Stephen Wade, Director of Marketing, Sewell Shutters, Inc.

You may have seen last Thursday’s Bloomberg release about the shifting homebuilder focus.  If not, you can read it here.

To summarize, homebuilders are responding to an ever-growing frugal customer base by scaling back their product lines.  To quote IHS Global Insight economist Brian Bethune: “The high end isn’t moving, so builders have got to dumb-down their designs and put in Formica kitchens and the bare-bones carpeting.  New-home buyers are being conservative — they’re not willing to pay for extras because they’re worried about the economy.”

Homebuilders have typically been a source of consistent work flow for companies selling plantation shutters, especially in Dallas.  Because they carry the aura of being a more luxurious window treatment than blinds (along with the functional benefits few other window treatments offer), plantation shutters have been used in spec homes by homebuilders such as Paul Taylor Homes and Highland Homes.  However, in light of demands from consumers for less expensive homes, lower expensive blinds are poised to take greater market share away from interior shutters.

What should the response by plantation shutter dealers be?

• Sell the builder the upgrade, not the spec.

In the past, companies would sell builder purchasing agents and sales managers on the advantages of installing their higher priced products in spec homes as a way to lure prospective buyers.  The promise of free granite countertops and stainless steel appliances would encourage buyers to close during a specific quarter, saving the builder on carrying costs and helping them reduce inventory and meet sales goals.  Now the same homeowners are wondering why a homebuilder, who obviously covers the cost of the “free” upgrades in the purchase price, doesn’t just remove the extras and offer a discounted price.

Since using your upgraded window treatments is going to be a much more difficult sell to homebuilders, the best option is to sell the builder on offering your product as an upgrade in their design center.  Many homebuilders are open to this idea, as it costs them very little to host your product.  Your proposal to builders should also include a plan to help them sell the product.  Builders want to maximize their design center space.  If they can’t sell your product, they will ditch it for something they can.

Convincing a builder on including your line of products in their design studio is a much easier sell (and costs less marketing wise) then convincing them to include it in their specs.  It’s also more safe for your bottom line.  If you write a deal with a builder to install X amount of plantation shutters in Y amount of homes, you will likely be asked by the builder to give a volume discount.  This isn’t a problem if you sell an essential product (like carpet), because it’s unlikely to be cut out of the house.  But if the subdivision you wrote the deal for isn’t moving homes, the builder will begin slashing upgrades to increase their margins – and guess what will go: you’re upgraded window treatments.  Without finishing out the contract, you won’t obtain the critical mass of installations necessary to profit – or even break even.  Several of my friends who had mass contracts for flooring and countertops with national homebuilders went under once the volume of homes produced decreased and they couldn’t produce enough volume to sustain themselves.

However, if you sell in a design center you don’t need a volume contract - because it’s a case by case situation.  The builder’s purchasing agent will be less inclined to demain a large discount from you.

• Pre-sell the homebuyer for the builder.

The marketing budget needs to be diverted away from a focus on selling homebuilders to selling homeowners.  Remember!  Homebuilders are listening to their customers. If the public wants a more frugal solution to their new home, the builder will give it to them.  However, if the public is demanding a certain upgrade – or more preferrably, YOUR brand of upgrade, the builder will respond to that as well.

The key is to convince the homebuying public to ask their builder for your product, while making yourself available to the builder to handle the requests once they begin coming in.

There are a variety of strategies for accomplishing this form of pull-through marketing.  At Sewell Shutters, we use an eclectic group of online sources to brand our name and encourage consumers to ask for our line of plantation shutters from their homebuilder or interior designer.  Using search engine optimization and social media, we are able to engage the general public in conversations and hopefully demonstrate to them why purchasing from us is a great investment for their future.  We offer free advice for current shutter owners who need DIY help for repainting or repairing their product.  We host product knowledge deminars.  We make appearances at a limited number of tradeshows.  We want people to know the Sewell Shutter brand, see value in it, and ask for it from their homebuilders.

And it’s working.  Just the other day, Regent Homes called us and said they had a buyer demanding they install a Sewell shutter in their house.  No other plantation shutter would do.

Stay the course.  The Sun is Rising.

I’ve decided to repost his blog here.  Well done Jim!

EXTREME QUALITY

July 21, 2009 at 2:04 pm | In Green Bulding, Home Buying Tips
Tags: extreme quality, green homes, green homes tampa, homebuilders tampa, new homes, new homes tampa,quality, tampa homebuilders, tampa new homes

Not long ago in a customer focus group a participant used the words “Extreme Quality” during a word association exercise where the facilitator threw out a builders name and the respondent had to reply with their first thought. Being personally vested in our organization I took great pride in that. But it also occurred to me that therein was our distinct USP. Our unique selling proposition. Extreme quality in our product, our service and as important the customer experience itself.

In today’s world you don’t hear much about quality. Everyone is focused on price. But it can’t be about price. Things have become out of balance. The cost of land remains mostly unchanged, the cost of building materials has remained constant and in some cases continue to escalate. Lumber for example just saw increases in the double digits. Labor costs have decreased in terms of salaries but overhead and employer burden continues to rise as the cost of health insurance continues to escalate. Every homebuilder has shaved as much cost as they can at this point out of the cost of building a home. But as foreclosures and short sales continue to dominate the market, the inequity in home pricing continues to be in the forefront of consumers minds and rightfully it is confusing.

I heard someone say once that you can have a great price but that doesn’t spell a great value. That person was absolutely right. Those who compete on price alone will ultimately lose; seller and buyer equally. There are three elements to a home purchase. Quality, service and price. Pick two because you can’t have all three. Someone will always be there to sell it cheaper so we choose to offer quality and service. For the consumer that this still matters to we are the homebuilder of choice poised to deliver the highest quality with the most exceptional service that can be found. Extreme Quality includes the customer experience and this is what makes Southern Crafted Homes unique in the market. Our uncompromising commitment to quality comes from our absolute adherence to our core values of honesty, integrity, respect, and our belief in excellence in everything we do. We believe that still counts for something. Let us show you the value in that.

Jim Deitch
Chief Operating Officer
Southern Crafted Homes

Ask for the real deal.  Ask for a Sewell Shutter