Just a few months ago, I was enjoying a day at the beach with my family. I have one of those large, battery-operated Bluetooth speakers that has wheels and a telescoping handle so you can pull it behind you, and I love to take it to the beach. If I’m being honest, sometimes, I am obnoxious with that speaker and I turn up my music really loud. On this particular beach day, we arrived early and found an isolated spot in the sand not too far from the ocean. It was perfect. As people started arriving, I could tell the ones who didn’t like our loud music because they kept on walking in search of their perfect place in the sand. There were several families and other small groups of people who appreciated our big, loud speaker because they set up their chairs close by so they could listen to our music, too.
Getting Everybody on the Same Page
Our playlist was an eclectic mix with every other song coming from a different genre of music. I noticed that when a country song came on, the group to our left would really get into it, but some of the other people didn’t seem as interested. When a rock and roll song played, the same thing happened with the group on our right. Then, a great R&B song would come on and some of the folks in front us would start swaying with the music. After a few minutes, I decided to play a song that I thought everyone would love. I leaned over toward my daughter, who was sitting in the beach chair to my right, and I said, “Ansley, watch what happens when this next song comes on.” She asked me what I was playing next, but I told her she would have to wait to find out. All I said was, “This is one of the most universally loved songs ever recorded. I bet everyone here will love it, too!”
She smiled as Whitney Houston started singing, “Clock strikes upon the hour, and the sun begins to fade. Still enough time to figure out, how to chase my blues away …” Whitney hadn’t even gotten to the chorus of “I Wanna Dance With Somebody” and everyone around us was moving and grooving along! It was incredible! There were folks dancing and singing like they were at a music festival. There was a father in front of us who stood up and grabbed his little baby and started singing to her. A lady beside us took the hand of her friend and the two of them danced together like they were teenagers. The people around us were smiling and nodding their approval of the song selection as they all got into it. I thought everyone would love this song as much we do, but I was really blown away by the scene unfolding before me. My daughter looked at me with a grin that stretched across her face from ear-to-ear, and said, “Wow, Dad, I guess you really do know your audience!” I laughed with delight.
Since You Mention It
As I think about that fun encounter on the beach and my daughter’s response, I hold that memory in fondness. Her reply was very witty. Of course, those folks weren’t my audience, but it was nice to get everybody up and dancing for a few moments. As I consider her words more earnestly though, I wonder how many people who are currently in leadership in our industry really know their audience. How many marketing executives in homebuilding really know their customers? How many new home sales leaders really know their prospects?
Shifts In The Market
We have experienced changes in the real estate market at a record pace this year. We’re constantly being told that interest rates aren’t as high as they have been in the past as if this fact is supposed to instantly sooth the fears of the buying public. While it is true that current mortgage interest rates are not at historic highs, the velocity at which rates have increased is historic. There has never been another time in our history when mortgage rates doubled in a matter of just a few months. So, we are in a unique market in the sense that things have changed at record speed. With all of these changes, some business leaders are very worried about what lies ahead for the coming year. That is understandable. There is a lot of uncertainty and a lack of confidence from many would-be homebuyers. I have been working with clients in the homebuilding industry and in the mortgage industry this year and I have seen my fair share of leaders who are asking, “What do we do next?” Some of the best advice I can give is to make sure you know your audience. That may seem insignificant to some, but I would caution that there has never been a time when it was more important to know your buyer.
I am reminded of something Bob Schultz said during the last downturn, “the market never goes to zero”. That is an important truth. Regardless of what happens in the real estate market, there are always people who want to buy a home. There are always customers who are looking to buy. It is crucial that we get to know who these customers are, and that we do it as quickly as possible. There are some in our industry who will argue that homebuyers never change. The implication is that there is nothing to do to get to know them because they’re the same as they’ve always been. They insist that homebuyers today are exactly the same people as their parents and grandparents who bought homes twenty or thirty years ago. There are some elements of truth to this notion. People are people and shelter has always been one of the basic, fundamental needs of people. In most ways, people are indeed the same today as they were one, or two generations ago. However, to say that homebuyers haven’t changed the way they buy homes over the past decade, could be considered a gross misunderstanding of today’s homebuyer.
Some Things Never Change and Some Things Do
There are some business leaders who believe the best course of action during a time like this is to hold steady and stay the course. These leaders are convinced that adjustments in their strategy are not necessary because the current market conditions will soon change in their favor. There seems to be another school of thought that says this downturn is no different than the last downturn or the downturn before that, therefore, the best course of action is to do exactly what we’ve done during the last downturns. I suggest that neither of these are great options because we do not know when the winds will turn back to our favor, nor do we know that today’s buyers are facing the same challenges as the buyers who bought during the last downturn.
There are some things we do know: Many of the needs of homebuyers today are the same as they were a year ago, or two years ago. People are buying homes today for many of the same reasons they bought homes before the market shifted. In fact, that hasn’t ever changed. These buyers are buying homes for many of the same reasons their parents and grandparents bought homes. What has changed in the last several months are the challenges today’s homebuyers face and the way they want to overcome those challenges.
My advice to new home sales teams has been, “Don’t assume anything but the sale!” I teach them to assume their customer is going to buy every time they have a sales conversation, but not to assume anything else. That means for example, don’t assume your prospective customer’s greatest need is an interest rate buy-down. For that matter, don’t assume every prospective buyer is using a mortgage. We’ve always had cash buyers in the market but there may be even more cash buyers now and, in the months, to come. That’s because there are many homebuyers in the market today who have realized great gains in the equity of their current homes, many of whom can sell and buy a new home without a mortgage.
Opportunities In The Market
There are other reasons homebuyers are getting into in the market today. The increased levels of inventory which most homebuilders are carrying are giving buyers more choice and more incentives than they’ve seen in the last few years. Also, buyers in this market don’t feel forced to waive inspection periods and due-diligence periods in order to compete for a home like they did just a few months ago. Homebuyers today are generally not being outbid by other buyers on homes that are selling much higher than list price. These are all dynamics that have changed in most major cities around the country. There are many savvy homebuyers that are interested in taking advantage of this market because they see the things that have changed in their favor. Many homebuyers are smart to realize that those difficulties that plagued the last hot market are likely going to come back once interest rates fall a percentage point, or two. These buyers are wise to take advantage of the current market and many of them are not dissuaded by current interest rates.
To be sure, the dramatic rise in interest rates has had a real dampening effect on the real estate market. There are a lot of homebuyers who have been priced out of the market because of the impact of rising home prices coupled with higher mortgage rates. There have been others who have been forced to bring more money to the closing table or have had to reevaluate their wants and needs as the cost of ownership has increased exponentially.
My point is today’s homebuyers are not homogenous. They all have different challenges and different needs and wants. We have to be careful that the sirens that are blaring about interest rates don’t drown out the voices of our customers. Likewise, we have to make sure all the solutions being hurled at us like rate buy-downs and adjustable mortgages don’t cause us to get tunnel vision around the other challenges, wants, and needs our buyers have.
A Key To Sales Success
I was speaking with a highly successful new home sales specialist a few days ago and he said all his mortgage partners are talking about is interest rate buy-downs, therefore, the leadership at his homebuilding company is convinced that this is the only challenge their buyers are facing. He told me there seems to be a belief that there’s is a monolithic buyer whose only problem is higher interest rates. This new home sales pro shared with me that he has written several contracts in the past few weeks and none of his buyers were overly concerned about interest rates, not a single one. He said one of them was a cash buyer and the others had done their homework and had a good idea of what their monthly mortgage payments were going to be. They all had challenges and objections to overcome in the buying process, but none of them were related to the higher interest rates. To prove his point, he told me that the builder was offering about twenty thousand dollars in closing costs and interest rate buydowns with the use of their preferred lender. None of his buyers used the preferred lender, deciding not to take the rate buy-down incentive, and instead used their own outside lenders.
This sales professional has made it part of his process to get to know his potential buyers, and I’m sure that has played a big part in his sales success. Is it possible that these deep incentives around interest rate buy-downs are costing homebuilders more than is necessary? This is a great example where the homebuilder may want to spend some time getting to know the voice of their customer.
The Cinderella Syndrome
There are many salespeople and entire sales teams who are affected by what I call The Cinderella Syndrome. They have a single solution which they believe is what every one of their prospects is looking for. Imagine if Prince Charming were a shoe salesman and the only shoes he offered were the glass slippers. He would spend his days and nights presenting those shoes to hundreds of prospects. Of course, none of these ladies would buy his shoes because no matter how hard they tried to squeeze into the glass slippers, they just weren’t a good fit for them. Eventually, our royal shoe salesman would find the one person whose foot would fit into the glass slippers, and he would make his sole sale (see what I did there?). Prince Charming wouldn’t be in sales very long with that type of strategy. He would have a terrible conversion rate, and after a lot of hard work, he would have nothing left to sale!
Imagine on the other hand, if there was a salesperson in that kingdom who had dozens of styles of shoes in every size and color imaginable? She could travel the kingdom and with just a few questions of every potential customer she met, she would know exactly the perfect shoes for each one, and she would be the envy of every salesperson in the entire kingdom! Though, I’m having a little fun with this, you get my point. Instead of choosing the single glass slipper solution and hoping we find enough Cinderellas to make our sales goals, we should spend some time getting to know our customers so that we can offer solutions that actually fit more than one scenario.
The Voice of Our Customer
There is great benefit to both, our sales effort, and our marketing effort, when we know our customers. When our marketing teams really know our buyers, they not only know their pain points, but they know exactly how our buyers describe those pain points and how they want them resolved. When we know our customers that well, our marketing messages can take on the voice of our customer. The same is true for our sales effort. When we truly know our customers, we can speak to them in terms that resonate because we are genuinely speaking with the voice of our customer. That kind of authenticity becomes a valuable unique selling proposition which separates and insulates us from the competition.
How do we get to know our buyers so that we can hear the voice of our customer?
1- Ask Them. This may sound like oversimplification, but it is imperative that you ask every customer about their expectations. Adopt a sales process that emphasizes curiosity over “setting expectations”. In other words, instead of spending so much time telling your potential customers who you are, what you do, and how you do it, put an emphasis on finding out who they are, what they want, and how they want it. Why do we spend so much time telling the builder’s story before we’ve learned the buyer’s story? This is the absolute best way to hear the voice of your customer. In this setting, you can ask follow-up questions and get great context for everything the customer shares.
2- Read Your Reviews & Surveys. What are your customers telling you in your online reviews and third-party customer satisfaction surveys? Don’t just focus on the good ones or the bad ones. Often, we read customer reviews in order to find the outliers or the exceptions. There is gold in your reviews. What a great way to get to know your customers, to read their own words in their own voice. I believe one sentence from your customer is more valuable in your marketing messages than a hundred words from your ad agency.
3- Read The Reviews Of Others. Don’t stop at your reviews. Read the reviews of your competitors. Read the reviews at the other places your customers shop. It’s not just about what they say to homebuilders, it’s about what they say. Where does your audience write reviews? That’s where you should be looking for what your customers are writing so you can learn who they are and what they want.
4- Find Your Customers Online. Be creative. Find the places where your customers spend time online. Think about social media, Facebook groups, neighborhood chat groups, etc. Look for people that are like your customers and lean into what they’re saying and how they say it. The more you get to know the people who are like your customers, the more you will know your customers.
5- Form Focus Groups. Your past customers are a great source of information on how to get to know your current and future customers. How often do you form focus groups of your past customers? The information you obtain there could be invaluable. Think about forming a focus group comprised of your competitor’s customers. Drive through several communities of your competitors and invite the homeowners to a focus group. If you concentrate on the newest homes, you’ll find the newest customers and these homebuyers can add great insight on who your customer is. Some of the best market data I’ve ever paid for came from hosting focus group dinners with homebuyers who bought from our competitors. Remember your goal is to really understand who your buyers are.
Take some time to create strategies that empower your sales and marketing teams to really get to know your audience. Knowing who your customer is may be one of the most important things you do for success in this coming year.
If you would like to know more about implementing a sales process that focuses on curiosity and is buyer-centric, or if you would like to know more about learning the voice of your customer, reach out to us today at www.SalesUncomplicated.com