If you are in the modular housing industry, either as a
builder or factory person, you know that this business is cyclical. Sometimes it’s
booming and other times it’s not, but neither state is permanent.
The difference is that while business is booming, your biggest
concern is meeting the needs of your builders and their new home buyers. When
things are not, you may be scrambling to keep everything on track.
Here are 5 suggestions about what to do and what NOT to do
when new home orders begin to slump:
1. Keep in Touch with
Past Customers
When business is going great, you tend to forget past
customers who helped you get where you are today. Yet when things slow down,
they can be your safety rope. Now is the time to drop them a friendly email or
call them with a pleasant message.
For modular factories, this can be the time to mend fences
and ask it there is anything you can do to help your builder. A lot of sales
reps forget that when they are busy, their builder is usually slow and when the
factory is slow, the builder is busy finishing the houses that were shipped in
the last 3 months.
I’ve seen factories with only enough orders to keep the
production line running 2 days a week begging for builders to buy houses.
Remember, builders don’t by houses, their customers do and historically they
only want to build new homes several times a year.
2. Avoid Cutting Prices
When sales go stagnant, you may be tempted to boost sales by
dropping prices. While this might seem like a good move to increase sales, the
builder’s buyers are usually not motivated by a “Winter Sale” price or a
pre-Price Increase sale. These will only get you the sale you probably would
have gotten anyway but now you’re not making as much profit.
The only segments of the housing industry that can use this
are the developers sitting on unsold units and the mobile home factories that
can build a house to order in less than a week without all the restrictions of building
codes except HUD.
Remember that once you lower a price, it’s super hard to
take them back up.
3. Make Budget Cuts Very Carefully
When revenue is dripping in instead of pouring, you may need
to trim some budgets, but be careful to make those reductions wisely. Your
first instinct may be to cut back on staffing, distribution, or customer
service. While these changes may help in the short term, they may cause you to
lose clients in the long run.
Never make any budget alterations that might end up hurting
your customers and costing you business.
4. Never Skimp on Quality or Quantity
Two things determine customer satisfaction: quality and
quantity. If you are trying to cut corners in order to save money, you may
consider making alternations in these two vital areas.
However, doing so may throw your business into more peril
than any temporary downturn in the cycle. When you provide services or homes
which fail to meet the builder’s or their customers’ expectations, you put
yourself in a position to lose repeat business, and repeat business is where
the money is.
Also, remember that happy customers are likely to tell
others how satisfied they were with your company. Likewise, unhappy customers
typically don’t hide their dissatisfaction. Maintaining your current level of
quality and quantity, or even increasing it, should be among your top
priorities.
5. Never Appear Desperate
People like to do business with those who are successful.
Therefore, if you approach potential builders with the air of desperation in
your voice, you are more likely to scare them away than enlist their aid during
this difficult period.
Examples of desperation may not just be obvious in what you say to your
customers but also in what you do. For instance, if you significantly reduce
your quote in order to secure their business, you may be sending them the wrong
message. Stay positive and optimistic. After all, nothing attracts business
like a good attitude.
