In-House or Outsourced Sales? Weigh Their Merits
Using in-house sales agents or hiring a builder marketing company has always been a bit of a dilemma for builders trying to decide how to have a cost-effective, yet successful, sales program. And in today’s market, the choice may be more difficult than ever.
So, which route should you choose? In good markets and bad, the answer remains the same — it depends.
As a builder, you need to consider several factors when making your decision, including: how many communities you will need to staff; how you will be compensating the agents; and how you will manage the sales team.
Some builders think they will be saving money by hiring an in-house sales staff rather than a builder marketing company. Maybe they will, but then again, maybe not.
What many builders don’t factor into their decision is the amount of support staff that is required to effectively run a sales program. Yes, you need a sales team, but who is going to supervise it?
Building a Strong In-House Sales and Marketing Staff
Nothing personal, but most builders are not great sales managers — mostly because they are too busy overseeing all aspects of running their business and don’t have enough extra time to manage their sales team effectively.
The following are the basic steps, with related costs, that you need to think about when considering this option. Don’t make your decision until you’ve considered them all.
- First, you need a capable sales manager. Your sales team is just as important as your construction team. You have a supervisor overseeing construction, you should have a manager overseeing sales.
- Trust your sales manager to hire a great sales team. At a minimum, you will need two agents on staff — one full-time agent and another support agent to fill in on days off.
Next, you need to determine how to compensate your sales team members. Will you pay straight commission or sales plus overrides? This is an important decision because it impacts your operating capital.
- How will you train your sales team? Let me assure you that even if you hire experienced sales people, they will need training. If nothing else, they will need training on your systems, so you will need some sort of initial training, as well as an ongoing coaching program, to keep your sales team on top of their game.
- Make sure your marketing is keeping pace with trends and changes. Are you using an advertising agency or are you handling the marketing in-house as well? Either way is fine, but if you use an agency, make sure it understands your business. All too often, a builder will hire a firm that hasn’t taken the time to understand their business philosophy.
Certainly, you can add a marketing director to your staff, but make sure that person continues to stay current with the changes in advertising and marketing opportunities that frequently occur. How we market homes is changing at lightning speed these days and you want someone who can keep up with the pace.
Okay, you have factored in the costs of having a sales manager, sales team and marketing director and you have the extra office space necessary to accommodate your additional staff, you can figure how this affects your bottom line and determine if you really are saving money.
Now let’s look at your other option.
Working Effectively With a Builder Marketing Company
Let’s say you hire a builder marketing company. It will have a sales manager who will work directly with you to oversee all the responsibilities previously discussed and more.
- Your sales manager will work with you to determine your sales goals and staffing requirements. Not only is the marketing company responsible for hiring your sales people and support staff, the company will determine what compensation is appropriate and pay it out of their fees.
- A builder marketing company will use licensed real estate agents. This is a huge benefit to the builder. Working with licensed agents assures the builder that his interests are legally protected, which translates into fewer buyer contract issues.
- The company is responsible for training its agents. Any good builder marketing company has a training program in place. Normally, it’s a combination of in-house training and industry-approved courses. Training on your specific company policies and procedures can be easily incorporated.
- The company will provide current marketing expertise. In addition to a sales manager, the company will provide its own marketing director who will meet with you to determine your specific expectations and then provide a marketing budget and timeline outlining what marketing efforts will be done throughout the year. You will be able to provide input and approve all aspects of marketing your communities, just as if the marketing director were on your staff.
- Builder marketing companies go to great lengths to ensure their marketing directors are on the cutting edge of marketing trends. These companies are handling multiple communities in your market area, usually in various price points. This gives them a greater perspective on the market as a whole and enables them to determine what marketing efforts work for different communities.
- Builder marketing companies can also supply market research. Any full-service builder marketing company will provide current market information on a regular basis at no additional cost to the builder.
So which is the better choice, in-house sales or a builder marketing group? Both have their merits.
With in-house sales you have total control of the sales process, but you also incur 100% of the costs involved. So, you need a large capital investment to bring your sales in-house.
A builder marketing company provides you the same services with less upfront capitalization. The marketing company provides the sales and marketing management, the sales team training and monitoring and on-going market research.
Like any other business decision, it comes down to dollars and cents. Figure out how much money you have to work with and evaluate which option makes the most sense for your business.
Gaye Burwell Orr, MIRM, CMP, is vice president and partner of Coldwell Banker Advantage New Homes, a full-service new home sales and marketing company in Raleigh, N.C. She has been working with builders and developers in the greater Raleigh area for more than 25 years and is a past chairman of the NAHB’s National Sales and Marketing Council and the current president of the Institute of Residential Marketing. For more information, e-mail Orr, call her at 919-460-6880 or visit www.advantagenewhomes.com/homepage.asp.
This article originally appeared on the NAHB Sales and Marketing Channel.
Tax Credit Web Site Looks at Opportunity of a Lifetime
Builders and other industry professionals can help spur home sales by referring prospective first-time home buyers to www.federalhousingtaxcredit.com. The NAHB Web site provides detailed information on the $8,000 federal tax credit for first-time home buyers included in the economic stimulus legislation signed into law by President Obama.
Consumers can use the Web site to find information on the tax credit – including a detailed question and answer section. It also includes information about other housing-related and small business measures in the legislation and a number of home-buying resources for consumers.
Spanish Version Also Available Online
A Spanish version of this increasingly popular Web site is also available to provide detailed information on the tax credit to Spanish-speaking first-time home buyers.
Industry professionals are encouraged to highlight either tax credit Web site when marketing to their potential first-time home buyer market.
In Today’s Market, 'Think Sold!' With Help From BuilderBooks
“Think Sold! Creating Home Sales in Any Market,” available at BuilderBooks.com, 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.
Subscribe to Sales + Marketing Ideas Magazine for Cutting-Edge Information
For additional cutting-edge sales and marketing information, subscribe to NAHB’s Sales + Marketing Ideas magazine (www.smimagazine.com).
Click here to learn about membership benefits of the National Sales and Marketing Council and the Institute of Residential Marketing.