Simplex Open House

Monday, August 28, 2017

Marketing Lessons for Modular Home Builders from Dollar Tree

Dollar Tree, that huge $20 Billion company that seems to be on every street corner in America is a master at marketing which the Modular Housing Industry could learn from if we just knew what to ask.

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Dollar Tree, Inc. is an American chain of discount variety stores that sells items for $1 or less. Headquartered in Chesapeake, Virginia, it is a Fortune 500 company and operates 13,600 stores[1] throughout the 48 contiguous U.S. states and Canada. Its stores are supported by a nationwide logistics network of eleven distribution centers. The company operates one-dollar stores under the names of Dollar Tree and Dollar Bills. The company also operates a multi-price-point variety chain under Family Dollar.

Dollar Tree competes in the dollar store and low-end retail markets. Each Dollar Tree stocks a variety of products including national, regional, and private-label brands. Departments found in a Dollar Tree store include health and beauty, food and snacks, party, seasonal d├ęcor, housewares, glassware, dinnerware, household cleaning supplies, candy, toys, gifts, gift bags and wrap, stationery, craft supplies, teaching supplies, automotive, electronics, pet supplies, and books. Most Dollar Tree stores also sell frozen foods and dairy items such as milk, eggs, pizza, ice cream, frozen dinners, and pre-made baked goods.

So what does this have to do with Modular Home sales? Plenty!

Research:
In 2010, just after the housing recession, there were 4,000 Dollar Tree stores. Today there 15,000. Adding 11,000 more stores wasn’t simply a matter of putting a map on the wall and sticking pins in it.

Rather, they did a couple of things that produced this growth. Market research and acquisitions.

To determine where to open new stores required they learn both who was shopping their current stores and who could they attract if they expanded. What they learned was their current customer was thrifty and mostly living at or slightly above the poverty line. Knowing they needed to attract new customers and not alienate their current customer meant figuring out what new demographic groups they could attract.

Turns out that teachers, middle income women, seasonal items and fresh breads, refrigerated and frozen foods were the answer.

Colleges could teach courses on Dollar Tree’s research.

Modular Builder Lesson:
Most small builders have no idea of their customer’s demographics. They know that some pay cash while others need a mortgage. Some had children while other didn’t and some were single while others were married…...you get the picture.

What do you think could be gained by actually going back over all the customers you’ve built a house for and begin putting them into socio-economic groupings? And don’t forget the prospects you did quotes for that didn’t buy from you. Put them in those groupings.

You would find that most of your sales were closely grouped socially and economically and the ones that didn’t buy from you were bunched together in another.

Now take a look at both groups and try to determine what you did right for one and where you missed the target with the other. Is there anything you could change to begin turning more of the No Sale buyer group into buyers? Sure there is but are you willing to do the work, that is the big question.

Marketing:
Armed with tons of research, Dollar Tree began devising ways to attract each group to both their existing stores and new ones. Their website was revamped to show each targeted group the benefit of spending a little of their shopping dollars at a store that sold everything for $1 or less. Teachers found tons of classroom aids and student award items.

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Middle income women were attracted to the store by direct mailings. The joke in our household is “How much is everything in today’s flyer from Dollar Tree?”. Guess what, my wife reads it cover to cover and marks items she never thought she needed before. Now she goes twice a month for a few things.

Their website shouts ‘excitement’ and it updated regularly, especially during seasonal changes and holidays. Shelves are wiped out after Halloween and Christmas.

Modular Builder Lesson:
Even if you didn’t do anything to learn what socio-economic groups your past customers were in, you’ve got to be constantly getting people excited by what you are building now. Blast FB, Instagram, Pinterest and your website with new things. Make prospective new home buyers want to learn what you are doing and they will visit your website more than once if you keep it updated on a regular basis with new product, new information and new pictures.

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None of this costs much other than time. Free or ‘for a couple of dollars’ should be your new mantra. Get excited about your business and it will show bringing new home buyers to your doorstep. Doesn’t mean you will close them but at least you’re seeing more of them and it only takes a few to add tens of thousands of dollars on your bottom line.

Making a Difference:
One thing that absolutely intrigues me is what determines a number one seller in a department where everything is $1? Is it brand loyalty, smell, size, ingredients? Turns out it that even though many Dollar Tree shoppers do give some weight to these things, something else is at work when it comes to what the shopper chooses.

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I talked with a Dollar Tree manager about this and she walked over to the shampoo department and asked me which brand was their best seller. Remember, every shampoo is exactly the same price…$1.00. I saw a name I knew and said VO5. Wrong! Turns out the number one seller is the one that has the most modern looking packaging and label with a lot of varieties to choose from. Sometimes it’s VO5 and sometimes it’s a new product that was just added with both of those attributes. She said shoppers are fickle. What was popular yesterday may not be tomorrow.

Modular Builder Lesson:
Don’t stick with putting all your eggs in what you’ve always built. Bring in new ideas and products. Add new homes to your lineup. Add different types of homes such as ultra modern, West Coast and maybe even a ton of tiny house plans.

Home buyers are not a stagnant group simply waiting to talk to you because you’ve been building the same type of home for years. Maybe they are getting tired of your 2 story center hall colonials, capes with unfinished second floors and rectangular ranch styles. What color would you like?

Take a look at what you are presenting to new home shoppers and ask yourself if your website looks boring and your social media marketing is absent. Could explain a lot.


1 comment:

Builder Bob said...

Great article Gary. I love it when you write something from your personal experiences.