As a Builder, I am frequently asked by prospective customers how much I charge per square foot. I recently taught an Institute of Residential Marketing course for Builders, Developers and Realtors. One of the chapters was titled "Customer Value and Marketing" and provided a methodology for measuring value other than by price per square foot.
What motivates someone to select one Builder or Remodeler over another or one Builder's home over another's? It is the perceived value. Our industry has allowed price per square foot to become the most common way for people to define value. Price / Square Footage = Value. By definition, the lowest price/square foot represents the best value. But the problem with this value equation is that it completely ignores other attributes that most buyers associate with quality. Price is not an attribute of quality.
Wouldn't you agree that a better way to quantify value is with the equation Price / Quality = Value. Using this equation requires us as building industry professionals to create a list of those attributes our customers associate with quality and to then ask them to rate the importance of each attribute (say on a scale of 1 to 10) in their decision to buy. Living area or square footage could be one of the attributes. But here are some other things that might be included in the list:
•· Location
•· School District(s)
•· Community
•· Size of homesite (lot)
•· Exterior design of home
•· Interior design of home / Floor plan
•· Number of Bedrooms
•· Number of Bathrooms
•· Size of rooms
•· Living area (sq. ft.) of home
•· Standard features included in the home
•· Available options
•· Ability to customize
•· Quality of materials and workmanship
•· Energy efficiency / indoor air quality
•· Builder's reputation
•· Builder's Customer Service Program
•· Special incentives offered by builder
What attributes would your customers include on their list? How would they rate them in order of importance in their decision to buy?
Once you've created this list of attributes and had your customers rate the importance of each attribute in their decision to buy, you can use the same list of attributes and ask your customers to rate your performance with regard to each attribute.
If you would like an editable copy of a survey, just email me.
Equipped with this information on your performance, you can set out to improve your performance. There are basically 3 ways to improve how your customers perceive your performance and the value of your product. Using the equation Price / Quality = Value, you can
•1. Do more
•2. Do things differently
•3. Do different things.
Successful Builders are market driven and not product driven. Successful Builders know what is important to their customers. They design and build their homes and manage their businesses to specifically address those attributes.
Want to learn how to be a successful, market driven Builder? Invest in the education provided by the National Association of Home Builders Institute of Residential Marketing
Chuck Miller MIRM CMP MCSP CSP GMB CGB
President / Builder - Chuck Miller Construction Inc.
Boise, Idaho
www.chuckmillerconstruction.com
(208) 229-2553
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