"Sales-Centric" companies

What does it take to be successful in sales? Is it (only) a great sales team? How well would that sales team perform if they had an inferior, outdated, or discredited product? Is it the advertising, marketing, web-tools team? How well would the company do if the website was superb, if the ads of whatever type generated plenty of visits, and the consumer was well-qualified, but the product was simply too expensive for the buyer? What impact does a terrible reputation have…even when the product, price, value, timetable, etc. are excellent?

I was impressed by the comments of Centex’ CEO, Tim Eller, where he said that his company was paring down its products from 4500 different plans to 700. He used the term “manufacturability.” Mr. Eller sees that he can improve quality by having fewer variables in his “manufacturing plant.” There is a shorter learning curve for everyone involved. Less opportunities for error. Likely an improved “manufacturing time.” Certainly, he looks forward to some cost savings by purchasing more construction components of fewer different versions. And, with good architecture, there can certainly be 4, 5, 6 or 7 elevations of each plan, so that the street scene is still varied and offers prospects a “one-of-a-kind” combination of location, home style, orientation on the site, etc.

Centex is certainly not abandoning its constituency. They still prize their strong showings in customer satisfaction. See http://www.bigbuilderonline.com/industry-news.asp?sectionID=0&articleID=771316

They must believe that they can still take very good care of their customers as well as their shareholders by heading to “manufacturability.”

Centex is certainly one of the firms that understands that we are here to serve the customer. In the business of new home sales, there can be many metrics, ROI, IRR, turns, return on capital, pre-tax income, stock price, etc. But unless there are enough sales, there are not many things to measure. In the absence of sales, survival is questionable.

By streamlining the building process, Centex should expect to deliver better-built homes to its customers, with fewer defects, and take less time to do it.



When that happens, there is a higher level of customer satisfaction. (The latest, J.D. Powers survey shows a close connection between the markets most impacted by lowered prices, and overall satisfaction. Respondents do link a great value to a great experience.) Better customer satisfaction means less call backs, lower costs, and more referral sales. Marketing costs are reduced by every referral sale. Even the number of pages of a brochure is reduced. Fewer renderings may be needed to be in the sales office displays, requiring less wall space in the sales gallery, less frames and less spotlights placed above them. Indeed the artists’ rendering costs can be reduced. Renderings might be bulk produced in Dallas and sent to the various divisions.

The plan reviewers at the municipalities should be quicker to respond. They will build a body of knowledge about the plans…and have fewer of them! They will see the same basic plans more frequently. In some jurisdictions, once a plan is approved, it may be used extensively and we may approach the municipality with a “K-revision” showing only the changes from the master approval.

Less management time is required for fix-it work, freeing up the brainpower for other creative ways to improve the customer experience and the company performance.

With fewer different plans, the sales team gets more familiar with each and is less likely to make errors in the presentations. If there are fewer, and by definition only the best remaining, plans, there are fewer models needed and the enormous costs of models can be contained.

If a customer is likely to want the Centex experience, they have fewer basic homestyles to choose from…and may well make a decision sooner. They will still have plenty of choices of elevations, garage-handing, perhaps the color palettes of body-trim-door-roof colors.

It looks like everything is focused on make more sales, making smoother sales…and expediting the sales they would already be likely to achieve.

Look at the auto manufacturers. Each year, in the US alone, we sell about 8,000,000 new cars. (In great years, we may sell 1,200,000 new homes.) Can we imagine that one manufacturer could have 4500 models? Overall quality of motor vehicles has been growing, not only in third-party evaluations of safety, mileage, etc., but in customer satisfaction as well. Customer satisfaction, and vehicle quality, do not need to mean a one-of-a-kind, custom built vehicle. And, vehicles are decidedly portable, unlike homes!

This is a good sign. I expect we will see the same trends in homes as we see in cars. Continuously-improved quality. More “manfacturability.” Better overall value perception. Then, there will be the truly tiny niche manufacturers like Bentley which sold 10,000 new cars worldwide for the first time in 2007.

By and large, car manufacturers are closer to their consumers. They respond more quickly. They are quicker to innovate. They streamline systems. They build in controlled environments to improve quality and reduce building time. And, at the end of the day, they think about what the consumer will buy in future. They are not infallible, but they avoid a mistake we see all too often in new homes…many designs and processes are established for the preference of the manufacturer and not for the convenience of the consumer.

Automotive manufacturers are more “sales-centric” than homebuilders. It’s time we learned from them.

Next edition: “Attributes of a Sales-centric Builder”