This months article of TecHome Builder features an interesting article that I wrote entitled, Creative Ways to Maintain Your Sales in a Slowing Market. The magazine comes out this week and it's a definite must read. Below is a snippet of the article. Make sure you visit
www.techomebuilder.com.
It finally appears as though the current North American housing cycle has crested and is beginning its retreat from record starts and unprecedented prices. Housing starts by June 2006 are down by approximately 15% compared to the same period last year. Consequently, industry heavyweights such as D.R. Horton, Ryland Group, and KB Homes are beginning to report significant decreases in revenue, a sure sign the North American home and condo market is beginning to lose its luster. With this change in purchasing behavior, the focus of builders is beginning to shift towards establishing creative ways with which to maintain sales in a declining market. In this months edition, we explore how to effectively manage your sales center costs, ensuring that your business remains healthy.
In this new age of building, in order to ensure a healthy bottom line it is absolutely vital for a builder to manage and even reduce their costs. With the abundance of new projects coming online, the amount of capital tied up in building, designing, furnishing and managing the associated sales centers and model homes is skyrocketing in comparison. So how can you maintain the impact and visual cues a model home provides while trying to minimize or even reduce the financial impact? The answer may surprise you: Build fewer model homes!
Since 1994, Tridel Corporation, a prominent builder in the Toronto, Ontario, Canada market has been achieving tremendous sales results without the aid of a model unit. By taking advantage of both virtual reality and
interior vignettes Tridel has been able to effectively communicate to and capture the attention and imagination of potential purchasers Early on, Tridel identified their need to eliminate physical model units.
"Prior to 1994 we relied largely on physical suites but since that time we have used 100% virtual suites," says Jim Ritchie, Senior Vice President of Sales & Marketing for Tridel. "The elimination of physical suites has saved us on average $250,000 per sales center and ultimately reduced sales center construction costs substantially."
It was clear to this progressive company that the traditional approach to selling units would no longer suffice in a revitalized and competitive marketplace. In order to meet their goals, some difficult decisions had to be made. The result: All of Tridels model units were abandoned in favor of virtual models. The virtual models had practically none of the maintenance cost and logistical issues that had once hindered the company, and in a synergistic twist allowed Tridel to better and more effectively convey their message to potential purchasers, actually increasing customer satisfaction during the critical purchase phase.
Within the past several years, a number of builders have opted to follow Tridels lead and make the transition from building a physical model to hosting a virtual one. This strategy has proven to be quite lucrative for some, saving the builder hundreds of man hours and countless dollars in the process. You may think this strategy cannot possibly work for your company, but read on and you may find that NOT building as many model homes can be one of the best decisions you make:
Pinnacle communities was able to drastically decrease their sales center costs through the reduction of model homes. "By reducing the number of physical models from 4 to 2 we were able to significantly reduce marketing costs by $160,000 without loosing sales."
In contrast, the cost of designing and fully rendering a virtual model would only require a $5,000 expenditure, a fraction of the cost of a traditional model!
Integrating
virtual renderings into your traditional sales center and marketing campaign is also crucial to a successful sales strategy. Often, a builder will rely upon renderings and
virtual tours to do the selling for them rather than using them as tools to aid in the sales process. When incorporating these virtual tools into your existing sales environment, ensure that the virtual and physical complement one another functionally. A virtual kitchen tour should be located in proximity to the cabinet, tile and countertop samples enabling visitors to better visualize these options in their proper context. Another effective technique includes
pairing a virtual tour with a models black-line floor plans. The blackline drawing anchors the viewers perception of where in the model they are, while the virtual tour can take them inside to see and experience what being in the space is actually like.
As described above, the net result is that visitors to your sales center still receive the same benefits they would have with a physical model, yet your company achieves this at a fraction of the traditional cost. As you are well aware, what weve discussed above is just one of the ways a builder can maintain a healthy balance sheet during times of uncertainty, next month we’ll discuss another: How to reduce your sales and marketing budget while simultaneously decreasing the time it takes to sell through your project.
Labels: Creative Ways to Maintain Your Sales
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