Homebuilders…A Flaw In Strategic Planning

Posted: March 30, 2011 in Making Customers
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Draw a line on a piece of paper and assume that this represents your projected profit for a particular project. Now make a mark above the line for how much you believe a good salesperson can increase profits for that project. Then make a second mark below the line for how much you believe a poor salesperson can decrease the profits. Compare where you made the marks. If you are similar in thinking to most homebuilding executives, the lower mark is invariably farther below the line than the increase profits mark is above the line. In other words, almost no homebuilding executive believes that a good salesperson can help their community as much as poor one can hurt it. Why is that? But, more importantly, is it true?

As to why that thinking is so prevalent, the standard answer that has been shared with me during the years goes something like this – it is the experience of almost every homebuilder. It’s what they’ve seen. They’ve seen a project decline and not perform as it should, and as so often is the case, sales gets the blame. But few executives, very few, have seen a project exceed expectations with the only reasonable explanation for the success being the salesperson.

There is a certain amount of entrepreneurial confidence that comes with local homebuilding. In almost every case, that is a good thing. It takes the spirit of a cowboy to risk as much as is risked in homebuilding. Yes, the rewards can be tremendous, but as we’ve seen the last few years, the downside can be devastating.

This confidence the that builder has in themselves and the project; the location, the product, the aggressive purchasing, the merchandising, the advertising and branding all come into play long before an individual salesperson is thought of or considered. The builder says to himself that he has excellent product with the appropriate specification level in a compelling location with clever marketing and sufficient advertising. With all of that going for him – if you build it they will come – he really doesn’t need much else. All he really needs is his salesperson to have a modicum of talent, show up when he’s supposed to, look nice and not say anything stupid. That minimum performance level will meet his goals with a minimum of frustration.

We get what we expect.

Every other discipline within homebuilding has a generally accepted set of criteria. Operations knowledge, financial skill and education, accounting background and training – maybe even an MBA or a CPA. All disciplines have a seemingly verifiable set of criteria that make it easier to determine a candidates overall qualification for the position.

Then we come to sales.

Expectations tend to be lower and less of the sales process can be quantified and placed on a chart, graph or spreadsheet. Plus our own experience is that the sales department is, as one executive stated, “…kinda like the crazy Aunt who lives in the basement. She’s part of the family so you have to keep her around, but you’re not too proud of her.”

We get what we deserve.

The sales process doesn’t fit neatly into our proformas, as much as we’d like to be able to quantify human performance and interaction. So as an executive, we either assume (or hope) we have good people managing and selling, or we drive ourselves crazy trying to figure out the best way to manage this bunch of misfits. Control and accountability? Reports and forms? Strict discipline? Surprise mystery shops? Lots of random calls and questions?

Very few executives would add continuing education and development to the list, until there is an issue. Several homebuilders have told me that new home sales is a transitory business, so why should they spend money to train salespeople and then have them leave? It’s wasted money. Okay. If you train them and they leave, that is almost as bad as not training them and they stay! And while that may be a concern, let’s be a little more strategic, productive and creative with an answer that can have a positive impact on the bottom line.

At the executive level, let’s spend some time trying to figure out what skills, talents and abilities make for a good salesperson. Who do we want to hire? What kind of person should they be? And as far as sales management goes, what is the best way to build and grow the entire sales team to not merely meet expectations, but exceed them?

The basics are simple – don’t have the salespeople reporting to someone who knows little or nothing about what they do. It doesn’t matter whether or not you are the owner or president, if you’re not skilled in sales management; have the sales people report to someone who is.

These and other sales and sales management related issues have answers that make sense, fit your business strategy and contribute positively to the bottom line. It all starts with an intelligent conversation with the right people knowledgeable about sales, sales people and how to best manage the process and lead the team.

The right salesperson can make a huge positive difference to the bottom line. I’ve seen it happen time and time again. Success and peace of mind with sales and sales management can and should happen in any company. But it won’t happen by default or accident.

By Kirk Chittck

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