Bill Webb, MIRM, on Builder Branding, Part 1

2010-11-23T11:32:00.000-08:00

Home builders hate getting chiseled on price, either by customers or by outside agents representing customers. If you are a builder, who is tired of doing all the hard work only to be attacked this way, listen up. With this blog post, I am commencing a multi-part attack on price-cutting designed to convince you that you do not have to accept being chiseled as inevitable.

Understanding Your Customers

Let’s agree up front that we love our customers, OK? So, they are prickly and demanding and not always fun to be with. We still need them to make our Cash Wheel go round and round, so it does no good to grumble. You can win this game, I promise.

It’s Where They Start

Of course, assertive customers start out by challenging your price. They think it is the best way to gain the upper hand. They’re likely to be right, especially if their challenge is hurled at an un-trained sales agent representing you. All too often, your agent’s response will include the dreaded word, “offer”. Merely saying that word signals the customer’s victory. You’re, what, 30 seconds into the sales presentation? And, already, you’re playing defense. Kudos to the customers.

And, if there’s a buyer’s agent involved, it just gets worse, doesn’t it? We all know why, and it’s not pretty, so let’s not waste any more time on that. Instead, let’s start figuring our how to defeat those price attacks, OK?

Indifference Is Powerful

Buyers who do not perceive a strong reason to buy your home will naturally attack your price as their one way of creating a preference.

“What was that again,” you say?

Think of a commodity; a true commodity like corn in a silo. There is no advantage in buying Jane’s corn or Kevin’s corn. Nobody’s corn is any better than anybody else’s corn. It’s just corn.

So, if you were to set out to buy some corn today, whose corn would you buy? Most people would say, “the cheapest. So long as there is truly no difference, why should I pay any more than absolutely necessary?”

The Reluctant Buyer

They actually teach this stuff in negotiating classes. It’s called the Reluctant Buyer gambit.

“I do not have to buy a home today, and I do not have to buy a home from you today. I can actually walk away, Rene . . . today. But since I find myself standing in your sales center, just how low could you go on your price?

There’s a hundred variations of this, and maybe you’ve heard them all. The specific one they try doesn’t matter, but the underlying message matters a lot.

They Don’t Care

The Reluctant Buyer gambit is an attack based on Alternative Power. In any negotiation, the person who does not have to perform unless their terms are met has a huge advantage. They hold Alternative Power. They can buy a home from you today, or not. They are indifferent. They want you to think the only way you can capture their interest is to cut your price.

It’s Not True

They are standing in your sales center. In today’s reality, nobody comes to your new home sales center until they have visited your web site and found something they like. That may not be 100 percent true, but it’s close enough to act on.

So, Waddaya Do?

You, or your agent says, “If we find a new home for you today that is truly exciting, Mr. and Mrs. Jones, I can promise you we’ll be very aggressive in meeting your price preference – tell me how long have you been looking for your new home?”

This is a run-on question. You do not pause at the hyphen. In 7 seconds, you have very politely taken control and turned the conversation in the direction you want it to go, defeating the Reluctant Buyer gambit in the process.

Step #1 in Branding to Protect Your Price

That’s it. Simple, yes? There’s more. Meanwhile, try this one. It works.

Bill Webb, MIRM

23NOV10