HERE'S SOMETHING YOU SHOULD know: New-home buyers spend more time shopping at a Wal-Mart, Best Buy, or Blockbuster than they do at one of your model homes.
Average shopping time in model homes is so short—just eight minutes, 58 seconds in all—that builders really need to take a closer look at how they merchandise their model homes.
“One of the things that blew me away was the degree to which home builders haven't thought through how a model home is supposed to work,” says Paco Underhill, noted New York–based behavioral research expert, who recently co-authored a study on home-shopper behavior for cabinet maker Merillat Industries.
“Without a lot more of a financial investment, model homes could show the lifestyle [improvement] a homeowner gets from investing in a feature like kitchen cabinets,” explains Underhill, who adds that builders go through the tremendous expense of putting up model homes, but then don't go the last “25 feet” to get the details right.
Underhill's company, Envirosell, observed new-home shoppers as they walked through 30 model homes from nine different builders in five markets. Envirosell's research was supported by Murphy Marketing Research/Trend-town, which conducted one-on-one interviews and “shadow shopped” the new-home shoppers, observing their actions as they progressed through the models. The homes were in the $200,000 to $450,000 price range.
In addition, over the course of several months, Envirosell logged more than 1,000 hours of videotape and conducted 153, 15-minute post-shopping interviews. Envirosell's goal was to record the traffic and to determine shoppers' likes and dislikes.
Murphy Marketing conducted an additional 68 in-depth, one-on-one interviews, the goal of which was to find out why people made certain decisions.
“The idea was to do a study so we could learn from retailers,” says Karen Strauss, vice president of marketing for Merillat, which funded the project to learn more about how home shoppers behave when shopping new kitchens.
HIGH CALIBERThis kind of study is unique for the home building industry, particularly bringing in a research group the caliber of Envirosell. Underhill, the author of Why We Buy: The Science of Shopping, is widely known as a guru in the retailing world. His client list includes The Gap, Ann Taylor, Star-bucks, CompUSA, McDonald's, and Citibank. Although he has consulted for construction-oriented companies such as The Home Depot and Lowe's, this is one of Underhill's first projects in the home building field.
The results of the study were presented in January to builders at the International Builders' Show in Orlando, Fla. Here's what the researchers learned about new-home shoppers and how they behave in model homes:
New-home shoppers have money. New-home shoppers are an upscale audience. Seventy-six percent had bachelor's or postgraduate degrees, and the median household income was nearly $100,000. Sixty-four percent of the shoppers were female, and 87 percent were married. Roughly 40 percent of the group were between the ages of 35 and 44. Also, couples and families accounted for over 70 percent of all model traffic.The majority really are looking to buy a new home. A full 51 percent of shoppers surveyed planned to buy within six months, 34 percent planned to buy later, and another 15 percent had no intention of buying. Some of the reasons why people wanted to move: Thirty-six percent said they needed a larger home, 20 percent were on a job transfer, and 10 percent wanted a better quality home.Expect the shoppers to visit your competitors. Seventy-six percent visited other model homes in the previous month or two, and 88 percent planned on visiting other model homes in the near future. Seventy percent were first-time visitors to the model.Couples dominate model homes. Couples were the largest group, at 44 percent, but shoppers with friends stayed the longest (11 minutes, nine seconds), followed by families with children (nine minutes, 48 seconds).The kitchen can make or break a sale. By and large, if shoppers like the kitchen, they're more serious about buying a new home. Sixty-two percent of the shoppers who liked the kitchen said they would be more likely to buy the home.Underhill's Envirosell team carried out its research in three ways. First, they simply observed people shopping. Second, the researchers conducted post-shopping interviews. Finally, Underhill's crew installed small video cameras at the locations, mainly to track information such as the number of people who pass through certain parts of the model homes.
“These are not spy cameras,” says Underhill. “It's just a way of being able to assign a numeric value to a routine action.”
Based on the group's research, Underhill recommends that builders start by taking care of the uninvolved person. The husband may be content to shop for a few minutes, but his wife may want to spend more time looking over the kitchen or some other part of the house. Have a place for the non-shopper to sit, he says. If you cater to families with children, have some toys available or maybe even a small outdoor playground.
It's also important to have parking readily available. “First impressions are vital, so try to have a clearly identifiable place to park,” Underhill says, adding that while parking may seem obvious, it can become problematic, depending on the nature of the job-site. That's why builders should think ahead of time about where their shoppers will park.
Underhill also advises builders to use strategic selling. People respond best to their contemporaries, so if the appointment is with a couple in their mid-40s, then have a middle-aged salesperson handle that account. If the couple is much younger, try to have one of your younger salespeople on hand.
Also take into consideration the opinions of the children. “If you are selling to families, ride on a skate-board and look at the model from the vantage point of a four- or five-year-old,” says Underhill.
“You might also want to look at the model through your wife's eyes,” advises Underhill, adding that women's opinions of the model are critical, especially with regard to the kitchen.
THREE-STEP PROCESSBecca Unger-Murphy, the account executive who headed up the Murphy Marketing portion of the research, says her company had its own three-step regimen. The process took roughly two hours per shopper, with the in-depth interviews and following the shoppers around taking about 80 percent of the time. Each shopper visited two homes, and the majority of the shoppers were couples.
The first step was an in-depth discussion with the home buyers about the process of model-home shopping. Murphy Marketing found that if the shoppers liked the home, their “must-have” items would fade some. “What we found is that if people liked the kitchen, they would start thinking, ‘Maybe I don't need a three-car garage,'” says Unger-Murphy.
The second step was the shadowing. In this phase the prospective buyers shopped freely, and the Murphy Marketing people followed them with very little interaction. The researchers would pick up on verbal cues, observing and writing down what the couples said to each other. The shoppers were instructed to think out loud, saying what immediately came model home.
Finally, when the shoppers came to the kitchen—the last stop—they were given a Polaroid camera and asked to take pictures of everything they had a strong reaction to, both positive and negative. Murphy Marketing then conducted a scrapbook exercise, in which the shoppers took their Polaroid pictures and pasted them into a scrapbook. The shoppers wrote captions beside the photos, describing their reactions.
“That was a lot of fun,” says Unger-Murphy. “A lot of our understanding came from the photos,” she explains, adding that one important finding was that the kitchen cabinets had to have all the bells and whistles.
“The thing to remember about a model home is that it's about living a fantasy,” says Unger-Murphy, who adds that shoppers really want the experience of finding out what they could have if they could buy anything they wanted. “It's one of the best parts of shopping a model home,” she says.
So when it comes time to close the deal, it's important for shoppers to hold on to the fantasy. Envirosell's Underhill says the closing area has to have a similar motif as the model home the shoppers walked through.
“It needs to be a nice place,” Underhill says, pointing out that the last thing you want is to have the closing held in a messy trailer or model-home office.
The idea is that it's not good enough just to put up a model home. Go visit some of your favorite retailers and take notes. The merchandising techniques you see at Starbucks or CompUSA or even your local supermarket just might help you sign more sales contracts.
THE PLAYERSNine builders in five markets participated in the study.
PHOENIX: Cornerstone Homes and Development
DENVER: US Homes; KB Home
CHICAGO: William Ryan Homes; Town & Country Homes
RALEIGH, N.C.: Drees Homes; Sunstar Communities
TAMPA, FLA.: M/I Homes; Bruce William Homes
SOURCE: MERILLAT INDUSTRIES