It's been said that sales cure a variety of evils, and nothing proves to be truer now, as sales have diminished today to three for every five sold two years ago. During upswings, orders, deliveries, and closings can make up for inefficiencies and poor decision-making. In downturns, they can steady shaky financial positioning, to the point where two or three sales can sometimes save a company from ruin. So, no matter where the industry is in its cycle, it's always about netting the next sale and getting it to closing.
But how to do that in this market is proving more elusive than ever. The downturn itself remains an enigma in some respects. The macroeconomic environment has continued to show healthy signs–population trends, job growth, and the gross domestic product (GDP) remain positive; interest rates hover just above historical lows; and consumer spending is healthy. And yet bloated housing inventories, falling home values, rising foreclosures, and a credit crunch are eclipsing what otherwise should be a sunny economic outlook.
The seemingly simple solution would be to drop prices and hope like hell that that'll be enough to bring buyers out of the woodwork. But as Big Builder found out through conversations with divisional and regional managers at home building companies across the country, there's no such thing as a one-size-fits-all, fail-safe strategy to drive sales. It takes careful analysis of market dynamics to identify what the real sticking points are when it comes to bagging sales in a specific market. Every builder in every market needs a custom solution.
From those discussions, Big Builder identified four industry leaders to share thoughts on what it takes to succeed in today's market, knowing that success has a new score card. They come from companies that differ by size, geography, and business model. They target different buyers, offer different products, and have different problems that require different solutions. They even represent different levels of management. But despite these differences, they share a few common threads, the least of which is a successful sales record.
They all speak of how every sale today is an exercise in teamwork. Everyone, from the most junior associate to the highest-level manager, has to do anything and everything possible to support a sale. That means better cross-discipline communication, more efficient scheduling, and closer tabs on buyers in the pipeline. And although that's the hard-and-fast nuts and bolts stuff, the fuzzy stuff is equally important in today's market. That means recognition and applause across the board when there is a sale. Employees more than ever need to know that their near-Herculean efforts to not only get a sale but keep a sale don't go unnoticed.
So, in their own words, here's how they see it and what they do about it.
Cycle Time: Model Behavior
With homes in the Jacksonville, Fla., market moving anything but quickly, Mercedes Homes' Jacksonville division president Dennis Ginder knew he had to find a way to jump start sales. New product was designed and existing product was retooled, as the division tried to make good (and sales) on a promise to show home shoppers something they hadn't seen before. As other divisions did the same, Mercedes senior management set a target of 45 days to build every new model. The philosophy was simple, Ginder says: "The faster people can see, feel, and touch it, the more likely you are to sell homes." Ginder's team not only hit the target on a 2,609- square-foot model but also soon improved to the point where it turned out a 4,293-square-foot model in 26 days.
The Big Benefit
There are some cost savings by getting a [model] house up, built, and flipped off to our third-party holding so we can begin leasing it back so we're not carrying it on the books; it frees up some banking stuff for us. But to me, the benefit of this model is to get open and get sales. In today's market, sales cure everything. The opportunity that getting a model built very quickly affords you is the opportunity to get just one more sale. And I don't know another builder out there that wouldn't just take one more sale on the last day of the month.
What He Did Different
In the past, [a model build] has been important to the division president or the sales team, but construction doesn't worry about it until it gets to the field; purchasing doesn't worry about it until it comes time to do budgets. But we get everyone in early on the planning process, so we all have buy-in up front.
The other thing that's pretty key along the way is that you have to have the local senior management's involvement. If I get a phone call saying, 'I need something for the model,' it gets done. It has to. If my vice president of sales or vice president of construction gets that call, you just have to go. There's nothing more important than that house.
And then when we get done, we've been know to have a small celebration and invite the trades and the employees and thank everyone again because it's an accomplishment to have built something like that that quickly. And when you celebrate it and let everyone know the benefits of it, it makes things a little more palatable when you have to go do it again.
His Final Word
Everybody just kind of needs to settle in to accept what is now here and stop just gnashing our teeth over the way things used to be. What was was. And we need to accept reality. And make the best of it. And the folks that resolve themselves to do that today, and absolutely make the very, very best of today are the folks that you'll see here in a year or two when things straighten back out. Or if this happens to be the new reality, then, you know, you'd better get used to it, right?