor Co., which utilizes around 12 non-commercial vehicle models to market and sell millions of cars worldwide per year. The ROI in the car industry is larger because so many more units are sold. This is a direct factor in why builders haven’t jumped into robust online marketing solutions. The latest computer-generated imagery can cost $10,000 to $50,000 per model (assuming it’s the production of a complete online model home tour and not just a room or two).
The bottom line is this: Builders aren’t seeing the value of building both a physical and virtual model. Moreover, many builders believe that virtualizing a model online conflicts with the sales approach of selling in person. These two approaches appear to compete, making the extra investment a tough decision.
Despite this apparent contradiction, virtualizing models is critical for selling new homes. As I shared in my last contributed article, the latest NAHB – Bokka Study found that virtual tours are important to 85.1 percent of new homebuyers, making it one of the most important information sources for make a new home purchasing decision.
The Breakthrough: Beacons
A new technological breakthrough called Beacons (or iBeacons) delivers a packaged strategy that enables a physical and virtual model to work in concert. Beacons integrate virtualization technology into the physical model via mobile devices. Envision a buyer walking through your model with an iPad or tablet. As they walk from room to room, building options, construction details, energy efficiency technology, and customer reviews appear on the device based on proximity to the beacons.
This approach not only extends the customer-engagement period in person, it then encourages buyers to continue that same tour virtually with their mobile device at home. Ultimately, the system provides significant lead generation capabilities, and more sales.
This technology is now possible through Beacons and content providers who integrate with it. At the 2015 International Builders Show several companies debuted such a product (including our company).
A true Clicks and Bricks strategy, this solution is a game-changing method for showcasing homes, engaging buyers, and closing the sale. Gone are the days when we build a model under the now-famous premise “build it and they will come” (a quote from the movie Field of Dreams). Home builders are going to need to build informative physical and digital models that work together to provide a self-guided tour that buyers can experience onsite in the physical model, and at home as they ponder their purchase. This is the way today’s tech-savvy Millennial buyer wants to shop, and with it comes the largest home buying cohort of our lifetime. Are you ready?
Paul Cardis is the CEO of Avid Ratings, a full-service customer loyalty management firm.