Attempting to read the housing market, so far this year has become challenging at best. In 2017 nearly everything driving the housing market teetered on what would remain after the natural disasters and how the political climate would respond. By the time 2017 had come to an end, it was discovered that there was very little about construction in the housing market that had performed as forecasted.
Samantha Sharf quotes Skylar Olsen, a senior economist with the popular home search website Zillow; “We thought there would be some things to take the pressure off,” (Forbes: Housing Outlook) “That did not happen at any impactful level.” The housing industry experts had believed that the housing industry would experience rising interest rates. There would be a moderate increase in price, growth, and of course, construction in general, inside and outside of the housing market. Currently, among various experts in all areas of the housing market, there is cautious optimism that inventory may increase, only slightly. As of January of 2018, Trulia ( a real estate resource for homebuyers and renters) states that only 6% of current U.S. homeowners have indicated that they would be willing to sell their homes in 2018.
According to the Associated Press (Washington); construction is moving away from building apartment complexes to building single-family homes that will be built for ownership. In a more stable market, this would be a positive sign of economic improvement for the construction industry. However, the usual belief is that strong pricing and increased demand would also increase the demand for construction.
So far during this cycle, this is simply not an indication of what is expected.
There are apparent reasons that builders aren’t progressing as planned and those reasons are structural. For example, considering local density regulations, there appears to be an increasing lack of buildable space. The price of land is rising significantly. The demand for higher wages from much needed skilled labor has become increasingly prevalent. And in light of the newly implemented tax laws; there is considerable desire to continue to rent already existing properties, especially in more expensive markets. It’s becoming more expensive to own a home under these new laws. Hesitancy to purchase a newly built home will continue, until there is some degree of comprehension of how the home buying consumer will benefit,
Where Will These Facts Leave Contractors Financially?
With current market conditions, contractors will again need to examine how they may weather any current financial storms or those that may come in 2018. One of the best ways to accomplish this is not only by monitoring misspending and material cost control, but will also lie in educating and arming your company’s employees with your plan to increase sales.
It’s vital to begin this process by understanding the difference between sales and marketing.
It’s critically important to understand the importance of consistent measurement and management of the two.
- Measurement – will require that you analyze and prepare a projection of what portion of your sales expenditures your company will have to absorb. Remember that to have anything at all to manage; measurement must be the priority.
- Management – will require some research and analysis so that you may determine whether or not your product would be well positioned in your particular market. If you find that improvements could provide better positioning, the time is right now to conduct the analyses and make these adjustments (accordingly your company will be on track for the best possible success scenario this year and moving forward.
Begin by Implementing the Following:
- Conduct a marketing study to assess your market’s position.
- Analyze any trends and track your monthly sales and closings.
- On a quarterly basis, dispatch your salespersons to visit and provide “shop” reports of any builders who may be competitors in your market.
- Analyze all social media and advertising results; i.e., what are the results of your company’s paid ad sources for website traffic (per unit)?
- How many visits is your ad source producing? How many appointments are you setting? How many organic contacts are you receiving as a result of your marketing efforts? How many of these combined contacts and appointments are converting to sales?
- Evaluate your salespersons’ conversion ratios. Are they asking for and producing sales from referrals?
Pay Attention to Client Services:
- During peak traffic hours, be certain that you are well staffed. Keep walk-in office hours that are convenient
- Be certain that your sales team remains attentive to new contacts and the lifecycle marketing aspect of the sales process with every contact and all potential buyers with whom you’ve made contact.
Follow Some Proven Steps to New-Home Sales Conversions:
- Create an escalating compensation plan for your salespersons to enhance achievements.
- Home purchases are one of the most emotional purchases buyers will ever make. Before your salesperson meets with the client(s), be certain, that they are emotionally and psychologically prepared to sell.
- All salespersons should expect a ‘first visit’ sale, or, a conditional sale or an appointment to revisit the possibility of the sale. At the very least your salespersons must acquire permission to recontact the potential client for a follow-up.
- • All salespersons must be well versed in the art of demonstration, provide convincing client communications and negotiations, the ability to close the sale. Evaluate these aspects often. Rehabilitate if needed, replace if necessary.
Enhance Sales Management:
- Worry less about hiring “experienced” salespersons. Recognize and hire the visible ‘great potentials’ and mold them to fit your company culture specifically.
- Always train your salespersons with exceptional sales development skills.
- Role-play sales scenarios often.
- Take charge and lead by example with a strong purpose and sense of success and financial well-being for all in mind.
Many exceptional strategies may enhance the profitability of your business. As the market begins to improve and your sales rise, beware of complacency. Every employee, from administrator to the laborer must be trained to consistently self-evaluate to improve their positions and therefore improve the profitability and success of your company.
If you feel that your company may require these steps but are not in a position to perform the analyses alone, you may wish to consider contacting a knowledgeable business consulting firm for assistance in organizing these methods and more, to improve your company’s culture and profitability.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: