12/20/2013 Goal Setting For 2014

As the end of the year draws closer, determine where you are in relation to the sales, financial, and customer satisfaction goals you set for 2013. If you are behind where you projected yourself to be, then assess and analyze to determine what you have to do to get back on track.

Bob Schultz, Contributing Editor



December 20, 2013

What did you accomplish in 2013?

A good way to plan for the new year is to ask yourself that question. Why? Because past performance is always a good indication of potential future success. So, look back before you move forward. Review your goals, activities, and performance benchmarks for 2013. Here are some items to consider as you make your assessment.

Carefully assemble the data needed for this review. As the end of the year draws closer, determine where you are in relation to the sales, financial, and customer satisfaction goals you set for 2013. If you are on track, great, and congratulations.

On the other hand, if you are behind where you projected yourself to be, then assess and analyze to determine what you have to do to get back on track. Next, think through all the actions, activities, and tactics you executed exceptionally well throughout this year. Determine why you performed those tasks so well and identify what you need to do to assure that you keep doing those tasks throughout 2013 and into 2014.

Likewise, review what you didn’t do as well and determine what you must immediately do to become more proficient in each and every one of those areas as you go forward.

Consider using 69 benchmarking segments—52 weekly, 12 monthly, four quarterly, and one annual—if you really want to drill down in the historic data. This rear-view mirror assessment will give you a sense of what you may need to do more systematically as you move forward. By keeping the focus and attention on shorter weekly segments, you’ll be able to achieve much more consistency and urgency in gathering information. Reviewing and assessing each of 12 months will allow more time to make quick adjustments as needed, and major reviews and corrections over four quarters will provide a much stronger possibility of achieving, or exceeding, annual goals and objectives in the future.

After you have assessed and determined what you did well and what needs to be improved, meet with the appropriate members of your team to create an action plan with time lines for implementation to achieve measurable improvement in the year ahead. Here’s an additional tool to help you assess what you accomplished in 2013: I presented a list of “25 Proven Ways to Increase Sales” in last month’s Professional Builder (see PB November 2013 or ProBuilder.com). Take that list, create a simple spreadsheet, and score each of the 25 items as you see it today on a scale of A to F.

A—Got it covered, do it all well and consistently. Identify why and how this has been accomplished. Action Plan: Maintain.

B—Somewhat covered and fairly consistent. Identify why and how this was accomplished. Action Plan: Improve where needed.

C—Varies as to levels of excellence and consistency. Identify why. Action Plan: Immediate improvement.

D—Not even close to a process or system to achieve success. Identify why not. Action Plan: Critical action needed immediately or concede defeat.

F—No clue where we are. Action Plan: Your call as to if you intend to try to stay in business.

A few more thoughts to consider:

• “When something becomes personal, it becomes important.” Builders want sales revenue and salespeople want financial compensation for their sales. For the most part, builders are responsible for nearly all (if not all) of the costs and expenses related to generating the leads and prospects to produce the sales. Pretty simple, straight forward, and personal.

• “You cannot manage and therefore improve that which you do not measure.” To increase the ROI on all sales-related costs and activities, builders, sales and marketing managers, and salespeople should have a passion for knowing and understanding the important metrics of their business.

• “In new home sales, if we only look at a sale as an objective rather than as the end result of a series of activities, actions, and expenses measured against acceptable levels of performance, then we really do not know where we are or what we accomplished.” Develop a vision for those possibilities.

Be sure that you have a system and process in place that consistently provides the costs, numbers, and ratios. Then you can more easily and accurately answer these questions: What did you accomplish in 2013? How did you do it? How many sales and how much revenue and profit did you achieve? How much time, money, and human resources were invested in the process? What was the ROI on the financial and human resources invested?

Using all this information as a frame of reference and creating an appropriate and formative action plan, I promise that you will be able to increase sales conversion ratios and begin to reduce unnecessary costs going into 2014.

But beyond these assessments and reviews, attitude is critical. Remember that success can often times be the biggest breeder of complacency. The recent upturn in many markets is starting to show some signs of that. Also know that no market ever remains great or bad forever. Always stay grounded in reality and be focused on the fundamentals, disciplines, measurable benchmarks, and accountability that are required for consistent optimum performance. Increase sales revenue and reduce unnecessary costs without sacrificing quality, integrity, and sound business practices. Do not allow yourself to get distracted by irrational exuberance or unfounded optimism.

Being a pragmatist with more than four decades of experience in our industry—enduring four major housing recessions along the way—I am convinced that history does repeat itself. With the continued upward pressure on all of your construction and land costs leading to price increases, and the strong potential of increasing interest rates over time, affordability will become a major issue. Also, there is always the omnipresent possibility of any national or global event that could quickly cause fear and pushback from potential buyers.

Then all of a sudden, just as the market did not that long ago, we could go from hot to not in an instant. Don’t plan on that to happen, for that outlook would be pessimistic and not appropriate; however, you should always be preparing for that possibility. Doing so is good judgment and very appropriate. A final thought: Where does good judgment come from? Experience. Where does experience come from? Bad judgment.

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11/15/2013 25 Proven Ways to Increase Sales

A comprehensive strategy for reviewing and improving your sales operation

Bob Schultz, Contributing Editor



November 15, 2013

If you look at what you are doing and the way you are presently doing it, how many sales and how much revenue do you think you are missing? How much are you misspending in the process, and what can you do to fix it?

To begin, it is imperative that you understand the differences between marketing and sales, and that you have a process to consistently manage and measure the objectives and results of each. For home builders, marketing takes two predominant forms. The first involves research, analysis, and interpretation of information to determine whether your product is well positioned in your marketplace. The second is to provide a reasonable projection of what your sales absorption should be expected to produce.

The following list offers 25 ways that your sales operation can benchmark, assess, and improve its processes. A single step, in and of itself, will not make a substantial difference as none of them is a silver bullet, the one thing, the big secret, or the newest strategy guaranteed to increase your sales. Review them all and evaluate your current standing against the entire list. Commit to an action plan for making improvements where they are needed, and you will begin to make a significant difference. The magic is in the mix. These steps are not easy. Embarking on this path will require focus and  an understanding of the value of these principles. Only then will you be able to motivate your team to take the action needed to create more sales success.

Measure 

1. Periodically conduct an independent competitive market study and positioning assessment of your company and its offerings.
2. Track monthly sales and closings in your competitive resale market areas and price ranges. Analyze trends, such as the number of closings, days on market, and who the selling agents are, on a quarterly basis.
3. Review and print the complete website of all competing home builders and check each one again monthly, noting any changes in offerings or the status of sales.
4. Send salespeople to personally visit and provide a competitive shop report of all competitive builders at least quarterly.
5. Conduct Realtor focus groups twice annually.
Another critical role of marketing is the creation, implementation, and measurement of resources used to draw homebuyers to interact with your sales people. This is especially important when using social media. Being liked is highly overrated if it does not lead to a measurable number of contacts, and then to sales. Measure the following; this data will let you know if the likes are producing sales:
6. Website visits against source, customer contact information provided on website, contacts made, appointments set, and sales converted.
7. Cost of traffic units by source.
8. Cost of sales by traffic source.
9. Conversion ratios by salesperson, by source.
10. Referral sales.

Mine Those Contacts 

Selling new homes is a contact sport. To maximize the number of contacts, take these recommendations to heart:

11. Be open for the convenience of the customer.
12. Be properly staffed, especially during peak traffic times.
13. Utilize assistants. One good new-home salesperson, working in conjunction with a well-trained, motivated assistant will outsell two salespeople in the same situation.
14. Hold a monthly drawing to acquire basic and accurate contact information from all visitors.
15. Have your sales team focus on follow-through and contact all prospects. Measure that activity and its results.

Sales Prep 

The point of purchase is where the rubber meets the road. Spending money and human resources just  to generate traffic is wasteful and simply gives your salespeople more chances to fail—unless your team has mastered the necessary skills. To improve your conversion ratios, follow these tips:

16. Use a targeted form of compensation where money is earned and escalate for achieving and exceeding levels of sales on a quarterly basis. The compensation should be calculated to be congruent with profit levels, and restarts each quarter. Do not use a fixed percentage of the sales price as your gauge.
17. All that the customer sees—signs, landscaping, models, sales office, amenities, selections center, and the like—must be show ready at all times.
18. Communication, demonstrating, closing, and negotiation skills must be highly developed through inculcation and become second nature when interacting with a customer.
19. Every sales representative that a customer encounters must be psychologically and emotionally ready to sell.
20.  Everyone must expect a sale to occur on the first visit, or if that doesn’t happen, a conditional sale; or if that is not going to happen, an appointment to meet again will be made; and if that doesn’t occur, an agreement for a call or contact; and if that doesn’t happen, it’s time to assess why not.

Sales Management 

You cannot manage and therefore improve what you do not measure. To create a high-performing sales team:

21. Learn to hire right, and when required, fire right. Do not hire for experience as far too frequently that experience is the greatest barrier to becoming extraordinary.
22. Train for the purpose of skill development and to provide a well-proven basis for change of behavior. Motivate to provoke the use of those skills, and don’t confuse the two.
23. Use simulated selling drills to increase sales competence to a high level of accountability performance. These drills, which salespeople know unfavorably as role playing, are not an option and should not be subject to popular opinion and consensus.
24. Mystery video shop and score against a high standard, view with your salespeople, and coach using the video shop at least twice annually.
25. Lead with a purpose. When placed in command, take charge.

Given the uptick in the market for many builders, the prospect of having a modicum of success can become the biggest breeder of complacency. Don’t let that happen. This list is just the tip of the iceberg, but it’s a good place to begin an assessment; consider converting it into your own self-evaluation tool. And please feel free to contact me with any questions or situations you would like to discuss.

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11/15/2013 Closing the Sales Fulfillment Gap, Part II: Action Amidst the Angst

Builders weigh in with their own, still-evolving solutions on how best to shepherd customers from contract to closing.

Scott Sedam, Contributing Editor



November 15, 2013

Last month in the October issue, we broached one of the greatest profit-sapping issues in home building; how to manage customers from sign-up through to the closing table, having met every decision date on time with a smile. It’s a problem that spawns an almost universal groan, yet generates little action toward a remedy or better yet, prevention. I described a 12-step sequence that greatly enhances the odds of success in this process then decided to take it to the streets—the home building streets—and gather some reaction from builders and perhaps a couple of sales trainers. I was hard on sales trainers in the last article in particular because after calling ten builders to learn how their trainers, either internal or external, address the problem I call “sales fulfillment” what I got was a universal, “They don’t.”

I then sent a copy of the first article to a cross section of builders and received a wide variety of responses, some short and sweet and others with considerable detail. A common word emerged as I read those replies—communication. Is that all there is, just improved communication between sales, the design center, purchasing, construction, and the customer and then everything gets better? As Dr. John Douglas, one of my favorite college professors, used to admonish, “Communication is never the problem; it is merely a symptom.” Symptoms, of course, are indicators of a deeper glitch afoot in the system, and we’d be wise to remember Dr. Douglas’ warning as we plow through these responses. In my 40 years in business, I found that an intense focus on outward communication cannot only mask the real problem; it can actually lead you astray. On these pages you will find observations and ideas from builders who, if they have not solved the problem, are owning up to it and making progress.

Mike Humphrey
David Weekley Homes, Houston, Texas 

This may sound simplistic but there are some essential basics. Hire the right person to the expected job outcomes/fit, attitude, and do it in a purposeful, scientific way. Train them. Their success is our responsibility since we picked them. Support them with the right tools. Benchmark against others, including those outside the industry, such as retail, etc. Survey customers and listen to their feedback both positive (celebration and reward) and negative (process first and person second with corrective action). Work on development plans with your people. Hire, train, and support toward the outcome you desire.

Dwight Sandlin
Signature Homes, Birmingham, Ala. 

Solving this issue requires a resolution of competing perspectives. Finance wants a margin that exceeds pro forma; design wants the coolest look; production wants a box, etc. We decided to create small teams with membership from each department required to accomplish the goal. We are just beginning, but our people are very excited about the teams and believe they will have more control of their own issues.

Jeff Czar
President, Armadillo Homes, San Antonio, Texas 

All selections are made by our sales people with customers in our sales centers. While we have many choices, they are done in a way whereby the customer is not overwhelmed. We try to provide the popular colors and options and focus them around design packages. Our customers can upgrade from there if they choose, but there are no handoffs. One single source, one message, and we feel that’s a better customer experience. Our sales agents are trained to cover the dos and don’ts during the selection process, and our customers are told that once the home is started there are no changes. Therefore, together the sales agent and customer verify all selections and options before the contract is sent into our office and ratified by me. To avoid having to tell the customer “No,” we make sure they understand that if a change must be made it requires a change order fee of $250 plus the cost of the change up front. This makes it their choice, but protects us, our schedule, and our margin.

Chris Cates
Caviness & Cates, Fayetteville, N.C. 

This issue had been Item No. 1 for us this year, and we attacked it full force. We went after additional sales and strayed from our formula. We are a spec builder, and we have always limited changes to our plans. We began allowing this and in return lost margin based on time, efficiency, and not charging enough for the changes and/or upgrades. We sat down as a group and pared the changes and upgrades that we would offer. As hard as it was to say to our customers, we had to give them a “quality no.” It’s a work in progress and the most important thing you can do is communicate with your staff and your customers. How your departments within your organization communicate also is critical.

Gord Bontje
Laebon Developments, Red Deer, Alberta 

In our area it is normal practice for salespeople to manage the fulfillment process. That is, get the selections made, coordinate the final prints, do the walkthroughs, etc. We don’t do that, but for a different reason than you might expect. My reason is that I think my salespeople should be selling. I let them write an agreement, get the conditions removed, spend a few hours turning the deal over to our office and field people, and then forget the buyer. I think the customer is better served that way than by having salespeople also act as clerical workers—something that the profile of a good sales person doesn’t ever contain. And, I get more sales.

John Howe
President, Omega Builders, Temple, Texas 

We prided ourselves on being a builder that embraced customization. The national builders cannot stretch a garage or master bedroom to fit your needs, nor can they customize a covered patio to the buyer’s exact wishes with an extra column. This “just-the-way-you-like-it” approach (to steal from Whataburger) we believed set us apart from the giants and gave us an edge. But the recession made things worse. We were willing to completely customize a 1,400 sq. ft. plan, stretching it any which way possible, changing sizes of doors, etc. just to make a sale. The lack of a defined process and clearly stated expectations created chaos, mistakes, missed closing dates, higher cost (less profit), and had an adverse effect on the very thing we wanted—high customer satisfaction.

Since then we have gone through substantial change, examining our entire process from contracting through closing, beginning with clearly defining the process. Buyers are informed verbally and in writing what to expect and exactly what changes can be made and when. Cut-off dates are defined as part of the purchase contract and since implementation of this policy, the number of change orders has decreased dramatically yet the dollar amount hasn’t. The first change order at the time of selections is free, but additional changes incur escalating charges. We determined the most popular structural (plan) options our customers like and offer them as predrawn and prepriced plan options. They have to be chosen at the time of contracting.

We expanded the number of predefined and prepriced standard options and established standard color families, which more than 80 percent of our buyers chose. This simplified the process for everyone and eliminated surprises. Our communication process includes: preconstruction conference call with sales agent and superintendent, preconstruction site walk, pre-drywall site walk including a firm close date set at this time, weekly buyer phone calls with superintendent and sales agent on Friday, recapping the week’s activity, preview of next week’s schedule, buyer concerns, and buyer deliverables. We see the payoff through happier customers and higher referral rates. We see comments like, “Omega is so easy to work with;” “We always know what is going on;” “Omega is the only builder in the area who consistently completes their homes and gets them closed on time.” Our Realtor sales have gone from about 45 percent per year to 60 percent. This took a lot of time and effort, but the results are worth it.

Bob Schultz
New Home Sales Specialist, Boca Raton, Fla. 

It is a fundamental responsibility of sales management to continually increase the efficiency and effectiveness of each sales team member, understanding that the entire company is the sales team. Most traditional training does not address the culmination of good sales process—on time closings and achieving profitable margins. This is what I try to instill into builder management:

1. Appropriate sales and operational process, consistently executed, takes the pressure off of people. This provides time to focus on the requirements of sales fulfillment.
2. Compliance requires processes that are jointly established, communicated, and understood by all involved. Establish incentives for compliance and consequences for noncompliance.
3. Establish all activities and actions with timelines that must be achieved by each department and individual, including documents, information, and steps to support customers in the fulfillment process.
4. Three rules:
a. When something becomes personal, it becomes important.
b. When it’s everybody’s business, it’s nobody’s business.
c. Money is important.
5. Prorate sales compensation based on meeting target dates for achievement sales fulfillment. Each subsequent day needed to meet a key date reduces payment. You’ll get 100-percent compliance within weeks.
6. Consider the same for customers. A builder was having problems with buyers completing documents and fulfilling required actions. He created an incentive certificate for design center options and dates. If all occurred on time, fully complete, the entire incentive was awarded at closing. If segments are not completed, the incentive began to decline.
7. It is legitimate to ask, “Why should we have to do this? Pay people, especially employees, to do what they should be doing in the first place?” The answer: “We shouldn’t, but we do, and it works.”

Cory Munson
Grand Haven Homes, Austin, Texas 

Having strong relationships with buyers for a long period, sometimes up to eight or nine months, can be very challenging. Setting expectations up front with buyers is critical. If the sales person spends time reviewing deadlines and stressing the importance for the buyer to meet each one, the process goes smoother. This takes more time during the contracting phase, because the sales person needs to go over the entire list of options available and which changes cannot be made after a certain date. The sales staff should contact each buyer a few days before the cut-off date, remind the buyer what is expected of them by then, and never get caught having to explain that an option cannot be added after the cut-off date. It takes commitment and discipline to make this process happen.

There is a management technique—perhaps more of a life technique—that says whenever you describe a problem, a pain, a difficulty, a failure, ask, “Why?” five times. When your salespeople don’t submit their paperwork complete and on-time, ask the five whys. When the start packages and POs go out with errors, five more whys. When your customers fail to make their decision dates, still another five whys. Keep that up and the deeper issues will become clear. That is actually the hard part, facing the brutal facts and being both individually and organizationally honest. Once you’ve done that, a clearer path emerges. All that’s left now is hard work, happy customers, and greater profit. PB

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10/24/2013 Selling To Women Home Buyers

Compared with men, women have a different approach to the process of purchasing a home and, in many cases, ultimately decide which house to buy.

Bob Schultz, Contributing Editor



October 24, 2013

To be a consistently high-performing new-home sales professional, you must be able to adapt to and connect with all of your potential buyers. As an expert on the new-home sales process, and in writing about marketing and selling to the female buyer, I decided to do what Dr. Stephen Covey recommends in his book, The Seven Habits Of Highly Successful People, which is to seek first to understand, then to be understood. I asked one of the most successful and professional women in new-home sales I know, whose expertise has been proven in the trenches what matters when selling to women buyers. Here is what Michelle Moore has to tell us.

Always having a planned, not canned, presentation prepares you for any surprises in the sales process. This recommendation reminds me of a saying I heard years ago: Proper planning prevents poor performance. Due to the high percentage of women making the home-buying decisions, a planned presentation must include details that are important to women. In fact, studies show that seven out of eight women will go out of their way to do business with companies that market to women. As you can see, the skill of selling to women isn't just nice to know; you need to know it.

The biggest purchase most people ever make is their home. In a recent article, Marti Barletta, author of Marketing to Women: How to Increase Your Share of the World's Largest Market, credits women with 80 to 85 percent of spending decisions. Sure, we know that men have some say in a couple's decision to buy a home, but when you look into  what their contribution is specifically, I think you'll agree it's very little.

Men often have a different approach than women when it comes to the process of purchasing. Men focus on a need and create a process to reach their buying decision, while women consider their relationship with their Realtor to be one of the more important factors in helping them to decide. Aspects such as appearance, reputation, respect, trust, eye contact, and how much you listen (or don't) can make or break the deal for them.
From a woman's perspective, some negative perceptions of men selling to women include a lack of manners, poor listening skills, and being aggressive, pushy, high pressure, overbearing, condescending, and devious.

Likewise, some negative perceptions of women selling to other women include a lack of technical and product knowledge, being emotional, tentative, uncertain, vague, unsure of specifics, unable to make a sound recommendation, and unable to get to the bottom line.
But here's one very important point. Though women have a great deal of buying power, their decisions are not about picking a product that only they like. Ultimately, when a woman makes a buying decision, she has her entire family in mind.

So if you're wondering which points to cover in an effective sales presentation to a woman, here?s a list of four must-haves:

1. Display good business etiquette such as beginning with a friendly greeting. Include a firm handshake while introducing yourself and make eye contact. Generally speaking, women prefer more eye contact than men in the buying process.
2. Paint a picture by speaking to women about how your product is going to appeal to them as a mom, a wife, or a partner. Women are driven to make their own lives, and the lives of those they care about, better. Remember, features tell and benefits sell.
3. Be prepared to deliver a professional presentation full of details such as completion dates, available features, and color selections. As I have always said, the deal is in the details. Women are researchers looking for facts. They won't make purchasing decisions without obtaining all the facts required to make an informed decision.
4. Listen, listen, and listen some more. Superior customer service is linked highly with your ability to actively listen. Reflecting back on customers' needs throughout the entire sales process shows that you are listening, you care about their needs, and you are sincere.

Finally, through the years, I have heard many people talk about doing business by the Golden Rule, which is, Treat people as you want to be treated. That is good. But as you develop your skills in selling to women, I challenge you to live by the Platinum Rule. It simply states, Treat people as they'd like to be treated. If you can master the art of selling to women, you can take your sales numbers to levels you've never seen. PB

Michelle Moore has demonstrated her expertise and ability in the real estate and new-home sales arenas with more than 40 sales and leadership awards from the industry. Michelle travels the country as an inspirational speaker and leadership coach, and as an associate consultant, training facilitator, and coach with Bob Schultz & The New Home Specialists. Her newest book, ?Selling Simplified,? has just been published.

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9/20/2013 It's Not Easy (Or Cheap) Being Green

Selling energy-efficient systems requires a bit of comparative math to make the value and savings more tangible to potential home buyers.

Bob Schultz, Contributing Editor



September 20, 2013

Kermit the Frog had it right, especially for home builders.

?Being Green? means you have to build to higher standards, more often with higher costs. But the marketplace has not yet totally accepted these added upfront costs to a new home as being a great value.

What is energy efficiency, why do builders do it, and how can the benefits be presented so that all home buyers will consider it a necessity, rather than an expensive nice thing to have?

Let?s check some key words and phrases:

? Energy describes those resources such as petroleum, coal, gas, wind, nuclear fuel, and sunlight from which energy in the form of electricity, heat, etc., can be produced.
? Energy efficiency is simply the process of doing more with less. The goal is to accomplish the same tasks and functions as before while using less energy.
What?s the objective:
? To reduce energy required to regulate temperatures, run appliances, etc.
? To provide cost savings to customers
? To have customers experience useful benefits and perceive great value
? To reduce the world?s energy needs
 Why do it:
? To help control global emissions of greenhouse gases
? In many countries, energy efficiency is also seen to have national security benefits.
? It?s the right thing to do.

And how about this: It can help sell more new homes and remodeling contracts.

Since there are additional construction costs involved, make absolutely sure that you receive the economic benefit and ROI you deserve. To accomplish this objective, you must have a strategy in place and implement a consistent plan of action so that each potential buyer touches, feels, sees, and experiences the benefits and value they will gain by buying your energy-efficient home.

As the late actress, Mae West said, ?If you?ve got it, flaunt it.? Football legend Joe Namath said, ?It ain?t braggin? if you can back it up.?

You must present the benefits of your energy system in two formats.

How It?S Done 

Tap into your customer?s logical side by presenting benefits that are tangible, such as saving money. Stating a fact in the form of a rhetorical question, to which the only logical reply is ?yes? can get the point across and cause customers to experience that benefit on a conscious level. For example, ?In considering features of your brand new home, I would imagine that like for most people, saving money on energy bills would be of importance to you, is that correct?? Who is going to say, ?No??

Then involve their emotions by connecting with why energy efficiency matters. Another rhetorical question possibility: ?Won?t it be comforting to know that your children will be warm and cozy on a cold night??

Next, create a unique selling proposition. ?Although it?s not required by any building code, we provide you with (mention the energy-value feature(s) that you offer). Of course, this will (explain the benefits). I don?t know why all builders/remodelers don?t provide this feature, but we do it because we believe that when all things are considered, it?s the right thing to do.?

Here is where the rubber meets the road. Most new-home salespeople do a pretty good job of talking about the elements of the energy system. Typically they?ll say something like, ?This will save you 30 percent on your energy bills.? The problem is customers don?t walk around with a calculator so they can immediately crunch the numbers to figure what?s in it for them.

Here is how to drive that point home, every time: Make the savings meaningful, easy to understand, and real.

For example, if your energy-value package is estimated to save your customers 30 percent on their energy bills, that 30 percent figure on its own is rather nebulous until you convert that percentage to something tangible. Here?s how:

? Present the percentage savings as a monthly amount.
? Let?s assume that the estimated monthly cost for energy (heating, cooling, and lighting) for a home that is comparable in size to the product you are offering, but does not have any energy-saving systems, is approximately $500 a month at today?s cost of energy. The 30-percent savings in energy efficiency translates into a dollar savings of $150 per month?a sizeable number to be sure, but still not impactful enough.
? Now create the comparison. Take the $150 monthly savings and convert it to buying power. Explain that at today?s current rates (let?s say 4.5 percent for this example), it takes approximately $5 per month to pay off the interest and principal on each $1,000 of mortgage money borrowed on a 30-year loan.
? Here is where you can turn that 30-percent figure into buying power. In your head, you can estimate as follows. Each $5 per month will pay off approximately $1,000 of borrowed money. Also, you are showing an approximate monthly savings as a part of their total cost of ownership in energy savings of $150 monthly. Divide that $150 by $5, and for each $1,000 of mortgage money you get 30, which represents $30,000 of mortgage money not being borrowed. To validate, use Google search to find any amortization table and plug in the $30,000 mortgage amount at 4.5 percent interest for 30 years. The answer will show a monthly payment of approximately $150.

The conclusion?what they are saving monthly (real cash now) as a result of your energy package?would provide them with, on average, $30,000 of buying power over the life of the mortgage. This figure will make any older resale they might be considering at a lower price seem like much less of a bargain.

Let?s face it, if it were ?easy being green and selling it to the marketplace?, everyone would be doing it. They might not be able to do so, but you certainly can.

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7/9/2013 Capture More Sales From Traffic That You're Already Generating

Measuring and ranking the quality of your potential buyers are among the keys to raising your conversion rate.

Bob Schultz, Contributing Editor



July 09, 2013

Consider that all traffic is not the same, costs the same, nor does it convert to sales at the same rate. New-home sales is a contact sport and a numbers game, so traffic can be defined as the number of contacts a builder’s sales organization makes directly with a prospective buyer.

To answer my question—Doing what you are doing, the way you are presently doing it, how many sales and how much revenue are you missing?—here is a checklist of some key areas to focus on for capturing more sales from the traffic currently being generated.

Staffing And Availability 

You are in the retail business, not the real estate business. Individual potential buyers who constitute what is called traffic are far more likely to buy if they come into personal contact with a well-motivated and skilled sales professional. Pay attention to the advice of retail genius Sam Walton: “To be successful in the retail business, be open for the convenience of the customer, not the convenience of the company.” The time between Thanksgiving and Christmas is harvest time in retail. During that period most stores report as much as 50 percent to 80 percent of their sales revenues and profit for the entire year. To maximize that opportunity they staff up and stay open longer hours. For most builders, weekends are similarly harvest time. Most potential home buyers work during the week and have weekends to shop and compare. Regrettably, I see too many builders’ sales offices are not open for the convenience of the customers, in particular on weekends. That oversight can be easily fixed. By simply keeping weekend hours, more contacts will be established. Another mistake is the one-salesperson phenomena. If at any time during the weekend there is at least one more prospective customer than salesperson in the office at the same time, sales are potentially lost. This imbalance is easily fixed by recognizing that one good new-home salesperson working in concert with a well-trained and motivated associate (assistant), in particular on weekends, will out-sell two of the best salespeople working without an assistant.

Sales Readiness 

Assuming proper retail staffing, the next step is to assure that each of your salespeople is contact ready. Providing more traffic to any sales person who cannot consistently demonstrate extraordinary presentation, communication, and sales skills congruent with diligent follow-up is simply wasting valuable resources and giving them more chances to fail.

Ranking The Quality Of Traffic  

Since all traffic is not created equal, it’s critical to properly assess the traffic that is generated. Individual units of traffic should be ranked or rated based on what a salesperson has found out about that customer regarding their level of being ready, willing, and able to buy, rather than how they feel about them. If a customer does not buy on the first visit, the ranking will directly impact the quality and diligence of the follow-up.

Measuring Conversation Rates 

W. Edwards Deming laid it all out when he said, “You cannot manage nor improve that which you don’t measure.” But as they say in the computer world, GIGO—Garbage In, Garbage Out. Consequently, getting as close as possible to recording and accounting for all traffic, not just what is perceived to be the good ones, should be your goal.

• By Source: Tracking the genesis of each particular unit of traffic and its conversion to sales, e.g. website, advertising, Realtor, referral, signs, and social media, is critical in order to know which types of generated traffic are providing the highest conversion possibilities. Understand that a Facebook “like” is not a unit of traffic unless and until it comes into personal contact with someone in your sales organization.

• By Subset: The more you review and measure those elements, the more likely you will develop a passion for the important metrics that will increase conversion ratios. You also will discover that new-home sales, as a numbers game, is much like what was portrayed in the book and movie, “Money Ball.” Then you can begin to drill down among other activities and events such metrics as the following:

1. Sales by customer visit—what percent on the first, second, third, and beyond.
2. By the number of customers taken through a full presentation and to a home site or completed home on the first visit.

• By Cost: When something becomes personal, it becomes important. Traffic generatioin for builders paying the bills is just that. So reviewing the costs related to the various sources of traffic and their conversion rates will provide insight and desire to focus on more cost-effective and productive activities. For example, in my seminars around the world I always ask salespeople this question: “Would you like me to recommend to your company that they increase the rate you are paid for making sales? As you can imagine, without exception, the answer is always a resounding “yes.” Knowing that in their particular company the cost of producing one unit of traffic is $500, I then say what if we stationed an independent auditor at their sales office to track all the traffic generated. At the end of each day, the auditor presents an invoice for that number multiplied by $500 to be paid by the salesperson, whose compensation was already adjusted upward. When asked if they want me to make that recommendation, no one (except the builder) said, “yes.” Then I ask, hypothetically, if this scenario did occur, what would you do differently? The majority of salespeople answered “better follow-up.”

Follow Up 

For traffic that does not buy on the first visit, diligent and consistent follow-up is vital. Consider that follow-up, or follow-through as my colleague Steve Hoffacker calls it, is just an extension of the first contact. It must be planned, practiced, and orderly with the purpose to get the customer back in one more time. My CIP System (Customer In Process Analysis and Action Plan System) is designed to do exactly that. To obtain a complimentary copy of CIP and “How to Increase Registered Traffic to Measure,” contact me at Bob@newhomespecialist.com.

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6/24/2013 The Importance Of Staying Focused In A Re-emerging Market

As more homes begin to sell, all of the players involved in sales eventually will get some benefit from the momentum alone. But good markets cover up and forgive a lot of bad processes and business errors.

Bob Schultz, Contributing Editor



June 24, 2013

A re-emerging market sounds like a good thing on the surface. The perception is that economic conditions are better and new homes will sell faster. Overall, that’s good. Having been actively engaged in this industry through past recessions during the early ‘70s and ‘80s and the boom times, I have always said, it’s not about what the market does. What matters is what you do with the market you find yourself in. A re-emerging market can provide a false sense of optimism and perception of success. A rising tide floats all boats; so does a re-emerging market. As more homes begin to sell, all of the players involved in sales eventually will get some benefit from the momentum alone. But good markets cover up and forgive a lot of bad processes and business errors.

To keep everything in perspective, you should always be asking, as I’ve written before, “Doing what you are doing, the way you are currently doing it, how many sales are you still missing?” Don’t get caught up in the exuberance of suddenly increasing sales activity because it may not last forever. Don’t allow the deals the market is allowing you to enjoy lead you into complacency. Stay focused on the essential fundamentals of variables you can control, and don’t worry about items you cannot.

Stay dialed in to the important benchmarks for measuring your sales success. The most important are completed sales that ultimately close and fund the builder. Other benchmarks include the following:

• Conversion ratio of sales to the number of potential buyers with whom you interact.
• The source of a lead can determine that conversion ratio potential. For example, someone who visited your website and then contacts you is not a first-time visitor.
• Realtor-accompanied prospects have a higher conversion possibility in the short term than someone who has just started looking, has a house to sell, and is not sure they even want to move from the area.
• Become intently focused on implementing the correct process and measure those benchmarks all of the time. The end result will be just fine.
• Again ask yourself, “Doing what I am doing, the way I am presently doing, how many sales have I missed?” Your insight to the minor adjustments you need to make will become abundantly clear, and the marginal increases in your profit will be significant.

As the market continues improving, there will be more traffic to convert. You must work more efficiently to increase your conversion ratios. Make every prospect walking through your door count. When they show up at your sales office, they are at least thinking more positively than in recent years about buying a new home. It’s your job to have a solid, planned presentation to help guide them through the buying process. Cause them to think it through. Get them to recognize that, even though interest rates have not yet risen, they will. Right now rates are still the lowest, on average, they’ve been in 50 years. Make them aware that construction costs are going to continue to increase rapidly. Explain that now is the best opportunity they will have to buy, and they should do it sooner rather than later. Impress upon them that their buying power will never be greater than it is right now.

In an extraordinary market, it’s easy for ordinary salespeople and builders to look successful. But as the recent difficult economy demonstrated, being an extraordinary salesperson or successful builder takes hard work. Those salespeople today who keep a clear focus, stay informed about their marketplace, perfect their presentation, are as diligent as they were when the market was tough, and maintain a PHD attitude (professional, hungry, and driven), will consistently achieve optimum sales performance and outsell the market. Last but not least, don’t confuse your increased cash flow or the size of your paycheck with your business acumen or operational sales excellence.

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5/22/2013 Word Is The Market Is Coming Back? Are You?

Having been in this industry for more than 40 years, I know from personal experience that our industry has always recovered from previous recessions. I contend, however, that great marketing and sales strategies are not honed during good markets, but during tough times.

Bob Schultz, MIRM, CSP, Contributing Editor



May 22, 2013

In many parts of the country, the news is trumpeting reports about the market coming back. In fact, as I write this article from New Zealand where I am working with a builder, the market there is also on the rebound. Good news? Maybe.

Having been in this industry for more than 40 years, I know from personal experience that our industry has always recovered from previous recessions. I contend, however, that great marketing and sales strategies are not honed during good markets, but during tough times. Some builders used the recent difficult period to reassess their situations. They found out what they were not doing correctly and fixed it. They sought answers to the questions I have posed many times: “Doing what we have been doing the way we have always been doing it, how many sales and how much revenue did we miss? How much money did we waste in the process?” Other builders did not conduct a self-assessment. They just waited for the market to come back. Now that the recovery is here, they are happy, too. But here’s the problem.

Roll Tide 

In speaking about his tax reduction proposal during 1961, President John Kennedy said, “a rising tide floats all boats.” That economic statement can very well apply to today’s housing resurgence. Simply stated, if your market is on the rise, it’s rising for all builders. The impact of a rising market is proportional. Builders who transformed their operations will enjoy increased sales. Those builders who did not also will see increased sales production.

But as Shakespeare wrote, “Therein lies the rub.” Builders who did not work to perfect operations during the downtime have no right to expect these increased sales. Builders and their salespeople will think the additional deals they’re closing are their doing. I recently saw Facebook postings like, “I had 8 sales this week!!!! Wow, I love this business,” or “So many buyers and so little time.”

When the market is bad, no salesperson is as bad as a builder thinks they are, and when the market is great, no salesperson is as great as they think they are. If salespeople did not dramatically improve their skills during the slowdown and are doing the same things they did before the market was tough, then the additional sales they think they are creating during this recovery are merely the result of the rising tide.  The downside is they are missing additional sales because the market is providing a false sense of accomplishment.

Be Proactive 

There is no such thing as status quo. Either you are moving forward or moving backward. The challenge is that without properly implementing fundamentals and measuring the critical metrics of your sales business, you won’t know the difference. Among other things, here is what proactive builders are doing:

Provide proper staffing.

• Operate with the assumption that you are in retail, not the real estate business.
• Be open for the convenience of the customer, not for the convenience of the company.

Establish a culture of sales education and training with high accountability.

• Understand the criteria. New home sales should not merely be a social event in which business is conducted some of the time. Rather, selling is an activity where salespeople must be focused and social. Changing behavior relies on training, and you need your sales team to develop such skills as demonstration and closing tactics. As the legendary sales guru and motivational speaker Zig Ziglar said so well, “Motivation in the absence of skill development is simply a wasted effort.”
• Inspect what you expect. Evaluate the new-home sales process by practicing role playing and conducting videotaped mystery shopping evaluations.
• Manage by wandering around. A desk is a dangerous place from which to view your sales operation.

Develop a passion for the critical, important business metrics. You can’t manage and therefore improve what you don’t measure. Constantly measure and analyze sales activity against pre-determined goals and by conversion ratio. Constantly measure and analyze the cost of traffic generation and sales by source and by activity in order to maximize return on investment.

Words Of Caution 

There are no silver bullets, secrets, or a magic wand to wave that will help you to obtain optimum sales revenue. Nineteenth Century Austrian writer Marie von Ebner-Eschenbach said, “No one is so eager to gain new experience as he who doesn’t know how to make use of the old ones.”

Sales operations that are not employing the strategies and tactics mentioned above—even those departments that are posting increased sales during this upswing and feeling pretty good about themselves—I guarantee are underselling their potential. The market might be improving, but the critical question is, are you? PB

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4/26/2013 Motivating A Cast Of Thousands

The two trophies most builder sales operations covet are more qualified traffic and more sales. An often-overlooked way to attain both is a well-thought-out and executed participation program for Realtors.

Bob Schultz, MIRM, CSP, Contributing Editor



April 26, 2013

The two trophies most builder sales operations covet are more qualified traffic and more sales. An often-overlooked way to attain both is a well-thought-out and executed participation program for Realtors.

Many times, for whichever reasons, companies that are desperately trying to sell homes do not have any type of program aimed at cultivating real estate agents, or the plan they do have is not implemented very well.

Consider the sales potential you can unleash by taking these first steps toward establishing a cooperation program.

On a map of your market area(s), draw circles from each of your sales offices in quarter-mile increments. Inside those circles, plot the number of active real estate offices and their approximate number of sales associates. In most cases, you quickly will see how many salespeople work within a few miles of your offices. The best part is they are in the same business as you.

These salespeople can be induced to work for you and will not expect any salary or draw. In fact, they are not paid until they perform. Typically, agents are compensated out of closing proceeds, which means you do not have to borrow or use your own funds before the actual sale and closing occur. Compare that option to the thousands of dollars spent on advertising, an expense that must be paid for at the time of purchase and may or may not generate a deal.

Many builders and marketing directors feel that 2, 3, 4, or more percent is too much commission to pay a broker. However, Realtors’ sales fees and related expenses should really be thought of as an advertising expense for your prospect-generation program. Real estate  associates can deliver qualified traffic, which in some cases is more effective than what advertising accomplishes. A well-conceived cooperation program should be judged from the big-picture perspective as to how it relates to the overall budget. For example, if one-third of your sales are with cooperating brokers earning 3-percent commission, your overall cost for that function could be as low as 1 percent for all sales revenues.

Map Your Way Toward Successful Relationships 

There could be hundreds, maybe even thousands, of real estate agents within a few miles or just down the block from your model centers who could be motivated by incentives to sell your homes. To identify the prospects, use these tactics:

• On a map, identify each of your individual model centers (retail sales operations) and draw concentric circles representing approximately one mile each.
• Within those circles, identify the locations of all real estate offices.
• Place a red pin on the map at the specific location of real estate offices with approximately five or fewer associates.
• Place a blue pin on the map to designate real estate offices with approximately six to 25 associates.
• Place a yellow pin to mark real estate offices with approximately 25 or more associates.
This exercise will enable you to quickly see the locations and the number of potential agents in relative proximity to your sales offices.

Find The Producers 

Don’t just court the top producers in your market. Find and attract experienced producers who specialize in your price range, product type, and geographical area. Sometimes the top sellers amass sales by collecting commissions on properties that they referred to other Realtors to sell because they didn’t have the time or expertise to sell those properties themselves. Rather than asking a broker about the office’s top seller or a local realtor board to identify the market’s top producers, make a habit of seeking out those agents who actually sell homes in your price range and geographical area.

One way to find the right agent is to access the Multiple Listing Service and track all the monthly closings and resales in your marketplace. Note the names of the selling agents. Make a point of meeting those agents and their brokers. Introduce them to the opportunities and procedures in your company’s sales program.

The Adopt A “New Kid” Program 

New Realtors are entering the profession in your marketplace every month. The number of fresh faces could be as few as five or as many as 500, depending on the size of your market. New agents have several characteristics in common that render them more receptive to your invitation:

• They have shown a level of interest and enthusiasm to be involved in real estate by simply making the investment in time and money to study and obtain their licenses.
• In the absence of experience, they lack the contacts to quickly obtain listings and make sales on their own.

Your objective is find them, become their friend, and show them how easy it is to sell your homes.

The local Board of Realtors usually publishes a monthly roster of newly licensed agents and the offices with which they are affiliated. Send these new hires a handwritten congratulatory note, welcoming them to their new profession. Three or four days later, call the Realtor. A first conversation might go something like this. “Hi, _________. Did you get my note? Good. How’s business?” Their answer probably will be some kind of camouflaged positive response. Then ask, “Do you have very many of your own personal listings?” He or she probably will say no. Then ask: “If I could show you a way that gives you direct access to approximately (state the total dollar volume of all homes you could sell in the next year) of brand new homes over the next year, would you be interested?” Wait for response, which will most probably be yes. “Great, well I’d like you to become my joint venture partner and I’d like to become yours. When can we meet?” Schedule a specific date and time to meet at your office.

When you follow through with your prospects, make a big deal out of their very first visit and their first sale. Write personal notes, send thank you letters, and take them or send them to dinner. You should even send a gift basket after their first sale. The basket should have a helium-filled balloon with “Congratulations” printed on it and a thank you note. P.S.: Hopefully, the gift can be delivered to the agent’s office at a time when he or she is not there.

Managing The Realtor Relationship 

Don’t be concerned about your Realtor partners making sales. Instead, focus on your agents building legitimate pre-qualified traffic to see your homes. Sales should occur at the rate of one for every three-to-five presentations of your properties to properly pre-qualified prospects.

Every Realtor cooperation program should include the following tenets:

• Be consistent with your policy. Do not change your guidelines every other month as sales rise and fall. Lack of consistency will cause confusion and apathy.
• Put your registration rules and commission procedure in writing and have a copy signed by each registered prospect.
• Communicate often with the agents through newsletters and open house meetings and always let them know what you have available in terms of price and occupancy. Realtors treasure partners who keep them in the loop. So copy them on all written correspondence from your company to their customer. Touch base with agents frequently, particularly during the period between accepting the offer and closing.

The Right Relationship Mindset 

Think of your relationship with Realtors as if the agent population was the downline in a multi-level marketing organization chart. Sales networks within multi-level marketing companies such as Amway or Nu Skin start with one person. That individual solicits people to work under him or her and in turn they solicit more people to work under them, who in turn solicit additional people. Eventually the participants build a network in which the recruits for a particular agent represent the downline.

Consider each real estate office as lead members of your downline and an office associate as an agent on another level on the downline. As with network marketing, success in building your downline of Realtors is about educating, recruiting, training, and motivating others to sell your product.

In-House And Outside Sales Teams 

Successful cooperation does not happen overnight. The most successful programs are the direct result of a company taking the initial step to demonstrate an openness and willingness to work with real estate agents, followed by constant personal contact with individual associates. This process  calls for building a personal selling relationship.
Also, your own staff should not be penalized for selling your properties. Their compensation for direct sales should be exactly the same commission paid to an outside sales broker.

To generate long-lasting success, create special incentives for rewarding top sellers. Think of real estate agents as an extension of your own staff and treat them as such. Establish recognition programs like Realtor associate of the month, quarter, and year awards. Publicize these achievements in newspapers, billboards, and even the local Realtor board association’s newsletter. Remember, agents are customers, too.

A final message. Realtor or outside broker sales should only serve as a supplement to your traditional sales. Depending on your specific marketplace conditions, outside sales should comprise approximately 35 percent of your total sales, but generally no more than 50 percent.

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2/18/2013 Strategies For Selling More Options

New-home sales expert Bob Schultz offers proven tactics for increasing high-margin sales revenue through options and upgrades.

Bob Schultz, Contributing Editor



February 18, 2013

My years of experience have taught me that if you lose control of any part of the buyer’s process, you may lose control of the buyer, and that may screw up the sale and cost you high-margin revenue. Therefore, it’s critical that during your interaction with home buyers you introduce a smooth, seamless process through which they personalize their brand-new home, while making that activity a very positive experience. Just like at Starbucks, it’s not about the coffee, it’s about the experience.

Since we cannot manage or improve that which we do not measure, first look at some basic benchmarks for your company as they now exist.

1. Over the last year, what is the approximate dollar amount (on average) that your home buyers invested in options and upgrades?

2. What is the approximate percent of sales price of the home purchase (on average) that a customer spends on options and upgrades?

I guarantee that whatever your current numbers are, they can be increased by employing an effective buyer-selection process and strategic options selling system. Doing so not only provides an opportunity for profitable options and upgrade revenue, ranging from 25 to 45 percent, it also assures complete and accurate selections are available to production quickly, and improves the consistency of both quality and product. In addition, it allows the buyer to put the options into their mortgage.

There are essentially two formats by which to present personal choices and options: either the new-home salesperson does it as part of the home sales process, or a design studio staff member does it during the design selections process. If your company employs the former approach, keep in mind that it takes the salesperson away from their primary objective, which is to sell more homes. In addition, when employing this approach, the gross option sales numbers are typically not as high as when accomplished through a design center (except for structural options).

On the other hand, a design center (in any format) creates a more relaxed atmosphere for the customer and provides the opportunity to sell more options and upgrades, generating more revenue. Also, it frees up the on-site salesperson’s time to sell more homes. An effective design studio can be accomplished in as little as 1,000 square feet; size is not as important as layout and functionality.

Think Retail

Regardless of the format you currently utilize, create a seamless customer process and positive buying experience.

First off, think like a retailer. It’s not necessarily about how much money an option costs, rather how little per month it is. With interest rates at an all-time low (approximately $5 or less per month per thousand borrowed), the customer would be wise and should be encouraged to consider putting all that the bank will allow into their brand-new home — in particular, durable and lasting features such as granite countertops, crown molding, hardwood floors, etc. For example, $10,000 of options would be approximately $50 per month.

Other best practices include:

• Be open for the convenience of the customer. That means nights and weekends.

• Consider making design center/selections appointments available on designated evenings or Saturday hours.

• Schedule a “preview night” once or twice a month for the purpose of the customer casually going through the design center to see and experience what is available prior to their first scheduled appointment. It’s far more efficient to spend an hour with five buyers at a time than it is to spend one hour each with five individual buyers.

• Remember, home buyers shop using the process of elimination. Therefore, the more information they have to study ahead of time, the less time they will spend in the design center. This gives the customer an opportunity to narrow their list down by eliminating things they know they don’t like, want, or need.

• Provide the customer with a catalog of included features, options, and upgrades that are available in advance of their scheduled first meeting at the design center.

• Bundle options. There are multiple advantages to bundling. First off, you will no doubt sell more options and upgrades if they are part of a “special package” with the “savings” clearly shown. In addition, it makes it more difficult for customers to comparison shop. And production will find it easier to facilitate options when they’re packaged.

• Demonstrate options appropriately in your models. To avoid confusion or misunderstanding, all references to models should list all optional features as shown. In each model, display an appropriately design placard to put on an easel and place in the foyer of the model that states: the model name, number of rooms, key features, price range from lowest to highest, exact cost of the model (with options), and a list of the options in the model.

Sales Advice

Create a culture where all involved are encouraged to learn how to sell options and upgrades and luxury features. Here are some fundamental sales tips:

• It is critical to have the mortgage approved before establishing the first meeting at the design center or with the salesperson to make selections and review options.

• Teach the design center staff members how to sell options and upgrades and compensate them based on a targeted-compensation model.

• Train your sales team and design center employees on the proper terms when interfacing with buyers. Here are a few to consider*:

Take some time to focus on how to improve your options sales. Remember, it is not what you are currently selling that matters. Ask yourself: Doing what we are presently doing, the way we are presently doing it, how much option sales and high-margin revenue are we missing, and why are we missing it?

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11/25/2012 13 Sales And Marketing Strategies For 2013

Sales training and management guru Bob Schultz offers a blueprint for improving your sales and marketing efforts.

Bob Schultz, MIRM, CSP, Contributing Editor



13 sales and marketing strategies for 2013

November 25, 2012

Business guru Tom Peters long ago pronounced that leaders in business must relentlessly strive to increase revenue while simultaneously reducing unnecessary costs. I suggest that while accomplishing this, it is critical to do both without sacrificing integrity, quality, or sound business practices, and to wisely invest financial and human resources for the maximum ROI.

This is the theme and focus of a series of live, hard-hitting, fast-paced seminars being produced by Professional Builder in conjunction with the National Association of Home Builders, the first of which will be in Raleigh, N.C., on December 12 (Click here for more information). I’m honored and excited to be working with Scott Sedam as a featured presenter for this timely and important topic for our industry. Here is a preview of what I will present.

Home builders are primarily engaged in at least these business activities:

• The manufacturing business

• The marketing business

• The retail business (sales)

• The financial and administrative business

• The customer experience and satisfaction business.

Constantly ask yourself: Doing what we’re doing, the way we’re presently doing it, how many sales and how much revenue and profit are we missing? And how much money are we wasting in the process? Competence will not be accomplished through change, which is an event, but rather through transformation, which takes place over time.

If you can’t describe what you are doing as a process you don’t know what you’re doing.

With that said, here are my 13 sales and marketing strategies for 2013:

1. Understand where you are now — evaluate your sales organization, assess your market position, and evaluate and assess your website, marketing, and advertising programs for effectiveness. It’s not about the advertisement or the website; it’s about having the correct strategy.

2. Hire and retain only the right people — hire using a methodical process of elimination, not by instinct, intuition, or feelings. Always topgrade, build bench strength, and never be held “hostage” by an employee.

3. Utilize a targeted compensation program — do not use a percentage of gross sales price as a basis. Sales compensation should be targeted to levels of profitability. Target quarterly objectives and provide other targeted incentives.

4. Provide proper staffing — remember, you are in the retail business, not real estate. That means you need to be open for the convenience of the customer, not the convenience of the company, and provide adequate representation for traffic generated during retail hours.

5. Establish and maintain a culture of sales education and training with high accountability — understand the criteria, implement the processes and systems for effective training, and inspect what you expect (i.e., role-play, mystery video shopping evaluations, customer-in-process analysis, and follow-through activity). Finally, be willing to be “unreasonable” with your sales team.

6. Properly price land premiums — let price differential direct inventory control, and don’t sell off all the good lots too fast.

7. Sell more options — think retail and train all personnel on how to sell options.

8. Don’t go crazy with buyer incentives — create incentives through a solid strategy, not a knee-jerk reaction to the marketplace. Don’t follow the herd.

9. Establish and maintain an extraordinarily high standard for franchise excellence — embrace the concept; set the standards; establish a senior sales council; hold franchise meetings frequently and consistently; manage contingencies; and measure and improve.

10. Develop a passion for the critical business numbers — you can’t manage, and therefore improve, what you do not measure. Constantly measure and analyze sales activity against pre-determined goals and by conversion ratio, using an automated customer relationship management system. Constantly measure and analyze the cost of traffic generation and sales by source and by activity. And if social networking activities are not producing a reasonable amount of contact information, it is “social not working.”

11. When placed in command, take charge — be proactive, be willing to be “unreasonable,” and think “tough love” sales management.

12. “Sales generate revenue. The sales organization is the CRP.”

13. Take action — plan it, then do it.

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10/26/2012 3 Social Media Myths Debunked

Being “liked” and having many “friends” are highly overrated if you’re not making measurable sales as a result, says sales management guru Bob Schultz.

Bob Schultz, President and CEO, Bob Schultz & The New Home Sales Specialists



3 social media myths debunked

October 26, 2012

My previous article on the use of social media in new-home sales brought an onslaught of emails and letters from readers, many of whom do not agree with my stance on the topic. Two comments that evoked the most feedback were:

• Don’t let social networking become “social not working.”

• You cannot manage, improve, or justify the expenses of that which you do not measure.

I believe, presuming a business is rooted in integrity, that the principle objective of a home builder or developer is to sell homes, condominiums, or home sites, and to make a measurable return on investment. Selling is a contact sport. The more opportunities a highly proficient sales professional has for personal contact with a prospect, the more sales will be made. What’s the point of spending time and resources on anything if there is no expectation of sales, or a system to measure its effectiveness against that objective?

Below are three common “myths” about social media in new-home sales, along with responses from two people I consider to be experts on the subject matter — Robert Jackson (RJ), owner of Internet Builder Consulting, and Kristi Allen (KA), director of Internet marketing with McArthur Homes, Salt Lake City.

1. More “likes” means more sales

RJ: A “like” or the number of “likes” has nothing to do directly with sales. And not all “likes” are created equal. It’s quite easy to create hundreds and even thousands of “likes,” but without ongoing interaction and a strong call to action that leads to a website visit or a phone call, related to provable sales, the “likes” are essentially worthless.

KA: Google Analytics makes it very easy to track social media efforts and see which forms of social media and, more importantly, which types of “request for contact information” are resulting in lead capture, interaction, visits, and sales.

2. The purpose of social media is to brand our business.

KA: I imagine the whole system as a funnel, with the fundamental purpose being to move people from the social media sites to the website (to a contact form on the site) to the model home — then to a purchase.

RJ: The strength of a social network lies within the interactions you create, not the number of “likes.” Social media marketing is about utilizing all of the top social networking channels to reach potential buyers, brand your company, control your online reputation, and entice people to visit your website (where you provide many opportunities for them to contact you).

3. Requests for contact information as a part of social media can hurt the relationship. “Liking” is saying you would like information through social media. Contacting people who have “liked” you is a big no-no in social media etiquette.

KA: Once visitors have found us interesting on Facebook and make their way to our blog and website — where we provide great content that is easy to navigate — each page includes multiple calls to action that have increased our contact rates dramatically.

RJ: If a social networking account or page is not set up properly — for example, linked to other accounts, engaging, informative, interactive, entertaining, all suggesting a website visit — it will not produce measurable results.

Recently, a builder sent me a message in response to a report he received from his marketing company. The company stated: “Over 800 ‘likes’ this week.” His response: “Then what? Please!” It’s a great question that I encourage all of you to ask.

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8/20/2012 Bob Schultz: How Builders And Developers Can Partner To Boost Sales

By forming a true sales and marketing partnership, land developers and home builders can team to increase sales of both homes and home sites. Here are some tips for success.

Bob Schultz, President and CEO, Bob Schultz & The New Home Sales Specialists



Bob Schultz: How builders and developers can partner to boost sales

August 20, 2012

There’s a perception that the housing market is getting better. For land developers who sell lots to home builders and for home builders who buy lots from developers, where is a sure-fire way to capitalize on that perception?

Successful developers know that they are in the retail business. They want to sell more home sites, sell them faster, at a greater profit, and have more demand for those home sites from successful builders. Likewise, builders want to sell more homes at higher profits, and both need to have an overall greater customer satisfaction level.

The most successful residential land developers in the country, regardless of size, operate with this mindset. What does it take? A cohesive, coordinated marketing and positioning program in which the developer cooperates with their primary customers — builders — by assisting them in reaching their primary customers — potential home buyers.

A land developer’s principal objective is to buy raw land at a wholesale price, finish it into buildable home sites, and sell them to builders at a retail price. With rare exception, the velocity at which home sites will sell to builders will be in direct proportion to how quickly builders will sell homes to their customers. Therefore, isn’t it in everyone’s best interest to create a “win-win” program to reach those consumers in the most efficient and effective manner possible?

As an example, a developer might sell a portion of their total home sites to a particular home builder, who may also commit to future buys in a takedown schedule. But if that builder isn’t as successful as they should be in reaching new-home prospects, they won’t have the mindset, or possibly the financial ability, to take down more lots.

Let’s create a scenario where the overall community is well-positioned within the marketplace, with a central information or sales facility, community advertising, and cohesive signage. This generates more consumer demand for homes in that particular community. As a result, builders sell homes faster and the developer realizes quicker returns. By creating higher sales velocity, prices may even justifiably increase.

When considering an overall marketing endeavor for a new-home community, take a hint from the way shopping center developers structure their promotional and positioning campaigns. The developer buys land, develops the center, and leases space to retailers. In turn, they receive a price per square foot for rent and typically a percentage of the merchant’s gross sales. Obviously, it’s in the developer’s best interest that those stores are successful, so the developer creates a budget for an advertising program to promote the shopping center as a destination.

A savvy residential land developer can accomplish the same result through a program designed to draw new-home prospects to the community. This could include all or part of the following: a well-designed website; a series of advertisements, billboards, and directional signs; on-site promotional events; targeted social media; direct mail; radio and television exposure; and a public relations campaign. All of these activities should be implemented as a result of a well-thought-through strategy, with the costs amortized over all the builders and the developer.

3 Essential Elements For Continuity 

1. Central information facility. The community should have a centralized information arena, rather than the “divide and conquer” type of at-the-site sales operation, where builders and their salespeople/agents are pitted against one another in combat for sales. In this scenario, the salespeople end up presenting the house, not the location, lifestyle, amenities, and the like.

A central information facility can be staffed by a well-educated, trained sales team that knows how to sell the community benefits and amenities as a whole, and can provide further assistance in leading the prospect to the builder that most closely fits their needs. Then, the prospects will find on-site sales agents at each builder’s site that have detailed product knowledge — all coordinated so that they are open during consistent days and hours.

Another option is the central sales facility in which the sales agents not only sell community benefits, but also handle sales for each builder. With either option, customers no longer drive around in frustration because some models are open and others are not, with two or more different real-estate agents handling different builders’ homes.  

By having a single, clearly visible, inviting information center where customers can learn about all the location and community benefits and the reputations of the builders in the community, buyers are sure to quickly find which builders offer homes that will meet their needs. If the builders have done the right job of positioning their products, through a combined market and positioning study, no two builders should be in direct competition with each other in terms of price point, size, and product type. Therefore, the participating builders should be offering a wide spectrum of design and price points. The retail site should be open for business seven days a week at a staffing level sufficient to provide face-to-face interaction with all potential buyers.

Training for all the salespeople, whether they are on site or in a central facility, is critical. Make sure all of them know what the expectations of the developer are, and stress the importance of not playing favorites among builders. Of course, when all builders have a high standard of customer care and customer satisfaction, this is easier to avoid, so place special emphasis with each builder on after-the-sale service and warranty issues.

2. Community advertising and positioning. In terms of advertising, shopping center developers provide special on-site promotions, billboards, TV and radio spots, etc., during the course of a year to deliver shoppers to the center, and ultimately to individual stores. Even though some of the retailers may be competitors, all will benefit by the increased exposure and traffic at a lower individual cost.

A developer of a new-home community can create traffic in the same manner. Take this example of an inefficient and probably ineffective method: Five builders in a community operating independently and in direct competition with each other each spend $1,000 a month on separate, small newspaper ads and a website for a total expenditure of $5,000. However, the ads are not created and executed in any unified way and are not creating much impact individually. Typically, most of the space in these ads is taken up with phone numbers, real-estate company logos, and pictures of agents, rather than text and graphics to promote the homes, location, and amenities. Oftentimes, the agents obtain potential buyers for the re-sales they have listed.

For the lesser total combined amount of $2,500, the five builders could pool their funds and create a unified ad and social media strategy with a very cohesive website, naming all the builders and better positioning the neighborhood and location, with trained personnel dedicated to following through with all contacts and converting them into sales.

3. Cohesive image program. Potential home buyers shop using the process of elimination. Nothing is as jarring to a new-home prospect as a dozen different colored signs with different listing agents’ names and phone numbers on them. Prospects are sent hurriedly jotting down names and numbers, scarcely remembering later which goes with what builder or home. There is no consistent theme to create a memorable impact. Customers come away so confused that they may as well shop for a used house in some resale subdivision.

Is it easier and more comfortable to just sell lots and let the builders duke it out for individual sales? Yes. Is it more profitable for all to develop a program like this? Absolutely.

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6/18/2012 Arthur Rutenberg Makes the Business Case for Franchising Home Building

Housing Giant and past Professional Builder of the Year, Arthur Rutenberg, offers franchisees solid business systems and a time-tested model for profitable home building.

Patrick L. O’Toole, Publisher and Editorial Director



Arthur Rutenberg, Chairman, Arthur Rutenberg Homes, Clearwater, Fla.

June 15, 2012

By the time Arthur Rutenberg sold his first franchise in 1978 to Bobby Lyons in Tampa, Fla., he had already been a builder for 25 years. In particular, he had built a large Florida  home-building company operating in 10 cities, merged it with a publicly traded builder (U.S. Home Corp.), completed a secondary offering of shares in that company, and successfully used the resulting funds to engineer a string of major acquisitions from Tucson to Minneapolis across to New Jersey to create the first truly national home-building company.

Like no other builder at the time, Rutenberg was a building renaissance man. He knew how to design and build great homes. He knew how to manage a local building business. He knew how to manage a private multi-market firm. And he knew the benefits and pitfalls of running a far-flung national company. So it was not without a great deal of experience that when the time came for him to re-launch Arthur Rutenberg Homes several years after leaving U.S. Home Corp. that he chose a new way of running a building company — the franchise model.

Today, some 34 years after first franchising Arthur Rutenberg Homes, Rutenberg remains firmly at the helm of the Clearwater, Fla.-based company, even as he approaches his 60th year in the business. In that period of time, the company has grown and has continually refined its home designs and its proprietary business systems — the “secret sauce” of their franchise operation. The company has 30 franchisees; six in the Carolinas and 24 in Florida. Rutenberg touts the benefits of franchising as perhaps the best model for building a national building firm.

“We approach franchising a little differently than most. We have a much thicker package of services. We have a system of doing business that we believe in,” says Rutenberg. “And we support that method by software and data which was designed for the purpose of supporting that business’s methods.”

Early Experience Leads To Franchising 

Rutenberg left his hometown of Chicago for booming Clearwater, Fla., in 1953, following his father who planned to retire there. In leaving Chicago, Rutenberg left behind a home-appliance retailing business in hopes of buying lots and building homes. The appliance business had taught him that selling a lower-priced item like a toaster took almost as much energy and time as selling a higher-cost item like a television or a refrigerator. His logic in going into home building was to get an opportunity to sell the ultimate higher-priced item, a new home.

Fast Facts About Arthur Rutenberg Homes

Headquarters: Clearwater, Fla.
Chairman: Arthur Rutenberg
CEO: Frank Pizzica
Founded: 1975
Franchises: 1975
2011 revenue: $82,340,362
2011 closings: 145 (136 in Florida, 7 in South Carolina, 2 in North Carolina)
2012 projected growth: 30 percent

Recent announcements: Gainesville franchisee and current NAHB chairman Barry Rutenberg has joined ARH as vice chairman of the firm; The company is now licensing its business systems and software to independent builders selling under their own brand with their own product.

Almost immediately upon arrival in Florida, he and his brother, Charlie, along with their father, purchased 10 lots on which Arthur built 10 very simple concrete block homes, which sold very quickly. It was from that beginning that Rutenberg over the course of his 20s and 30s built a home-building enterprise consisting of 10 locations around the state of Florida. By 1969, Arthur Rutenberg Homes had grown to become one of the largest builders in the country. But it was in 1969 that Bob Winnerman of New Jersey-based publicly traded U.S. Home Corp. approached the Rutenberg brothers about jointly creating the first truly national home-building operation. In short order, they struck a deal. Though Arthur Rutenberg Homes was larger than Winnerman’s operation, the U.S. Home name was the one selected after the merger was completed that year.

The strategy of the merged company involved a secondary offering of $20 million, which funded a series of transactions to purchase a number of home-building firms around the U.S. Back then, tax-free, stock-for-stock transactions were permitted under IRS code. By August 31, 1971, when the stock-for-stock provision ended, the company had completed more than a dozen acquisitions of large private builders in places like Tucson, Denver, Minneapolis, Cincinnati, and elsewhere.

Having completed his work with U.S. Home, Rutenberg left the company in 1971 and was involved in a number of joint ventures until 1975, when he decided to re-launch under the Arthur Rutenberg Homes name, which he had been able to retain after the U.S. Home merger. This time, he opted for a franchising model because he felt it was a uniquely appropriate vehicle for growing a large, geographically diverse home-building operation. The logic goes like this.

At that time, large regional and national home-building firms were  highly decentralized. Division presidents were given a lot of autonomy to run their own businesses. They chose land based on local knowledge. They chose product to sell based on very targeted prevailing market trends. And at the end of the day, the parent company typically imposed very few systemic controls. Some local divisions of national and regional home-building firms had separate software systems. In this way, says Rutenberg, franchising is an apt solution to a geographically diverse home-building operation.

“It has always been a very decentralized industry,” Rutenberg explains. “It seems to work best that way. The product is certainly not the same all around the country. It is simply impossible to sell the same product in South Florida that you sell in Indianapolis. Therefore, your operations are separate. So you want to take your decentralized person and pay them a percentage of the profits. And usually, the large companies charge something for central overhead, which are parceled out to the various divisions, and that is always a source of controversy. So we decided that the ultimate decentralization was a franchise model, and the ultimate autonomy is a franchisee. And the best way to charge for overhead was to do it as a franchise fee. It is pre-agreed, at the beginning, in the franchise agreement, and you don’t have to discuss it for 10 years, because our agreements are 10 years. That way it is not an annual discussion, and that is the way we do it.”

In broad strokes, a Rutenberg franchise agreement begins with the right mindset of the franchisee. Rutenberg acknowledges that most builders are entrepreneurs, who like to do things their own way. An Arthur Rutenberg builder is someone who wants to embrace the brand and the systems and be willing to follow a proven and defined program of doing business.

The initial franchise fee in Florida is $40,000. Homes sold without a home site incur a 4.25 percent fee. Homes sold with a home site incur a 3.25 percent fee.

“Our franchisees are certainly their own boss. They own the business and it is 100 percent theirs,” Rutenberg explains. “And nobody can tell them what to do. They won’t do as well operating their own way since they are paying a franchise fee. You have to make a profit on a franchise fee. And you can make a profit on our franchise fee easily because we will save a franchisee more money than what they will spend in their fees. In addition, they have the use of our model home network of all the franchises, all that marketing, our plans, and our interior design system. They get those advantages too. So it all works.”

Leading Designs In A Pre-Sale Operation 

Since 1978, upper-end home buyers around the state of Florida and in several locations in the Carolinas have come to know Arthur Rutenberg Homes for their quality designs and their attention to detail.

This spring, visitors to ARH’s Gulfport model at Fishhawk Ranch in Lithia, Fla., near the company’s headquarters, were wowed by the home. Selling for approximately $800,000, the Mediterranean style Gulfport packs a visual punch. The front elevation is grand without being imposing, and each exterior detail is well proportioned — from the pitch of the roof to the trim around the windows and doors.

Entering the model, most prospective buyers react similarly. They stand there and survey the perspective of a very large, beautifully merchandised central “great room” with 14-foot ceilings. The great room then opens to a large kitchen — back and to the right from the front door. But the visitor’s eye is quickly drawn directly through the main room and out an opened set of pocketing doors to a large outdoor living program. It is a tropical haven that includes a massive flagstone lanai and patio/pool surround by a grotto-like canopy of professional landscaping. The pool includes a swim-up bar and grill area. All of this hits a buyer while they stand there in the foyer of the home.

Memorable, livable design is a hallmark of an Arthur Rutenberg home. And it is among the key reasons the company prospered in 2011, building 145 homes on $82 million in revenue. Despite the long housing downturn, Rutenberg and his team have continued to invest in well-designed model homes. The company’s design team, led by Mario Vitorino, manages a portfolio of 80 proprietary home designs that range from 1,700 square feet on up to 7,000 square feet.

“You can almost always take something that works and make it look great,” Rutenberg says. “It rarely works the other way. You always shortchange the thing you do second.”

Arthur Rutenberg Homes typically relies upon its franchisees to build new models. But because of the downturn and tight finances at the local level, as well as the need to keep the inventory of new-home models in front of the home-buying public fresh, Rutenberg made the decision to have the parent company own several new models and to lease them back to local franchisees at an affordable rate.

“One of the things that we have done to help our franchisees in the last couple of years is to build models and lease them to the franchisees,” says Rutenberg. “We own quite a few models today. About half of the new models that are being started in our system now are actually owned by us. We are doing this outside of the franchise agreement. We are doing it because it is the only way everyone is going to get through this time without being decimated and it is having a positive effect. Our model network is growing and it is going to grow 70 percent this year. And it is mostly because of the fact that we are willing to own those models.”

As a group, Arthur Rutenberg franchises have weathered the housing downturn much better than the rest of the industry. And the company is in a growth mode in the Carolinas, (where it opened its first model in South Carolina in 2007 and the first model in North Carolina in 2011), as well as other parts of the Southeast. Right now the company is expanding westward from its base toward Mobile, Ala., and beyond.

The company is built around the pre-sale model. Most homes sold are built on a customer’s lot. There are currently very few spec homes built in the system, therefore an Arthur Rutenberg franchisee is focused almost exclusively on making money from home-building operations as opposed to real estate and other sources of revenue. Thus the backbone of the company (in addition to very attractive model homes) is a set of business systems, particularly as they relate to cost-side analysis, which create opportunities to make money on home-building operations, even now when there is a lot of downward pressure on prices.

“Our system is not difficult to understand, but we do things certain ways, and when you do them that way, they work,” says Rutenberg. “If you use our purchase-order system and you use line items for purchases, then all of sudden you have a vast cost-comparison network available to you that you wouldn’t have any other way. If you use the system well, you see significant reductions in your costs. Then you are making more money and it becomes pretty exciting.” Based upon his own experience, Art’s son, Barry, agrees with this conclusion. Barry, in addition to being the 2012 Chairman of the Board of Directors of the National Association of Home Builders, is also a franchisee in Gainesville, Fla.

Rutenberg’s business systems have been refined over time. They are the result of many different successful home-building business incarnations prior to the launch of the company’s first franchise. In good times, Rutenberg franchisees that stick with their systems can earn 9 or 10 percent pre-tax, says Rutenberg. But circumstances are different today and Rutenberg acknowledges that the typical Rutenberg franchisee is earning 5 or 6 percent net profit, despite extremely tough price pressure. But this, he says, is far better than the average small-volume pre-sale builder today who struggles to earn about 3 percent pre-tax net profit.

“Our systems can do so many things for a builder, and if you use all of the tools, you really fall in love with them,” says Rutenberg.

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