Times have changed since McDonald’s chairman Ray Kroc introduced upselling to the masses by directing his employees to ask customers if they wanted fries with their sandwiches. Even 60 years ago, Kroc knew that consumers spend more when they’re already in buying mode, and his directive nearly doubled the company’s sales of french fries.
Home builders long profited from the same approach, selling bare-bones houses standard while pushing a variety of higher-end products as upgrades or options. But 21st-century home buyers are turned off by hard line tactics, say industry experts. In fact, among home buyers and builders, upselling is now practically a dirty word.
“We don’t upsell. The term itself is inappropriate,” says Kira Sterling, chief marketing officer for national home builder Toll Brothers. “The implication is that that’s against customers’ best interests, and this is not what we are doing.”
Instead, associates at Toll Brothers’ 25 design centers throughout the country take a custom approach for every client, Sterling says, getting to know each buyer’s lifestyle and how they intend to live in their homes so presentations and offerings can be tailored to their needs.
It’s all about building trust, says design consultant Suzanne Felber, founder of Lifestylist Brands. “People don’t want to be sold—they want to be educated,” she explains, noting that model homes and sales centers need to focus on education instead of sales. “When they trust you, they will buy from you.”
Jane Meagher, president of design studio consulting firm Success Strategies, calls the process of informing and educating home buyers upserving. “When you upsell, you’re focused on driving more revenue at any cost,” she says. “When you upserve, you educate customers about higher-value products, and if they see the value and decide to invest, they end up with homes more closely aligned with their wants and needs, reflecting their unique personalities.”
Seattle-area builder Quadrant Homes takes this approach in selling its high-end houses in Seattle’s tech corridor. Buyers spend anywhere from half a million dollars to upward of $1 million to live in one of the builder’s communities in award-winning school districts east of the city.
Seeking to enhance its customers’ product selection experience, Quadrant in 2013 built a design studio in Bellevue, Wash., where home buyers could work with design associates to choose finishes and upgrades. The center was beautiful and won awards, but it wasn’t unique enough, says president Ken Krivanec.
So this year, company executives replaced the original design studio with a state-of-the-art 4,200-square-foot concierge-level facility that is “a haven for today’s buyers, offering products and services just ahead of what they expect,” Krivanec says. “One station after another inspires them to think differently.”
A “tech wall” highlights the latest in home automation. Kitchen and bathroom vignettes show off the newest premium products, from heated marble floors to floating mirrors with vanishing TVs. Buyers can see how different finishes work together using interactive displays, make lattes using the automated system, control windows and lighting with their smartphones, and play with robot vacuums while enjoying a catered lunch from the demonstration kitchen. The studio showcases products from many premium brands including Savant, Lutron, KitchenAid, Whirlpool, Cambria, and Delta.
Quadrant’s investment is paying off. Though the firm wouldn’t share sales numbers, vice president of operations and purchasing Chris Pallemaerts says that year over year, buyers across all price levels are spending more on finishes and going for products they connect with emotionally. “Costs and budget have become a kind of secondary concern, which shows how much the space and products inspire them,” he adds.
Show Offs
In markets across the country, home builders of all sizes are upping their design studio game. Earlier this year, Louisville, Ky.–based Cook Brothers Homes opened what it claims is the most comprehensive design studio in greater Knoxville. In Charlottesville, Va., buyers can preview and select fixtures, appliances, cabinets, and countertops at Southern Development Homes’ new design center. In Southern California, The New Home Co. converts model home garages into customized on-site design centers and highlights all available upgrades, from lighting to landscaping, in its models. In February, McLean, Va.–based Miller & Smith opened a “sales experience center” at its new community One Loudoun in Ashburn, Va., a 1,300-square-foot retail space that allows home buyers to feel and see products.
Similar efforts are underway at the Victor, N.Y.–based design studio for developer and home builder Riedman. President David Riedman says buyers are making more “additional investments” (the PC term for spending more money), thanks to the company’s design center that differentiates his firm from competitors. “Customers walk away from the experience with the home they want as opposed to feeling like they were sold as much cabinetry as possible,” he says.
The process of selecting the hundreds of products that go into a house can be daunting for even the most design-savvy buyer, notes Cliff Stahl, national vice president of sales training for Meritage Homes. “They want to be reassured that they’re making coordinated, tasteful selections,” he says.
To that end, sales associates at Meritage’s 19 design centers nationwide take the role of trusted advisers who get to know each buyer, reassure them when necessary, and nudge them toward making choices when time is running out. Meritage recently began to offer Envision, an online application from Austin, Texas–based consulting firm BDX that lets buyers see and research options as they prepare for design center appointments.
The digital portal eventually will be available to every Meritage client. “There’s always been this mystery before going into a design studio, and you couldn’t really prepare for the appointment before you got there,” Stahl says. “Now you can preview selections and shop around at your leisure. This is the way of the future.”
California’s BlackPine Communities also uses the Envision portal to help prepare clients for visiting its 1,200-square-foot design gallery in Sacramento, says president Michael E. Paris. He has seen that “the more prepared folks are and the more ability they have to see and feel things in our design center, the more exponentially their tendency to spend, so to speak, increases,” he says.
Targeted Sales
Home builders looking to profit on products are wise to target affluent empty nesters who are often trading down in square footage, have discretionary dollars, and “feel like it’s their time to shine,” says Meagher. She points out that millennials also tend to feel no less entitled to superior products and upgrades than their boomer parents. Raised in a world full of hyper-segmented choices, millennials don’t want to live in a box that looks like the neighbors’ house, Felber says, and they expect the latest, greatest technology.
Jerry Gloss, a senior partner at Louisville, Colo.–based architectural firm KGA Studio Architects, says baby boomers are especially ripe for upselling—without the high-pressure tactics. “They figure they’ve worked their whole life for this house, and with lower interest rates, their dollar goes a little bit farther,” he says.
Builders Design regional vice president Lesley McCarthy says curation is key to reaching all buyers, many of whom feel an immediate sense of trust when design centers feature trend-forward products they’ve seen on Houzz and HGTV. In fact, builders who offer customizable design features in their homes are viewed more favorably by buyers than those who do not, according to a new study, even when buyers choose not to opt for the upgrade.
The survey of potential home buyers commissioned by fireplace manufacturer Napoleon found that 52% of potential homeowners had a more positive impression of builders that offer upgrades, says Stephen Schroeter, Napoleon’s senior vice president of sales.
“We learned from the study that success isn’t just about upselling products,” Schroeter says, “but more about designing spaces and incorporating amenities that increase the emotional appeal of a room.”
