Wednesday, November 26, 2014

Happy Thanksgiving From Our Family to Yours

9 Things That Can Influence a New Home Purchase

If you want to get people to buy a new home from you, you need to understand how people make purchasing decisions.

Quality built homes and builder reputation matter; that goes without saying. What about when your home matches the customer’s needs and wants, and they trust you, the builder? What are the things that influence the purchasing decisions once those fundamentals are in place?

New home purchases usually start with a Google. Most people do online research and compare different builders in their area. What happens after can make or break your business.

Here are 9 things you should know about purchasing decisions:

1. Peer reviews matter
Nearly 90 percent of new home buyers said they look for online reviews prior to beginning their house hunting.

Start gathering reviews on your site. Ask your past customers to give you one or two sentences that can be added to your website. Ask their permission if you can use their names otherwise either use their initials.

Don’t delete the negative reviews some may send you – they actually help sales if there are only a few of them. If there’s tons of negative reviews about your business on the Internet, most people are naturally turned off and look elsewhere. That is one hard thing to overcome.

2. People gather information from mixed sources
Even though social media and internet rule, customers make purchase decisions using a combination of old media, new media, and old-fashioned conversations with friends and family, especially when it comes to building a new home.

According to a recent study, the most common methods of gathering information prior to buying a home are:
  • Looking you up on Google
  • Face-to-face conversation with a salesperson or other company representative
  • Face-to-face conversation with a person not associated with the company

59% of people consult friends and family for purchasing decisions. They want reassured that they are not alone in making the decision. Asking people around us for recommendations is still commonplace. This means the experience you provided your past customers matters a great deal.

3. People don’t often know why they prefer something
There’s a famous study about jam tasting.

These scientists asked a big sample of consumers to rank jams on taste, ordering them from top to bottom.

Then the scientists re-did the study with a different, but still statistically representative, group except this time they asked the sample to put the jams in order of taste and write down why. The result when they did that was that the order literally flipped, so the ones that the first group ranked as best tasting were judged to be the worst by the second group and vice versa.

The reason was that they were asking the conscious brain to suddenly get involved in something that it really doesn’t know, and suddenly there are all these sort of social pressures, e.g. what they “should” choose, leading the answers away from what the people actually liked.

People make instant decisions with their sub-conscious. When they have to explain the choice, the choice might change all together since the rational mind is then involved.

Takeaway: don’t trust people when they explain why they bought something or didn’t. They might not know themselves.

This is one of the missing pieces in the modular home sales process. When asked what they think of modular housing, the customer’s immediate response is negative based on what their sub-conscious is telling them. If you could see what is happening in there you would probably see double wide trailers being blown off their foundations in a tornado.

Now ask them to describe their thoughts about modular and you will find that what they don’t know could fill volumes.

4. Mass leads the way
Most of our preferences are learned and largely formed by social norms and expectations that producers have a strong hand in shaping.

A Washington Post column uses the example of clam chowder. It used to be thin decades ago, but is now almost uniformly super thick. What happened? At some point, restaurateurs got in the habit of adding flour to make chowder thicker and thicker, and now this is what consumers have come to expect constitutes a bowl of “authentic” clam chowder. Now that has become what the consumer prefers.

These learned preferences can just as easily involve characteristics that, from an objective standpoint, do not make a product any better and might even make them worse — particularly when it relates to texture.

Ravi Dhar, a marketing professor at the Yale School of Management, notes that although Heinz ketchup does not reliably win in blind taste tests, it has established itself as the gold standard in its category because it is thicker. In the marketing world, Dhar says, “meaningless attributes often lead to meaningful differentiation.”

Ever wondered why so many products on the store shelves are so similar? Wouldn’t it be better to make them different? Not necessarily.

There are huge incentives in consumer markets even for competing companies to make everything the same.

Our preferences evolve as the society evolves. A “family car” used to mean a station wagon in people’s minds. Then it was the family van. Now it is an SUV.

In home buying where people have had a lot of experience of living in homes, it pays to be like the market standard. Set yourself up as the Gold Standard in your marketing area.

5. Cognitive fluency
Cognitive fluency is the human tendency to prefer things that are familiar and easy to understand. For home builders this means that the easier to understand what modular construction is, the more likely people are to buy it.

Psychologists have determined, for example, that shares in companies with easy-to-pronounce names do indeed significantly outperform those with hard-to-pronounce names. Coincidence? Nope.

Suggestion: make your new home selections and pricing as easy to understand as possible.

Previous positive experiences matter.

Cognitive fluency also explains why you stick with brand and service providers you have used before, why you often order the same thing from the menu – it’s easy. You’ve tried it, it worked, and you don’t want to spend a bunch of time researching alternatives and risking a bad purchase.

As a modular home builder, this means it’s super important to make a great first impression. Show your homes are packed with value. Price only sells in mass produced consumer products, not new homes.

Once they have their first positive experience with you, it’s much easier to move toward building their home.

6. Hard to read, hard to buy.
Make your website easy to read.

When people read something in a difficult-to-read font, they transfer that sense of difficulty onto the topic they’re reading about.

Norbert Schwarz, a leading fluency researcher, and his former student Hyunjin Song have found that when people read about an exercise regimen or a recipe in a less legible font, they tend to rate the exercise regimen more difficult and the recipe more complicated than if they read about them in a clearer font.

The same goes for buying new homes. Easy to read fonts on your website will double the number of people willing to click on your contact info and seek more information and maybe even an appointiment.

Bottom line: make everything as simple as possible.

7. Does social media have an impact on purchasing decisions?
Another recent study found that consumers are 67% more likely to buy from the brands they follow on Twitter, and 51% more likely to buy from a brand they follow on Facebook.

Social media does impact home buying decisions, but it’s a slow relationship building process and just shouting “buy this” works on a very small number of people especially if you have few ‘likes’ and most of them are your friends and relatives.

The purpose of social media is to get the home buyer to visit your website. It is not to give opinions on social matters. Create a Facebook page strictly for your business.

8. Emotional decisions, rational justifications
Do people make decisions based on emotions or logic?

McCombs marketing professor Raj Raghunathan and Ph.D. student Szu-Chi Huang point to their research study that shows comparative features are important, but mostly as justification after a buyer makes a decision based on emotional response.

Buyers seem compelled to justify their emotional choices with non-emotional reasons.
Emotions rule in all areas.

The earlier you make the emotional connection with the new home buyer the better, because once a potential new home buyer decides they like, either site building or modular, the more difficult it is for them to backpedal.

Rational thinking will only justify their emotional choice.

9. It’s the subconscious that drives buying decisions

For the last 50 or 60 years, market research as an industry has relied on an understanding that people make decisions based on rational conscious thought processes. What the science tells us now is turning that fundamental belief on its head – most decision making happens at the non-conscious level.

We have a tendency to focus on facts and numbers, but in many cases it’s the subliminal that makes people decide one way or the other.

People are complex and we are just beginning to scratch the surface of what they really want. Sometimes we make buying decisions even when we aren’t paying attention to the products.

The more you can get a home buyer to move from their sub-conscious to their conscious level, the better chance you have of helping them decide that you and modular housing is the best way to go. 

Monday, November 24, 2014

10 Practically Free Ways to Promote Your Modular Home Business

It doesn’t matter if you only build a couple of new modular homes a year or 100, you have to get the word out about the great homes you build. Throwing a lot of money at marketing could be one way but if you get few leads and maybe only one new contract, then that is probably money that could have been best used for something else, like taking your family to Disney World.

What you need in addition to your usual promotions and advertising are some free or inexpensive ways to attract new home buyers to your website and then a meeting to discuss their wants and needs in their new home. You not only have to build homes, you have to be your own best marketer. There is no Marketing Fairy.

Hopefully there will a few new ideas here that will help make things happen for your business.

  1. Take great photos of completed houses – this has been the most successful free advertising that you can do. Don’t just grab your phone and snap a couple of shots. Take your time. Walk room to room and take a ton of photos, especially the front elevation, finished kitchens, baths, entry ways and family/living rooms.

  2. Use Facebook, Twitter, Instagram and Pinterest. If you are not sure how to do it, hire a young person to do it. The rewards will be huge.

  3. Write your own blog, create meaningful content. To get people to read your blog and want to keep coming back to your website over and over until they are ready to meet with you is the real purpose of the blog. Publish at least one article a week.

  4. Comment on other blogs, many blogs will link your name back to your website. When you comment make sure you enter your website in the field that asks for it. Modcoach will allow you to link back if your list your website in the comment signature area.

  5. Hand out business cards, take them with you everywhere. Be almost obnoxious. It only takes one new home from your card distribution to pay for a lifetime of business cards.

  6. Participate in a Home and Garden shows as well as Builder Shows and make sure to hand out business cards. February and March is the time for these. Make your booth count. Home Shows - Do's and Don't

  7. Use Google Analytics to analyze existing traffic so you can reach your target audience and keep them on your website.

  8. Provide awesome service and communication to your existing customers, they’ll tell their friends.

  9. Find free places to advertise in your local community – put your business cards up in coffee shops, at your salon, gym, or places your customers might frequent.

  10. Post videos on YouTube.

Sunday, November 23, 2014

Blurring the Lines Between On-Frame and Off-Frame Construction

When the single and double wide people want to blur the lines between themselves and modular housing they twist things a little to make it seem that they are just about the same. The industry knows they're not but the unsuspecting new home buyer can be fooled.

Terms like manufactured housing, modular and prefab are now being be used by the HUD housing industry and unlike the original modular and prefab factories, the double wide folks are effectively marketing themselves as an alternative to modular housing.

On-Frame Manufactured Home

IF by some strange miracle the Modular Housing Industry were to come up with a word that would accurately describe what we are, it wouldn't be too long before the manufactured folks would come up with a similar term and blur the lines once again simply because they have an effective marketing machine.

Right now it looks like the new term for modular housing, given to us and marketed by the Mobile Home Industry, is off-frame.

Watch the video and be amazed by how this mobile home dealer blurs the lines.

Achieving Zero Defects in Today's Modular Home Factory

How much does poor quality cost today's modular home factory?

Quality defects have significant costs associated with them – some of the most obvious being money, time, resources, and lost reputation.

And programs to eliminate quality defects can be expensive and time consuming.

Do you insist on eliminating defects entirely no matter the cost?

Or, do you accept that a certain, albeit very small, percentage of defects is acceptable, and just accept the costs and learn to live with them?

One of the most influential ideas about this was the notion of "zero defects." This phrase was coined by Philip Crosby in his 1979 book titled, "Quality is Free."

His position was that where there are zero defects, there are no costs associated with issues of poor quality; and hence, quality becomes free.

Zero defects is a way of thinking and doing that reinforces the notion that defects are not acceptable, and that everyone should "do things right the first time" and “on time.”  The idea here is that with a philosophy of zero defects, you can increase profits both by eliminating the cost of failure and increasing revenues through increased customer satisfaction.

Tip:While this will probably be true, it may not be true in every case!

"Zero defects" is referred to as a philosophy, a mentality or a movement. It's not a program, nor does it have distinct steps to follow or rules to abide by. This is perhaps why zero defects can be so effective, because it means it's adaptable to any situation, business, profession or industry, especially the modular home industry.

The question that often comes up when zero defects is discussed, is whether or not zero defects is ever attainable. Essentially, does adopting a zero defect environment only set users up for failure?

Zero defects is NOT about being perfect. Zero defects is about changing your perspective. It does this by demanding that you:
  • Recognize the high cost of quality issues.
  • Continuously think of the places where flaws may be introduced.
  • Work proactively to address the flaws in your systems and processes, which allow defects to occur.
Zero defects is a standard. It is a measure against which any system, process, action, or outcome can be analyzed. When zero defects is the goal, every aspect of the business is subject to scrutiny in terms of whether it measures up.

When you think about it, we expect zero defects when we are talking about items or services that we use. If you buy a new 60” LED TV and your pixels start burning by the thousands, you demand satisfaction. When you take the car in for brake service, you expect that the mechanic will install the parts exactly as the manufacturer prescribes. No defect is an acceptable defect when it affects you personally.

So why then, is it so easy to accept that "defects happen" in the modular home process that effects the modular home builder’s customer? This is the interesting dichotomy that presents itself. Zero defects is one of the best ways to resolve the discord between what we expect for ourselves and what we can accept for others; between the modular factory and the builder.

However, if you fanatically follow a zero defects approach in areas which don't need it, you'll most likely be wasting resources. One of the most important of these resources is time, and this is where people are accused of time-destroying "perfectionism."

Adopting Zero Defects

There are no step-by-step instructions for achieving zero defects, and there is no magic combination of elements that will result in them. There are, however, some guidelines and techniques to use when you decide you are ready to embrace the zero defects concept.

Management must commit to zero defects. Zero defects requires a top down approach: The best-intentioned employees cannot provide zero defects if they are not given the tools to do so.

  • When you decide that zero defects is the approach you want to take, recognize that it likely represents a significant change to the way people do things.
  • Understand what your customers expect in terms of quality. Design systems that support zero defects where it matters, but don't over-design if the end-user just doesn't care.
  • Zero defects requires a proactive approach. If you wait for flaws to emerge you are too late.
  • Create quality improvement teams. Zero defects must be integrated with the corporate culture. Zero defects needs to be accepted as "the ways things are done around here".
  • To implement zero defects, you have to have strong systems in place.
  • Monitor your progress. Build mechanisms into your systems and methods of operating that provide continuous feedback. This allows you act quickly when flaws do occur.
  • Measure your quality efforts. It is important to express your progress in terms of the bottom line. Take baseline measurements so you understand the cost of defects in your organization, and can measure the benefits your achieving in eliminating them.
  • Build quality into your performance expectations. Encourage members of your team to think about how they can achieve zero defects, and reward them when they're successful.
  • Recognize that although zero defects is a destination, circumstances keep changing. Monitor, evaluate, and adapt in a continuous, never-ending cycle.

Things have moved on since 1979. Since then, there have been several waves of quality improvement which have taken things further, most recently resulting inSix Sigma  .

While zero defects is a useful idea, be aware that you may have to go much further nowadays if you want to your modular home factory to lead the market in terms of quality of delivery.

Thursday, November 20, 2014

Housing Starts Predicted to be Almost 1,000,000 in 2014

According to Calculated Risk, yearly adjusted housing starts will be within shouting distance of 1,000,000. That's the good news. The not so good news is that single family housing starts are weaker than expected. There are plenty of reasons for it including fewer people wanting to buy the 'American Dream', climbing costs, fewer builders and tougher codes.

The following table shows the annual housing starts since 2005, and the percent change from the previous year (estimates for 2014). The housing recovery has slowed in 2014, especially for single family starts.  However I expect further growth in starts over the next several years.

Here are a few key points:

• Housing permits in October were at the highest level since 2008. Last year, in 2013, there was a surge in multi-family permits in October - and that was followed by an increase for starts in November. It looks like that might happen again this year.

• Multi-family completions have increased sharply. Completions are what matter for apartment market supply, and with more completions it appears that the apartment vacancy rate has reached bottom and even increased a little (but still low). More apartments on the market will probably mean higher vacancy rates and less upward pressure on rents.

• Single family starts are increasing, but are still extremely low. As we've been discussing for several years, demographics have been very favorable for apartments (and the housing bust boosted apartments too).  However, looking forward, the demographics will become more favorable for home ownership. This is a positive for single family housing and for the overall economy.

On starts: There were 848 thousand total housing starts during the first ten months of 2014 (not seasonally adjusted, NSA), up 9.6% from the 774 thousand during the same period of 2013.  Single family starts are up 5%, and multifamily starts up 20%.  The key weakness has been in single family starts.

NJ Developer Discovers the Beauty of Going Modular

The Westminster at Madison in NJ is a multi-family project by Richard Romano, of Royal Wave Development.  Richard, an award-winning builder, has been constructing single and multi-family homes, townhouses, and commercial buildings throughout New Jersey for 36 years.

Romano chose the project location due to its close proximity to the New York City commuter train service, Madison’s historic downtown, and other local attractions.   He chose to use modular construction because he knew it was the best way to control costs and bring the project to completion faster, without sacrificing quality.   The modular building process allows builders to complete projects in a fraction of the time it would take using site-built construction, thereby offering a quicker return on investment.

For phase 2, a thirty two thousand square foot, three story condominium building; Richard worked with Innovative Design & Building Services.  IDBS is the commercial building arm of Excel Homes. 

IBDS employs the top large scale projects specialists in the modular industry.   IDBS provided the modular condominium building to Royal Wave through the Excel Homes manufacturing facility in Liverpool, Pennsylvania.  The building consisted of 39 modules or boxes.   These boxes came together to form a 13 unit building.  This building offers spacious condos which feature single floor living, open floor plans, and are loaded with high end amenities.

Romano is a firm believer that modular construction is the way to go if you want to be successful. He pushed IDBS and Excel Homes to provide many things that some builders might just do on-site.  By allowing the modular manufacturer to do as much work as possible, Romano was able to focus his attention on the finish details of the units.

Here are pictures of the completed project. Great job!