Two words that strike fear into the heart of most builders are “millennials” and “disruption.” I believe they both symbolize the same thing: change is coming fast. And most home building organizations are not set up to respond to systematic changes.
When most of us think of disruption, we think of what Netflix has done to the video rental industry. Remember all those rows of empty boxes in the new release section? Or how Uber has disrupted the taxi industry. Or Airbnb disrupting hospitality. Or how Amazon has disrupted pretty much all of retail. When you think about our industry, which of the two do you think we most resemble? The disruptors or the disrupted? It’s unlikely you think we’re the disruptors. In fact, home building is at the bottom of the list of digitized industries, just ahead of hunting, and just behind government.
And disruptive companies like Amazon have changed the way Karen thinks about buying. Karen’s purchasing behavior has dramatically changed in just a few years. It wasn’t long ago that Karen did all of her shopping in a store. But that changed, as she started researching and reading product reviews at home before going into the store to buy. Next thing you know, she has her smartphone in hand reading reviews while she’s in the store shopping. Then, she’s buying completely online with just a few clicks. But that’s still not fast enough or easy enough for her (or Amazon), so technology now allows her to make purchases simply by saying: “Alexa, order it for me.”
And Karen is not unique. Over 60% of American households now have Amazon Prime. The Age of the Customer is here.
To continue using Karen, let’s consider how she fits in the current process of new home sales. How do we sell to her?
We’re in the business of selling. We strive to be leaders in new home sales.
We measure the success of a community based on the number of units sold per month.
And we invest a lot of money in the selling process. In order to get Karen to buy from us, we need her to visualize life in her new home. So we build models. Big, beautiful, expensive models. Online visualization is now available in the form of virtual tours, virtual reality, and so on. But most builders are still not investing as heavily as they do with models, because they don’t see a direct correlation with sales. It’s less about giving Karen what she wants, and more about getting her behind a trap fence where a salesperson can take advantage of the emotional state the model puts her in. But the business of selling is a problem in the age of the customer. The new digital-savvy buyer doesn’t want to be sold to. Just ask any Millennial. Sure, they need help personalizing their home and navigating the complicated journey of construction. But what they really need is for someone to simply help them buy.
When a builder becomes known for delivering memorable customer experiences, it gains a real competitive advantage.
Lower turnover, for one. A culture of putting the customer first creates a culture of happy employees. Especially as the guard changes and Millennials join the ranks, having a real sense of purpose will be critical to hiring and retaining the best talent. Other benefits can include shorter cycle times, decreased warranty claims, and higher margins. But the most important benefit is the ability to disrupt instead of being disrupted. The builder that prides itself on listening to, and acting on, customer feedback (even if it means a decrease in sales) is the one that sees disruption coming and pivots before it happens. In an industry not known for its ability to change, the future of the organization may depend on it.
1) Be customer-obsessed. This is Amazon’s number 1 business principle. Another famous quote by Bezos is, “We're not competitor obsessed, we're customer obsessed. We start with the customer and work backwards.” In the early days at Amazon, Jeff would bring an empty chair into the room during important meetings to remind executives that even though the customer might not be physically present, their needs should always come first. For Jeff, it means sacrificing short term success for long term gains. In fact, Amazon didn’t report a profit for more than 4 years after they went public. Not many builders would be willing to make a sacrifice like this.
How builders can start being customer-obsessed: Move beyond the funnel.
Don’t get me wrong – the funnel is important. We work with builders every day to improve sales funnel conversions. But we want to move beyond the funnel (which ends at sale) to focus on the entire experience.
Customers love designing and envisioning their new home. It’s the best part of the sales process for them. But the part of the customer experience that matters most to buyers is the delight phase, which comes after the builder has recorded the sale. And this is where we fall short. Even the largest (single-family) builders in the country struggle with the most basic customer needs during this phase: communication during construction and service requests during warranty. And this is the time when most buyers are writing their reviews. I can’t tell you how many times I’ve read buyer reviews that start with, “Everything was great until I signed on the dotted line.” If we want to become customer-obsessed, we need to focus on the entire experience.
2) Invent and simplify. This is the second business principle from Amazon we can apply to avoid disruption. Amazon has always shown a strong willingness to challenge the status quo. Not only have they redefined how we shop online – they’re reinventing how we buy in a store. The best way to describe how Amazon is applying this principle is with the AmazonGo store that first opened to the public in Seattle in January 2018. The cashier-less store uses artificial intelligence and what it calls “sensor fusion” to let shoppers walk in, fill their bags and just walk out, having their credit card billed as they pass the exit. It’s revolutionizing the in-store shopping experience. They’ve since opened 8 more stores and are poised to take the tech nationwide with their purchase of Whole Foods.
How builders can invent and simplify: There are a lot of moving parts that make up the experience of selling, building, and servicing a home. Possibly more than any other single consumer purchase. So the first step is to map out the experience (called customer journey mapping) to better understand what the customer goes through. Most builders think they know what it’s like from the customer’s standpoint, but every journey mapping session I’ve led with builders has revealed they had no idea what they’re really putting their customers through.
Mapping a 6-12 month customer journey can seem overwhelming, but start small with areas where you know customers are unhappy, or you’re getting really bad reviews. Align your processes with customer touchpoints to determine what they’re thinking, feeling, and doing all along the way. The idea is to have a visual representation of what the buyer’s experiencing, similar to the chart below.
With this in hand, the entire organization can look for ways to innovate and simplify the process wherever possible. A simple way to think about it is to find ways to bring more joy and confidence to the experience. I believe this is something our industry could use more of.
3) Think big. Without a doubt, the best symbol of Amazon’s ability to think big is drone deliveries. Amazon knows their customer journey inside and out, and the number one question their buyers have that can affect the customer experience is, “where is my stuff?” They’re constantly looking for ways to decrease the amount of time it takes to deliver purchases to their customers. Several years ago in an interview with Charlie Rose, Bezos shook the media when he unveiled a plan to use drones for 30-minute deliveries. And despite all the logistical (and FAA) challenges, in late 2016 PrimeAir made its 1st drone delivery to a customer. Amazon even holds a patent for docking stations that would allow drones to land and recharge on top of street lights throughout the city. Even though Amazon sells more online than the next 12 biggest competitors combined, it’s still not big enough (or fast enough).
How builders can think big: We’re in an industry that’s known for being old-school, and afraid of change, so thinking big can often be a challenge for builders. But a good way to start is by rethinking how we sell new homes. It’s just a matter of time before our customers will be buying homes completely online. So instead of talking about all the reasons why this won’t happen, we should start planning for self-service. Ask yourself, “What will it take for me to be able to sell homes without a salesperson present at a physical meeting?” Just asking this question will open a floodgate of ideas that could improve the customer experience. The improvements could go well beyond sales and range from online visualization to completely digitized financing (blockchain?) all the way to self-service warranty/customer care. The idea is to stop saying “yes, but…” and start saying “yes, AND...” – it’s a mindset shift. We need to not be afraid to think big and reinvent how we do things.
Or are you willing to change your focus to be CUSTOMER-OBSESSED? Are you ready to INVENT AND SIMPLIFY your customer experience to bring more joy to the customer? And are you willing to THINK BIG in order to become a leader in the industry? We have big obstacles to overcome to really innovate the customer experience and avoid disruption. Becoming the Amazon of home building is a big transformation to undertake, but if we make it our mission – we can stop worrying about being disrupted, and instead become the disruptor.
This article first appeared in ProBuilder Magazine - see original article here.