How to Compete for Sales in a Fearful Market
Customers are paralyzed with uncertainty and “they are more afraid of making a mistake than they are of finding the right home,” Ross Robbins, MIRM, of Shinn Consulting | Lee Evans Group in Littleton, Colo., told builders and salespeople at a recent seminar in Minneapolis.
To survive the downturn, builders and salespeople need to see the market through their buyers' eyes, Robbins said. Only then, can they begin to address their concerns.
The payoff, though, can be more than just survival. Builders who take the time to understand their customers’ perceptions, fears and beliefs ― particularly small-volume builders — can actually find ways to turn negative perceptions into positive advantages, Robbins said. First, though, the industry has to overcome its own bad habits.
“Every time prospective home buyers go out, the deals get better. There is so much inventory for them to choose from, they figure that there’s going to be just as much inventory tomorrow,” Robbins said.
Also, since many buyers have their own houses to sell as well, they often decide to wait, Robbins added.
“The worst thing of all is that salespeople have caved in to that agenda,” Robbins noted. “They come in looking for a deal and if we can’t meet their deal, we let them go.”
“Who wins? Nobody! That’s a lose-lose game, and folks, that’s a stupid game to play,” he said.
To help turn customers' attitudes around and create a win-win situation, Ross suggested that builders and salespeople accept the realities of the current market and do the following:
- Acknowledge Prospective Buyers’ Fears
“Their perception is that this is a scary, terrible time to buy. We have to acknowledge the reality of the situation. It’s the 500-pound gorilla in the living room. It’s real,” said Robbins.
Arguing with customers will not change their beliefs. Arguing will only destroy a builder’s credibility.
Instead, Ross recommended that salespeople talk to prospective buyers on their terms. “What do we say instead? We say, ‘You're right, it is a scary time. I understand why someone wouldn’t want to buy right now. And yet, for those who are brave enough and understand what they’re looking for, it could be one of the best times to buy. Would you like to know why?’”
- Reach Out to the People Who Are Still Looking
Those who are shopping for a new home despite their fears are there for a reason, Robbins explained.
Whether they admit it or not, they are looking to buy.
“We need to offer them some really good emotional reasons to proceed, and we have to shift the discussion in order to do that,” he said. “As long as we’re talking about bad news, we’re on a ‘not buying’ agenda.”
After acknowledging that they are paralyzed by the fear of making a mistake, Robbins suggested that salespeople focus on the benefits ― physical, financial and emotional — that come with acting now and buying.
Smaller builders can offer some advantages in the current market:
- Buyers Can Deal Directly With the Owner. “They get to deal with you, not some corporate representative who the corporation can pull the plug on if your market is non-performing,” Robbins said. “They’re dealing principal to principal, that’s not the normal thing. That’s a plus, and you’ve got to play that up.”
- Lower Volume Means Greater Customer Service. “If you’re building three to five houses a year, can you give that customer more attention than someone who is building 300 to 500?”
“I don’t care how many employees they have, there is a ‘disconnect’ between the person making the decisions and the person communicating with the buyer that isn’t there in your organization,” he said, telling attendees to “use this market perception to your advantage by stressing the one-on-one, personalized service you can offer.”
- Roots in the Community. “That’s the way I like to say it, ‘We have roots in the community.’ Is that different than saying, ‘We’ve been here longer?’ Yes and it’s more emotional. Words matter,” Robbins said.
- Flexibility. Smaller builders are usually much more flexible and have a better ability to customize or personalize designs, particularly when business is slower. This can be a big advantage if properly presented to buyers.
- Communication. Commitment to a fluid communication process is an area where smaller builders can really shine, particularly since this is an issue that buyers from larger builders often list as a point of dissatisfaction.
Buyers can be happy with their home but still be unhappy with the processes that it took to get them into the home, Robbins said.
- Craftsmanship. Large-volume builders tend to hire tradesmen based almost exclusively on price and then constantly work them for lower and lower pricing, making it increasingly difficult for the tradesman to make a profit, Robbins said. The results are often less-than-stellar work and a tendency to cut corners.
Low-volume builders, on the other hand, are more likely to choose subcontractors with whom they have long-term relationships and who offer quality work and few warranty issues. This is something buyers can appreciate and will respond to, Robbins noted.
“Contact all your previous clients who had a great experience and have them write those experiences down,” Robbins said. “That is something that the big guys can not match ― that personal testimonial.”
“Do you have a customer where you can just step aside and let them do the selling? That’s gold,” he added. “That customer is 50 times more credible than you are.”
“These are the things that you’ve got to start talking about in your agenda, and you need talking points on every one of these things,” Robbins said.
Most home buyers buy a home as “a refuge, a gathering place, a place to create memories and celebrate the events that make up a lifetime,” Robbins said.
If they buy to satisfy these goals, it is almost certain that their “investment” yield will be very high.
At the same time, buying a home is not like a stock certificate whose only reason for being is investment. A home buyer’s equity will increase in value over the long haul, absolutely for certain, he said
Practice Your Message
“So then, how do we get comfortable transmitting these very real messages to our prospects? That’s easy — we must practice them,” Robbins said.
“There is no substitute for having a script that you and your sales team have created and practiced with role playing until the responses are second nature,” he said. “Training on the right way to deal with the uncertainty your prospects display is a critical piece of being confident that you can deal with whatever the message may be that the media transmits today.”
“If you want to convert prospects to buyers, you and your sales team must role play until you are comfortable that you have a sensible response for whatever stall you hear,” he added.
Ross also noted that, when reporting on home buying, most financial editors “have made the financial aspect of home ownership the primary focus — but it is not.”
“While the financial equity created over time is important, the human equity is far more important,” he said. “
If you can make sure you can successfully convey that to your buyers, Robbins said, “then I will confidently make this financial prediction — you and your buyers will do fine during and long after the discussions about how bad the housing market is.”
Ross Robbins, MIRM, is an operations and marketing consultant with the Shinn Consulting | Lee Evans Group based in Littleton, Colo. He has been in the home building industry for more than 34 years, and currently teaches sales skills and management skills to builder clients around the country. For more information, e-mail Robbins, or call him at 303-972-7666.
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