Home Technology Disconnect Could Mean Lost Revenues
Most home builders are not marketing and offering the home technology upgrades and option packages that could stimulate their sales and increase their profits because they don't think there is enough consumer demand for them, according to a recent survey by the Consumer Electronics Association (CEA).
Even though consumers say they want home technology upgrades, builders aren't offering them for a number of reasons, leaving many deals on the table as a result.
However, the CEA research — the sixth annual State of the Builder Technology Market Study, a supplement to NAHB’s Annual Builder Practices Survey — also found that consumers are not buying the technology packages they want because builders are not marketing them or offering them during the construction process.
CEA’s study concluded that what builders perceive as a lack of demand for their technology options may actually be more a matter of marketing, packaging and timing.
Builder reluctance to fully embrace home technology may also be contributing to this disconnect, according to the Home Technology Alliance (HTA) ― an NAHB initiative with the Custom Electronic Design Installation Association (CEDIA) created to serve as an industry resource on electronic integration and home technology products and services.
The HTA found that many builders are still wary of offering home technology options because of the changes they bring to their business operations, additional marketing costs and the learning curve needed to educate their sales staffs. They are also cautious because of the potential delays the options may have on their production schedules.
Underscoring the disconnect is the fact that 89% of the builders surveyed in the CEA study agreed that it is important to advertise home technology options when marketing new homes and that nine in 10 builders said adding home technologies either increased or helped them maintain their revenues.
Easton Park: A Case Study for Increased Revenues
One possible way for builders to bridge this home technology gap is by incorporating technologies in their sales options that match the offerings to their target market.
Production home builder M/I Homes Tampa teamed up with S&S Electric, an electronic systems contractor (ESC) based in Oldsmar, Fla., to create successful option packages ― from lighting controls to whole-house audio ― for Easton Park, its single-family home community in Tampa, Fla.
One of the keys to the success of the program was “to only offer option packages that are easily repeatable and simultaneously meet the needs of a majority of the community’s home buyers,” said Shawn Smith, president of S&S Electric. “By not completely customizing each home, we were able to maintain strict production schedules and provide product options that were profitable for us and M/I Homes.”
M/I Homes also knew that many of its potential customers were technically savvy, which added to the complexity of the solution.
"Our customers are very diverse and require a wide variety of options," said Lisa Turbeville, vice president of sales and marketing for M/I Homes. "We needed a partner who could incorporate as many mainstream options as possible to enhance our model."
For Easton Park, M/I Homes decided “to showcase the most up-to-date options available to set ourselves apart from the competition," said Larry Sekely, the division’s director of purchasing.
Because of the home buyer profile, M/I Homes and S&S Electric also concluded that, to turn their prospects into buyers, visitors would have to be able to walk in, intuitively press a button and see something happen.
Every upgrade option showcased in the community’s Bordeaux IV model — from lighting design and control, video security system, multi-room home audio to the built-in entertainment center — enhances a buyer's lifestyle and potentially meant the difference between making or not making a sale. In many instances, the options presentation helped close the sale.
"M/I Homes embraced the increasing demand for home technology and chose to demonstrate upgrade options in their model homes that many other builders do not offer,” said Smith of S&S Electric. “This resulted in higher consumer satisfaction as well as increased revenue.”
According to Turbeville, with the S&S Home System upgrade sales program, M/I generated close to $200,000 in additional revenues in Easton Park last year.
“Structural product innovation alone is not enough to differentiate yourself from the competition these days,” said Theresa Lynn Collins, area president of M/I Homes. “Our partnership enables us to deliver the very best in consumer electronics and integration that fits the needs of today and will continue to fulfill this requirement into the future.”
Information About Home Technology Available From HTA
The Home Technology Alliance (HTA) is a partnership between NAHB and the Custom Electronic Design Installation Association (CEDIA) that was formed to position the housing industry to effectively meet the growing home buyer demand for home technology and provide maximum return on investment in the new home building and remodeling process.
For more information, visit www.nahb.org/HTA.
CEDIA: A Source for Experienced ESCs
The Custom Electronic Design Installation Association (CEDIA) is a founding sponsor in the Home Technology Alliance and an international trade association of companies that specialize in designing and installing electronic systems for the home.
CEDIA members are established and insured businesses with bona fide qualifications and experience in this field. CEDIA serves as a source for Electronic Systems Contractors (ESCs).
For more information on CEDIA, visit the association’s Web site at www.cedia.org. To find an ESC, click here.