Continued from last blog posting...
Sales-centric homebuilders intuitively understand that without sales, nothing else matters. When a CEO of a public company makes a presentation, she/he always mentions deliveries very early…often first. In a robust market, it may be partially based on bragging rights. In normal markets, it is the ultimate test of how they understand the buyers…their own, their competitors’ and the buyers of resale houses. In depressed markets, it is a matter of survival…even if there is no profitability per sale. A sale that closes at least repatriates some capital…and pays down some debt. Better than the alternative.
Our business always awaits with anticipation the May edition of Builder Magazine, when the “report card” is issued. The Builder 100 ranks builders based on numbers of annual deliveries. Sure, there are other metrics, but they all follow deliveries. How many were there?
Members of the KB Home team often say theirs is a sales and marketing company…whose commodity happens to be housing. That sums it up!!
Let’s start with three principles:
If it does (eventually) not contribute to a sale, should any activity be continued?
If it contributes to a sale, which activity should be abandoned?
If there is something that could contribute to a sale, and we are NOT pursuing it, when will we start?
With those as overriding concerns, we can then fine-tune our processes, value-engineer many components, and find better, faster, more economical ways to support 2 and 3 above.
The great companies ALWAYS consider the buyers.
Not first.
Not mostly.
ONLY!!
If we take the position that we want to attract more sales, we will have better marketing advice. We will have designs that buyers will accept, not that sellers love. We will keep our sites clean and green. We will have proactive customer care programs. We will...all of us…understand that the days of we/they are over. (They should never have taken root, originally, but anything that gets in the way of sales is a mistake. Those members of our team who cannot embrace that attitude should be discharged to impose their bad attitude on someone else.)
Below are some ideas.
Products / plans must be based on buyers needs, balanced with their limits of affordability;
Model merchandising must be based on showing our buyers how and why they may live in our homes;
Our hours of sales office operation must be based on when the greatest number of buyers can visit our community, engage our sales professionals, tour our models, and see a specific location that could best suit their needs and affordability;
Everyone is in sales. Whenever possible, even when we DON’T think it is possible, we ask for a referral. Referral sales are less expensive and are less likely to cancel. Referral sales increase profitability. Profitability affects survival.
It is the responsibility of sales management and senior leadership to train everyone…including non-staff trade partners…how to ask for referrals.
It is then the same responsibility of sales leadership to have an immediate, and effective, system for following up referrals. And, to report back to the source of the referral, both the members of our team and the “civilian” who put her own credibility on the line for us.
It is also the responsibility of sales management to celebrate and say thank you to both if a sale results. And, to encourage more referrals. Referral sales are less expensive and are less likely to cancel. Referral sales increase profitability. Profitability affects survival.
If everyone IS in sales, then, everyone also needs to be part of several other teams.
Everyone is in market intelligence.
Everyone tries to shop the competition;
Everyone is a clipping service and forwards news articles of interest to the marketing leadership;
Everyone collects resales fliers from the nearby neighborhoods.
Everyone is on signage patrol.
When our A-boards are knocked down, everyone is deputized to pick them up;
When our signs show graffiti, everyone is accountable to either remove it or let the marketing leadership know immediately.
When anyone sees a potential signage location, they make it known;
Everyone should be prepared to give a bottle of cool water to the human arrows;
Everyone is in HR.
While shopping the competition, anyone who spots great sales talent lets the sales leadership know the details;
In a professional, non-accusatory way, anyone who sees our own team
missing sales opportunities, owes a duty to the entire team to call out that failing to the appropriate manager. It is mis-placed loyalty to hide the facts if the sales team does not even have the office and models ready for “show time” during 100% of the posted hours of operation. Those failings affect the income, the job satisfaction…even the employment…of the entire team;
Everyone tries to improve our own human capital…by helping to develop our own and by looking for great talent elsewhere. When we have better salespeople, our closing ratios increase. Our metrics improve. Our profitability goes up. Profitability affects survival.
d. ANY improvement in our talent pool will speed up our turns on capital,
increase our absolute sales, or reduce our cost of sales. All of these improve profitability. Profitability affects survival.
10. Everyone reduces litter on site. This is a multi-faceted matter:
No more tossing burger wrappers that land close to…but not in…the appropriate trash containers;
Trade partners clean as they go;
On site construction management inspects what it expects. The supervision always includes finding ways to reduce the construction debris in the first place and it always requires the source of the construction debris to own the responsibility for managing it;
Our sub-contracts normally require the trade partners to clean as they go. That means we never, ever, reinforce bad behavior and hire clean up crews to make up for any failures in that regard…unless that cost is back-charged to the offending trade.
None of us is beyond picking up litter. It is OUR community, OUR business plant, our source of income and pride. We will treat it as if the litter were in our neighborhood retail store, our living room or our classroom.
Everything and anything that “trashes our community” reduces sales. Those that disagree may be better off in a new career.
When closings are happening, everyone can be a courier for escrow documents. This doesn’t mean that everyone is a notary or a certified document signer, but we can all pitch in, save some costs…or some time…and deliver documents if such is necessary / helpful. Closings pay the bills!
When sales are closed, everyone celebrates. When metrics are achieved celebrations include the entire team.
Everyone, including trade partners, knows our fiscal year end. No one plans a vacation immediately before FYE. When we meet our metrics, our lenders and equity partners are happy. When they are happy, they are likely to do business with us again. When they know we are reliable, that our closings are predictable, they consider us as less risky. When we are less risky, the cost of “renting money” is reduced. When renting money costs less, profit increases. Profitability affects survival.
Everyone is in customer care…and recognizes that happy customers make for more referral sales, at a lower cost, thus improving profitability. Profitability affects survival. Sometimes it is easier to oil a hinge than it is to send a memo to the hinging oil department! It is certainly faster!!!
When we have grand openings, topping-off, phase releases, VIP previews, etc., everyone is on the promotions team. Beazer-Los Angeles has a great spirit in this regard. Their operations team arrives shortly after dawn. They look for ways to improve the presentation, rather than excuses to stay away and reasons to snipe at others. They know that successful events result in more sales or earlier sales. Each of these contributes to profitability. Profitability affects survival.
Everyone is in Marketing & PR. We can take a lesson from the very highest levels of management at LENNAR. If they wear name badges at the supermarket, at the movies and at the hockey game, they show a real pride in themselves and their builder. I dare say it has an impact on their conduct in these places, and results in a wider, but also, better impression of LENNAR. If we consistently consider ourselves to be “brand ambassadors” our brand improves. Our sales increase and our costs of sales decrease. Our profitability increases. Profitability affects survival.
Everyone is in land acq…looking for opportunities. If there are sites that come available, where any of us believe we can be successful in making sales, we must advise the land acquisition / forward planning leadership of those opportunities.
CONCLUSION:
Sales-centricity means that everything revolves around sales. In the absence of sales, no other metric matters. Indeed, we don’t matter and we don’t survive. Some have tried to impart this attitude for years, but too many of us were too preoccupied. We were too busy with “our jobs” to worry about sales.
How is that attitude working for us in 2008? How is our job security if there aren’t sales? Maybe, just maybe, this market can be the time when we all embrace that sales and closings are results. Everything else is simply a process.
Jeff Brotman, founder of Costco, is quoted as saying “Reward results and not efforts.”
What do we want more of…results? Or processes and efforts?
No matter what else we do, if we don’t make sales, we don’t survive.
Sales-centricity. It’s time to embrace it! MAKE time to embrace it.
Our business always awaits with anticipation the May edition of Builder Magazine, when the “report card” is issued. The Builder 100 ranks builders based on numbers of annual deliveries. Sure, there are other metrics, but they all follow deliveries. How many were there?
Members of the KB Home team often say theirs is a sales and marketing company…whose commodity happens to be housing. That sums it up!!
Let’s start with three principles:
If it does (eventually) not contribute to a sale, should any activity be continued?
If it contributes to a sale, which activity should be abandoned?
If there is something that could contribute to a sale, and we are NOT pursuing it, when will we start?
With those as overriding concerns, we can then fine-tune our processes, value-engineer many components, and find better, faster, more economical ways to support 2 and 3 above.
The great companies ALWAYS consider the buyers.
Not first.
Not mostly.
ONLY!!
If we take the position that we want to attract more sales, we will have better marketing advice. We will have designs that buyers will accept, not that sellers love. We will keep our sites clean and green. We will have proactive customer care programs. We will...all of us…understand that the days of we/they are over. (They should never have taken root, originally, but anything that gets in the way of sales is a mistake. Those members of our team who cannot embrace that attitude should be discharged to impose their bad attitude on someone else.)
Below are some ideas.
Products / plans must be based on buyers needs, balanced with their limits of affordability;
Model merchandising must be based on showing our buyers how and why they may live in our homes;
Our hours of sales office operation must be based on when the greatest number of buyers can visit our community, engage our sales professionals, tour our models, and see a specific location that could best suit their needs and affordability;
Everyone is in sales. Whenever possible, even when we DON’T think it is possible, we ask for a referral. Referral sales are less expensive and are less likely to cancel. Referral sales increase profitability. Profitability affects survival.
It is the responsibility of sales management and senior leadership to train everyone…including non-staff trade partners…how to ask for referrals.
It is then the same responsibility of sales leadership to have an immediate, and effective, system for following up referrals. And, to report back to the source of the referral, both the members of our team and the “civilian” who put her own credibility on the line for us.
It is also the responsibility of sales management to celebrate and say thank you to both if a sale results. And, to encourage more referrals. Referral sales are less expensive and are less likely to cancel. Referral sales increase profitability. Profitability affects survival.
If everyone IS in sales, then, everyone also needs to be part of several other teams.
Everyone is in market intelligence.
Everyone tries to shop the competition;
Everyone is a clipping service and forwards news articles of interest to the marketing leadership;
Everyone collects resales fliers from the nearby neighborhoods.
Everyone is on signage patrol.
When our A-boards are knocked down, everyone is deputized to pick them up;
When our signs show graffiti, everyone is accountable to either remove it or let the marketing leadership know immediately.
When anyone sees a potential signage location, they make it known;
Everyone should be prepared to give a bottle of cool water to the human arrows;
Everyone is in HR.
While shopping the competition, anyone who spots great sales talent lets the sales leadership know the details;
In a professional, non-accusatory way, anyone who sees our own team
missing sales opportunities, owes a duty to the entire team to call out that failing to the appropriate manager. It is mis-placed loyalty to hide the facts if the sales team does not even have the office and models ready for “show time” during 100% of the posted hours of operation. Those failings affect the income, the job satisfaction…even the employment…of the entire team;
Everyone tries to improve our own human capital…by helping to develop our own and by looking for great talent elsewhere. When we have better salespeople, our closing ratios increase. Our metrics improve. Our profitability goes up. Profitability affects survival.
d. ANY improvement in our talent pool will speed up our turns on capital,
increase our absolute sales, or reduce our cost of sales. All of these improve profitability. Profitability affects survival.
10. Everyone reduces litter on site. This is a multi-faceted matter:
No more tossing burger wrappers that land close to…but not in…the appropriate trash containers;
Trade partners clean as they go;
On site construction management inspects what it expects. The supervision always includes finding ways to reduce the construction debris in the first place and it always requires the source of the construction debris to own the responsibility for managing it;
Our sub-contracts normally require the trade partners to clean as they go. That means we never, ever, reinforce bad behavior and hire clean up crews to make up for any failures in that regard…unless that cost is back-charged to the offending trade.
None of us is beyond picking up litter. It is OUR community, OUR business plant, our source of income and pride. We will treat it as if the litter were in our neighborhood retail store, our living room or our classroom.
Everything and anything that “trashes our community” reduces sales. Those that disagree may be better off in a new career.
When closings are happening, everyone can be a courier for escrow documents. This doesn’t mean that everyone is a notary or a certified document signer, but we can all pitch in, save some costs…or some time…and deliver documents if such is necessary / helpful. Closings pay the bills!
When sales are closed, everyone celebrates. When metrics are achieved celebrations include the entire team.
Everyone, including trade partners, knows our fiscal year end. No one plans a vacation immediately before FYE. When we meet our metrics, our lenders and equity partners are happy. When they are happy, they are likely to do business with us again. When they know we are reliable, that our closings are predictable, they consider us as less risky. When we are less risky, the cost of “renting money” is reduced. When renting money costs less, profit increases. Profitability affects survival.
Everyone is in customer care…and recognizes that happy customers make for more referral sales, at a lower cost, thus improving profitability. Profitability affects survival. Sometimes it is easier to oil a hinge than it is to send a memo to the hinging oil department! It is certainly faster!!!
When we have grand openings, topping-off, phase releases, VIP previews, etc., everyone is on the promotions team. Beazer-Los Angeles has a great spirit in this regard. Their operations team arrives shortly after dawn. They look for ways to improve the presentation, rather than excuses to stay away and reasons to snipe at others. They know that successful events result in more sales or earlier sales. Each of these contributes to profitability. Profitability affects survival.
Everyone is in Marketing & PR. We can take a lesson from the very highest levels of management at LENNAR. If they wear name badges at the supermarket, at the movies and at the hockey game, they show a real pride in themselves and their builder. I dare say it has an impact on their conduct in these places, and results in a wider, but also, better impression of LENNAR. If we consistently consider ourselves to be “brand ambassadors” our brand improves. Our sales increase and our costs of sales decrease. Our profitability increases. Profitability affects survival.
Everyone is in land acq…looking for opportunities. If there are sites that come available, where any of us believe we can be successful in making sales, we must advise the land acquisition / forward planning leadership of those opportunities.
CONCLUSION:
Sales-centricity means that everything revolves around sales. In the absence of sales, no other metric matters. Indeed, we don’t matter and we don’t survive. Some have tried to impart this attitude for years, but too many of us were too preoccupied. We were too busy with “our jobs” to worry about sales.
How is that attitude working for us in 2008? How is our job security if there aren’t sales? Maybe, just maybe, this market can be the time when we all embrace that sales and closings are results. Everything else is simply a process.
Jeff Brotman, founder of Costco, is quoted as saying “Reward results and not efforts.”
What do we want more of…results? Or processes and efforts?
No matter what else we do, if we don’t make sales, we don’t survive.
Sales-centricity. It’s time to embrace it! MAKE time to embrace it.
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