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Pitfalls to Avoid When Planning an Active Adult Community

Planning and developing an active adult community differs in many ways from what is required for traditional communities because with an active adult community, you are dealing with a completely different buyer in a unique market.

To succeed in the 50+ market, you must to do your homework and, early in the planning process, begin your market research and sales staff training. If not, you will not be fully prepared and could find yourself susceptible to any of the 12 big mistakes project teams often make when developing strategic market planning for an active adult community.

The mistakes to avoid include:

• •  Not Properly Targeting Your Market Feasibility Study

Very often, builders and developers will look at the demographics and make decisions on the basis of age and income when targeting their active adult prospects. This approach is too simplistic and fails to recognize that the active adult market is fractured, multi-generational and complex, and that the buyers are more sophisticated and discerning than their predecessors. Not understanding this can lead to a community’s failure before ground is broken.

• Not Testing Market Results

If you rely on an initial market research program that only utilizes quantitative data, you’re headed for disaster. It’s important to engage your target buyers using qualitative research (i.e., focus groups, attitudinal telephone and mail surveys) as well as obtain information from residents in competing, existing communities. Failing to do so could hurt your community’s market acceptance and will prevent your project team from getting the proper information it needs to design your product, amenities and community infrastructure.

• Not Periodically Re-evaluating the Marketplace

In today’s development climate, taking a community from the beginning to the grand opening — from optioning the land through zoning and initial community development prior to pre-selling and the grand opening — can take between 24 and 36 months or more, depending upon the region. You not only need to do initial research, you should continue to check the competition (current and planned) at least every three to six months while you are undergoing development planning. You also should survey your target market to see if the views of your potential prospects have remained the same or begun to change.

• Not Building a Strong Lead-Generation Database

The most successful active adult communities during the past five years have been those that understand the value of building a lead-generation database — and starting early.

Waiting until your community breaks ground is not the time to start developing qualified leads. You should begin when you are in the early or final stages of zoning and are confident of obtaining approvals. At that time, you also should put in place the systems, scripting, fact sheets, folder, booklets and other materials that provide the answers active adult buyers seek when visiting your lifestyle community.

• Not Strengthening Your Lead Follow-up Program

If the systems, promotional materials and answers are not available when prospects inquire, the odds of converting your leads into qualified prospects and purchasers will decrease considerably. If you haven’t thought out the methodology of how your sales agents will follow through after the initial contact — the visit, telephone call or inquiry — overall market acceptance more than likely will decrease, too, and potential sales will be lost to your competition. However, a systematic, periodic follow-through will encourage prospects to contact you for further discussion or steer them closer to purchasing.

• Offering Outdated or Flawed Product Designs

Too often, builders and developers of active adult/early retirement lifestyle communities take the approach that, “If it’s selling, don’t fix it.” Either that or they just don’t have a plan for periodic introduction of new product. This approach can lead to a false sense of security as more competitors enter the market and as your target market evolves.

To prevent your product design from becoming “stale,” you need to conduct ongoing research. You should continually question current residents about what they would change or what might be missing if they had to purchase the home again. You also should ask them how much they would pay to have these changes made.

Buyers and residents always have a wish list, but you need to find out their priorities and how much they are willing to spend for upgrades.

• Not Following a Marketing Plan or Developing an Adequate Budget

Nothing hurts a community more than “helter-skelter” decisions or a temporary response to a competitor’s marketing program or promotion. You cannot live in a vacuum and ignore what the competition is doing, but your best bet is to create an annual marketing plan that is broken down into quarterly or 13-week periods and has a built-in flexibility in order to accommodate change.

Second, developing budgets based solely on a percentage of projected gross sales may not be comprehensive enough to accurately do the job. Instead, look at each of your major expenditures and ask yourself this question: “Have I budgeted sufficient money to do the job, reach my projected goals and attract qualified prospects that have the money to buy and are willing to buy?" Only after you can answer ‘yes’ can you say that you have developed a budget appropriate for the task.

• Not Establishing Urgency or Contingency Plans

You cannot live in a dream world when you prepare your marketing plan. You have to provide for contingencies in case the market changes or the competition increases. For instance, if sales slow, are you prepared to delay your clubhouse opening? And what effect would that have on your prospects and your community’s future?

If you don’t plan ahead for events like these, you could lose all your prospects. Also, if you don’t establish an “urgency to buy” — by controlling the release of your inventory, price increases or a limited amount of marginal models — many of your buyers could delay their purchases.

• Not Staffing Your Sales Office Adequately or With Enough Support Personnel

The larger the community, the more staff you need not only in sales but in marketing support services. Usually, your first three to six months after opening will determine how fast you are gaining market acceptance.

It is better to set goals for each sales counselor (approximately 36 to 50 home sales per person annually) and then weed out the weak people who don’t carry their load. Also, active adult marketing requires support personnel in the design center and solid follow-through in processing, walk-throughs and warranty service.

Do not burden your sales counselors with processing and closing functions when you pay them to sell. Non-productive activities that don’t lead to a sale can upset the market strategy and diminish your sales team’s productivity.

• Not Providing Enough Concentrated Sales Staff Time

Programming a sales counselor’s time on the sales floor produces more efficient sales and enables your sales staff to conduct the follow-through with prospects. If you expect high-volume sales (150 to 300-plus annually), then deliver traffic that allows them to be on the sales floor at least 50%-70% of the workday.

Good salespeople try to work with at least 50 prospects:

• 30% who will buy in 30 days
• 40%-50% who will buy in 90 days
• 20%-30% who will buy in 180 days
  
  
• Staffing Your Sales Office With Staff With Little Experience Selling to Active Adults

Too often, sales counselors with good experience in other forms of real estate sales are hired even though they have little or no knowledge about how the active adult buyer thinks, reacts and goes through the decision-making process. This could result in your sales staff not connecting or bringing bad habits from previous jobs to your community.

All sales professionals, regardless of their experience, are looking for new ways to sell. Sales management needs to conduct ongoing and continuous training programs to increase the rate of conversions of qualified prospects to buyers.

• Lack of Team Effort Between Sales & Marketing and Company Management

In today’s corporate organization — with its company mission statements, business plans and work effort diversification — the lifestyle community development sector requires a “team effort” to produce efficient sales that don’t cause undue delay. In many cases where coordination is not present, project management can be “inflexible” and insist that change orders be kept at a minimum. The result is that active adult buyers are not able to get what they truly want. By the same token, sales management tends to accommodate the buyer by forcing the issue and not recognizing why certain customer changes cannot be done.

Remember, active adult buyers are still “king.” They have a choice and can buy from another developer. Unless your entire project team understands what these customers want and projects and delivers a customer-friendly atmosphere, your marketing and sales efforts will not be successful and your community will not gain total market acceptance.

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