If you’ve been a modular home contractor for any amount of
time, you’ve probably had to compete with “low-ball” competitors. And if you’re a new builder, you just might
be the “low-baller” and don’t even know it.
We all compete in a new economy dictated by free-market
forces where a fair price being one the new home buyer and the new home builder
agree to without coercion. Like it or
not, a great many buyers will continue to choose strictly based on the basis of
low price.
Unless the new home buyer is knowledgeable, open-minded and
discerning, it is next to impossible for them to compare builders until the
house is actually built.
There are only two things new home builders offer buyers;
either a commodity or a service. Commodity
selling would be similar to being a new car dealer. A Ford is a Ford and car buyers will travel
great distances to beat your price. A
service becomes a commodity ONLY after it is built. Unfortunatley, a lot of modular home factories view
their homes as commodities and see the builder as “low-ballers.”
Position your company as a unique service provider with
exclusive characteristics and value-added services. If you don’t, be prepared to run with the “low-ball”
pack.
How can you accomplish this?
First, understand that for
low-price buyers to exist, there also must be low-price sellers. Some are
legitimate, some are not. Know the “who,” the “how” and the
“why” of the low-price builders, and plan your marketing accordingly.
Through proper planning, you not only can provide your clients and prospects
with tools to be discerning buyers, but you also will be prepared to “push
the right buttons” when offering your services.
Who are the low-price sellers?
- Newcomers.
Newcomers are the most common of the low-price sellers. Most don’t have a
clue as to what the business of home building management is all about, and
their chances for survival are not good. Unfortunately, low barriers to
entry in the building industry ensure that, just like dandelions, another
crop of modular home builders will sprout every year.
- One-size-fits-all
builders. This class of low-price competition is the
“cookie-cutter” or “one-size-fits-all” tract home builder.
These contractors provide only certain basic services with minimal quality
at minimal prices. Many new home contractors
choose this niche and, if they’re efficient, they can be quite successful
and profitable.
- Cheaters.
A third class of low-price competitors are builders who cheat. Let’s be
candid: There are some who do. These contractors know how to prey on
unsuspecting customers. They promise a lot and deliver very little, all by
design. Even though they don’t deliver what the buyer wanted, they will continue sell to new ones every
year because of low pricing and human nature.
Now that you know who the “low-ballers” are, let’s look at
how to compete with them.
Selling a quality home is important but quality has
different meanings to different people. It can be defined as what is right and
appropriate for each customer and not necessarily by what is the best, most
expensive or highest level of service. Therefore, you need to listen and let
the customer define what they mean by quality. Often, their definition is
tempered by what they are willing to pay. Perhaps you see an opportunity in
selling price. If you do, talk about it, but be honest enough not to promise a
quality or level of service that is not commensurate with the price you charge.
Some new home buyers may accept it, most won’t.
It will be tough looking at yourself as a service provider
rather than a commodity provider but the rewards will be awesome. You will find that you can build fewer homes,
have better management controls, make more profit per house, have better
employees and a happier family when you stop trying to compete with “low-ballers”
that are selling commodities and start
working with buyers that understand that you are offering something unique in
this WalMart world.
