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I have weathered seven economic downturns since I first entered the workforce in 1970 and each has been challenging in its own right.
But, while the first six I experienced varied in their degree of severity and each one only affected particular portions of the real estate industry, the downturn we are beginning to climb out of now has severely affected all segments of the industry — residential, commercial, industrial, institutional, recreational, resort and retail.
With about 10% of the nation’s workforce unemployed and a large percentage underemployed or simply too discouraged to even look for work, employment is the key to the recovery for both housing and the nation.
And, although many in the industry have done a good job of trimming their costs and downsizing their workforce to weather the downturn, with economic indicators starting to point toward modest growth in 2011, we can expect to begin to see many new opportunities throughout the country for building and developing apartments. In addition, the demand for single-family homes and condominiums in several markets has been on the rise.
While the Mortgage Bankers Association recently predicted that a 30-year fixed mortgage rate will climb to 5.1% by the end of 2011, the rate will still be historically low.
Still, the increase may stoke some fears and cause some prospective home owners to resist getting into the market. As the market recovers, however, our job will be to quell those fears and educate prospects on why they should get off the fence now and buy a new home.
Targeting the New Buyer
A study released last month by Builder magazine and the market research firm American LIVES outlined five home buyer traits that you should consider when designing and selling new product in the recovering market. According to the study, home buyers today are:
Concerned about their financial future
Concerned about energy efficiency, but not necessarily “green”
Likely to consider their prospective neighborhood to be almost as important as their home when making a buying decision.
In addition to addressing these traits, you will need to assess your local market to determine home buying and leasing trends to help determine the viability of your market. You also should determine how foreclosures and re-sales are faring in your market; the value-differential between new and existing homes; and the condition of your local commercial, industrial, institutional and retail markets.
Like we do on a regular basis, you should meet with your local Realtors®, remodelers, retailers and wholesalers to determine what products and services consumers in your market area are purchasing. This will enable you to fine tune your buyer’s profile, which you can further refine through surveys and focus groups.
How Will You React to a Changed Market?
The market is changing and, in order to succeed in the new market, you should consider and prepare for how you will react to the changes.
According to author and speaker Wayne Dyer, "When you change the way you look at things, the things you look at change." When applying that attitude to home building — instead of complaining about how bad business is — you should develop fresh ways to re-create your business.
Begin by assessing your position in the marketplace, your strengths and weaknesses, and pursue business measures that can improve your strengths and reduce or marginalize your weaknesses.
Also, determine whether you are quick and nimble enough to seize opportunities, and if not, how you can reshape your company so that you can grasp opportunities when they appear. This not only applies to your company, but to your contractors and trade partners as well.
Consider, also, what processes you need to change in order to develop and deliver better and more competitive products and services, and to generate more leads, sales and closings.
When the time comes to implement your changes effectively and efficiently, be sure you also have a system in place to monitor and evaluate your changes so you can ultimately determine their effectiveness and quickly change course, if need be.
Embrace Creativity and Innovation
An effective way to position yourself in the changing marketplace is to embrace passion, creativity and innovation and project a positive, can-do attitude.
One company that did exactly that was Meritage Homes, which builds in Arizona, California, Colorado, Florida, Nevada and Texas.
“At Meritage Homes, we are trying to be proactive and innovative,” said C.R. Herro, vice president of environmental affairs. “We are eliminating waste and products that do not offer value to the homes we build."
The company offers 100% Energy Star-qualified homes — at no extra cost to consumers — and other eco-friendly features that differentiate it from the competition and from existing homes.
In addition, Meritage Homes promotes an entrepreneurial work environment that encourages employees to be creative and innovative and to pursue opportunities to further their careers. The builder fosters a team atmosphere where every employee counts.
Like Meritage Homes, small-volume Pennsylvania builder Outlook Construction also embraces energy efficiency and green building.
The company launched a special promotional campaign featuring The Energy Star Idea Home, which incorporates state-of-the-art products and services. Outlook Construction promoted the home in one of its communities, and the promotion garnered the builder its highest traffic and sales in its 25-year history.
Revive Personalized Communication
Person-to-person, or at least personalized, communication has become something of a lost art today as more people and businesses have come to rely upon electronic communication — a more efficient, but somewhat impersonal form of communication.
Your goal is to let your customers and business associates know you care and that you will address their concerns as soon as possible. To accomplish this, you should strive to make your communications more consumer- and business-friendly by changing some of your business processes and projecting a more personal connection and attitude.
You can begin by simply personalizing your communication program; smiling before you answer every phone call or make one; being pleasant and genuine; and not interrupting when being addressed. Let the other party finish what they are saying before you respond.
In addition, when you have to leave a message, let the party know you will call again at a specific time and with the information that they requested or that you promised. Then, be sure to call at the appointed time, even if you don’t have the information. By making the call when promised, you build and maintain their trust.
Be punctual and return phone calls the same day. If possible, have an employee — rather than voice mail — answer the phone.
Send letters as well as e-mails. Because fewer people today send letters, “snail mail” will have a greater marketing impact on your customers and business associates.
Finally, follow up — and always ask for referrals.
It’s a Tall Order, But You Need to Do It All
In today's tough marketplace, we all need to learn from one another. We need to adapt and make the appropriate changes to improve our business.
We need to be flexible, creative and innovative and market our company story through electronic and print media, our websites and social media and person-to-person. We also need to evaluate our products, services and market strategies often.
In short, we need to stay on our toes.
Businesses that stop or reduce their marketing will lose market share. Conversely, businesses that continue to market in these difficult times will out-perform their competition now. Plus, when the market improves, they will have better brand recognition, increased customer satisfaction and more referrals, sales and closings — securing their position for enduring success.
S. Robert August, IRM Fellow, MIRM, CMP, CSP, MCSP, CAASH, is president and founder of S. Robert August & Company, Inc., a national marketing and public relations firm based in Denver that specializes in providing home builders, developers, Realtors®, manufacturers and lenders marketing/management consultation, executive business training and sales training. August is a Master Train the Trainer, past chairman of NAHB’s National Sales and Marketing Council and past president of the Institute for Residential Marketing. For more information, e-mail August, or call him at 303-220-8480.
“Think Sold! Creating Home Sales in Any Market,” available at NAHB BuilderBooks, is a practical, how-to guide for developing the self-awareness, knowledge and skills needed to succeed in the competitive field of new home sales.
The book covers everything from the home buying process and new home financing to strategies for making better sales presentations and sizing up the competition. It teaches readers how to overcome customers’ concerns and provides specific examples of how to explain the benefits of new home features in customer-friendly language.
“Think Sold” provides insights on how to approach sales and life from a position of optimism that will create successful outcomes; how to improve upon potential customer prospecting and follow-up skills; and how to communicate effectively with various types of buyers and learn how to adjust communication strategies to increase rapport and alignment with buyers’ motives.
To view or purchase this publication online, click here, or call 800-223-2665.
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