Monday, December 2, 2013

The Curse of the “One Home Buyer”

Even if you’ve only been a modular home factory sales rep for one day, you’ve heard that most new home builders that sign up with a factory to build their homes only buy one house and then are never heard from again.

The amount of money that a factory expends getting a “new to modular” builder to visit the factory and order a house is enormous. Assuming a mid size factory has 6 sales reps and each brings 4 “new to modular” builders to the factory every year, that is 24 builders. If 75% give the factory rep a home to quote, only half of those will actually stay with it long enough to buy a home. That’s only 9 builders.

Of those 9 new builders only one third will buy more than one house. That’s only 3 builders. Now let’s see how many houses that is. 9 builders building their first house, 2 builders buying two houses and one builder buying 3 houses. That’s a grand total of 16 homes for the factory or approximately 54 floors or modules. A grand total of 1 ¼ houses added per month. Next year the circus starts over again.

The question you have to ask is “what happened to the 21 builders that bought only one or no houses from you?” There is no definitive research on where or why they left but from my experience working for some of the largest modular factories in the East and talking with my contemporaries, most of these builders simply dried up and went away never to be heard from again.

That is not the whole story however. For the most part they simply didn’t understand what they were getting into and decided not pursue modular construction in lieu of what they knew; site building. Changing “new to modular” home builders into returning modular builders for your factory may be easier than you think.

Here are some things you can change right now to help increase your dedicated builder base.

Stop being Self-centered. Getting a builder to visit your factory is what you want and you probably do a great job of explaining who you are and why your factory is awesome but your builders only care about how you can benefit them. Figure out their pain and you will be the factory that gets their attention. Every factory can put on a great dog and pony show but very few have empathy for what the builder is going through.

No Nurturing Program. Some “new to modular” builders, actually most of them, are interested in your homes but do not have a current home buyer with a plan and are unable to buy right now. You could offer them a 25% discount and they wouldn’t be able to take advantage of it. If the sales manager pushes the rep to call the builder and ask for a house when none is needed, the builder will go away, never to be heard from again. What is needed is a Nurturing Program that gives them a way to keep in touch with the factory and slowly learn what you have to offer and how you can help them. This is the first thing that every sales manager should work on establishing for their factory.

No Continuing Education. Imagine yourself in the builder’s shoes. You wake up with no prospective customers in the pipe line and unsure how to get any. You have a website but traffic is slow or even dead. The phone doesn’t ring anymore and you are running out of work after this house. Where do you turn? Maybe you turn to remodeling or window replacement. Today you have to be on-line to win “friends” and get noticed. You visited that modular home factory and the sales rep said he wanted to help but they only want a house from you. They really don’t have any way to help.

This is where the factory should step in and be proactive. Become part of your builder’s business. Offer in-factory courses in lead generation, financing for both their customers and for them, marketing and sales help, advertising, social media, working with subcontractors and state and local inspectors and other topics.

This doesn’t require a full time department. It takes a real sales manager that can organize on-line and in-factory classes, maybe webinars and possibly annual or semi-annual conferences for builders. People like to part of a winning team and your factory can be just such a winner.

If my Builder Breakfasts have only taught me anything, it’s that builders love to share successes and frustrations about the modular home business. If your factory would bring experienced builders together with the new modular builders in a factory setting, you would see builders working together to help your factory succeed because you are listening and helping them succeed. It’s Golden Rule time.

NOTE: I’ve had many factory owners and sales managers tell me that they would love to do these things but money is tight and builders show little loyalty anymore. Only the biggest builders stay with a factory because they have built a relationship with the sales and management team and also have too many houses in the pipe line to jump ship. Encouraging new builders through a Nurturing Program and Continuing Education will quickly build a loyal following of builders that will become big builders.

Coming into winter would be the perfect time for owners and management to sit down and come up with a plan to implement both of these programs. It’s not like you’ll be swamped in January and February.


Anonymous said...

Why should the builder have loyalty to one factory? The factories have no loyalty to the builders any more. They are all after the big commercial projects. You don't know who is building your modular because some of the factories are farming out single family homes.

They also give you a delivery date but then are constantly changing it. Then you have to find an available date with all the subs. This ends up making the home owner upset because their move in date keeps getting pushed off.

Anonymous said...

It would seem that a factory team that incorporates and manages a program as outlined in the blog would receive loyalty from the new to modular builder. Sales manager or reps who offer this service build loyal builders

Anonymous said...

After 30 years in the modular business with 7 manufacturers I learned that a common thread is that most manufacturers do not deliver the level of quality and completeness that new builders assumed. This was NOT always the fault of the sales person. Quality control, although touted as spectacular in a controlled environment, sometimes is simply a joke. I have seen the repair budgets for warranty/repair departments with some companies run into the hundreds of thousands of dollars. One home I sold was speced without finish plumbing fixtures.....stub outs for fixtures only. Even though the work drawings for the plant showed plumbing schematics for rough and finish piping, the house was delivered with NO plumbing whatsoever. These types of screw ups really are more the norm than the exception for most plants and that is why there are so many one shot modular builders.