New Math for Builders
There is a new formula for builders. Let’s look at some of the latest numbers:
84% - The percentage of your homebuyers who use the internet to research new homes
12.1 Weeks - The average time it takes for Internet buyers to purchase a home - double the amount from 2006
94% - The percentage of Internet buyers who expect a response in 4 Hours or Less
64% - The percentage of New Home Sales Executives who DO NOT FOLLOW UP with qualified buyers
$4.00 - The average price for a gallon of gas
All these numbers add up to a Huge Opportunity!
The home buyer pool has become very shallow and competition has increased for their business. Now, more than any other time in history, buyers are using the web to research their choices. Savvy buyers are being very strategic - narrowing down their choices of homes and communities - disqualifying as they go - using the Internet as their power tool to gather information. They are shopping almost twice as long before their first appointment to a model home. Throw into the mix current fuel costs, at $4 per gallon, families aren’t jumping in the Suburban for a leisurely drive from one new home community to the next.
As builders work their way through “the dip“, it is critical to invest in online marketing and take the time to set up a process to manage the leads they receive.
Potential customers are craving better on-demand information. They expect top notch customer service while they are shopping. The builder who shows them this courtesy in the beginning will come out ahead in the end.
Home builder marketing dollars and mindsets will need to shift to this shopping phase to capture the buyer sooner - instead of waiting for the “walk in”. It makes sense to go where the buyers are, and right now they are online, trying to determine if you are the right fit.
Manual Makes BuilderBooks.com
I am extremely excited to announce that Browsers to Buyers will now be carried by Builder Books, the publishing arm of the NAHB. I would like to thank Torrie and Jackie for the opportunity and all of their hard work!
Online Sales Counselor - Endangered Species
Visit www.builtaroundyou.com by Wilshire Homes and you’ll see why I’m looking over my shoulder. OK, maybe I’m not that worried about my job but this is a cool feature! They created a microsite to encourage interaction with a “Virtual” Online Sales Counselor named Sheila. Wilshire reports that online leads have increased by %13.54. Not too shabby, and if anything - it is an innovative feature for a homebuilder.
I took a test drive acting as a customer - the end result produces a housing report (view my report) that you can email to a friend, email to a wilshire associate, or print. I like the options. Obviously, they couldn’t list every variation in the scripts but covered most of the important qualifying questions - at least to get a customer pointed in the right direction.
Below are the results from Wilshire Homes in the case study by Marketing Sherpa:
RESULTS
Texas homebuyers are loving the microsite and Sheila’s down-home hospitality. At first, Horne (Wilshire’s President) had set goals that were mostly related to stickiness, but he was elated to see the microsite lift online sales leads by 13.54%. Even more interesting is that 2% of the site-generated leads actually complete their purchase online — sight unseen.
Additionally, site-generated customers visit an average of six homes before making a purchase, while offline leads look at 15. “It tells you that the knowledge the site users are getting is beneficial, which allows our sales team to achieve higher efficiency,” Horne says.
Other stats:
- 56.2% who start the lead generation process complete the entire demonstration and receive their housing report.
- 11.17% print their report or forward it to a friend.
- 3.14% email their report to a Wilshire Home sales rep for follow-up.
- Users spend an average of 6 minutes on the microsite.
Why your builder should love the internet
Hopefully, you do not need convincing as to why you need to implement or improve your online sales program. However, it is always good to look at the facts and forecast the future to adapt your program for things to come.
Let’s take a look at a few of these facts directly related to the homebuilding industry:
- Over 80% of homebuyers start their home search online That is a large percentage of your exact market. Shoppers are also frequenting the website more often to research a potential purchase and to look for additional information over their entire sales cycle.
- Over 27% of American adults use the internet to research real estateThis is a large portion of the adult population. This number has doubled since 2000 and is only increasing as the use of the internet increases.
- Homebuilders determined that the highest quality leads come from their websiteOnline customers are more informed, serious shoppers who can make a quicker decision than walk in traffic. Specifically, online customers who have been qualified and well taken care of tend to write a contract 30% of the time.
- The faster you follow up with a customer, the more likely they are to purchaseWhen a customer receives a fast and courteous response to an online request, the conversion ratio increases dramatically. This is not easily accomplished by the traditional onsite sales agent.
- Builders are not allocating enough marketing dollars to online sources to keep up with the demandStudies show the lack of marketing dollars allocated to online marketing. Similar studies also show that the amount spent for online marketing will almost double by 2010.
- Less than 10% of builders have a dedicated person to handle leads from online sourcesLeads are coming in over the web with little to no conversions because builders are not handling them quickly or effectively. A large segment of the market is undervalued.
Builders must anticipate the increase of online shoppers and the growing expectations for these potential homebuyers.
A recent survey conducted for the National Association of Home Builders Institute of Residential Marketing by Harris Interactive suggests that builders need to boost their online-marketing dollar allocations and improve their Internet presence. This study also revealed alarming trends in the lack of online contact from the builder to the consumer. Builders are missing an easy opportunity to connect with the target audience and would benefit by having a staff person dedicated to handling Internet leads and only 8 percent of participating builders claimed having a dedicated Internet salesperson to handle leads.
This revealing study is screaming one thing loud and clear – most homebuilders are not taking advantage of the large amount of people searching online for their new home. The exciting news is that there is an immense amount of opportunity for builders who are willing to channel their marketing efforts where the buyers are. Not only that, but builders put a program in place to effectively manage online customers will be well ahead of their competition.
A second study by the Pew Internet & American Life Project conducted in 2006 shows the increasing numbers of internet users who are using the web to research their next residence. The study shows that 39% of internet users have looked online for information about a place to live – double the overall number of Americans who had done so in 2000. This number has steadily increased over the past six years and is poised to increase at a higher rate.
Not only that, more than half of internet users ages 19-29 use the web to research housing. This is a forecast of things to come. Those who have grown up in the information age will be more likely to start their search online. Are you ready for those customers? The real question is, will you evolve to deliver on this new buyer’s expectations. The same old song and dance will not work anymore.
A Look At Tomorrow’s 1st Time Home Buyer
Great post by Jason Benesch over at the Real Estate Tomato Blog with a clever take on the future “first time homebuyer” and how to connect with this audience. Guess how? Be sure to read his post here>>
A great exerpt:
My generation has the mentality of avoiding paying menial costs, revealing our identity, and committing to membership. It is the convenience of the internet that is to blame. The past barriers of expense and membership are frequently circumvented by ‘gaming’ the system. Our approach is that we expect to be able to get the information and data we want without having to make any solid commitment. Our generation has learned how to seek out and find information online and we don’t stop until we are satisfied or exhausted….
If your business model does not in some way connect you to this growing market mentality, you are essentially alienating yourself from the next wave of first time home buyers.
Conversion Rates for the Online Sales Program
Most builders have the same questions about the success rate of an Online Sales Program. How many leads do you get each month? How many of those are converted to an appointment? How many appointments end up on contract? What are your statistics etc…
I would like to share what numbers I have seen personally and also what many other successful programs experience. Keep in mind, every market and builder is different. Use these statistics as benchmarks but your numbers may vary slightly.
1-3% Leads captured from online sources
You will have many sources to drive traffic. What most builders use to determine this number is the new unique visits each month, not the total “hits” or even return visits. It is important to determine how many new users you attracted and how many of those requested further information. Your web host should have these statistics on hand - if not, they should be able to install the software to track this for you. A lead is qualified as one individual who submitted a request or called in directly from an online source. Many sources are included but only the total unique visitor stats from your website is used as the number to get your ratio. This is the easiest way to measure overall conversion.
20-25% Leads converted to appointments
The total leads are from both online sources and incoming phone calls. The conversion ration is based on appointments that are kept, not appointments scheduled and not kept.
30-35% Appointments that write a contract
This number is based on leads that go on appointment and then write a contract and close on the home. You will see some contracts fall through so do not count the totals until the home is closed.
5-10% Increase in overall sales
You can expect to see an increase in the first year of this successful program. This does not take into consideration additional sales that are created from a stronger web presence. It is hard to truly determine direct sources from the internet.
20-25% Of total sales will be generated by this program
You can expect to see a good portion of sales generated through this program. Keep in mind; these are additional sales or sales that you will not lose to your competition. You might have had some of these sales before – but now you will be sure to keep these numbers high.
Remember, these numbers will continue to increase as more people use the internet as the primary source for their new home search.
Sums it Up
Found this quote over at incredibleagent.com - pretty much sums it up.
“The Internet will never replace the real estate agent; however, the agent who uses the Internet will replace the agent who does not”
Home shoppers do their hunting online
A recent USA Today article “Home shoppers do their hunting online” details the journey one couple had purchasing their home online. It is an interesting article on many levels.
One of the first observations made in the article:
Technology is shifting knowledge and power to buyers and sellers.
This is a sentiment that has been gaining steam over the past couple of years. We are just now seeing what is truly possible online and the real estate markets are taking notice. As more shoppers have easier access to the Internet, it is transforming the way they shop for their home. Besides the adoption of technology by the baby-boomers, the younger generation rely primarily on the Internet to find information.
Another point the article made is:
The Internet is a significant threat to Realtors, who in previous decades have had iron-grip control over all necessary information for those seeking to buy or sell a home.
While it is true that information is now easily accessible, I would not consider it a “threat”. I guess the only Realtors it would threaten are those who don’t adapt to the changes being made. In every industry, technology will bring about great change. You either have to evolve and use the tools to your advantage or you will be left behind. I don’t believe the advances of the Internet will render their services useless, but it will change what services they provide.
The good news for builders…advances in technology and the prevalent use of the Internet to search for homes provides the opportunity to showcase your homes to the masses at a low cost. In addition, when you manage your Internet leads properly, you will see a noticeable increase in sales. No longer do you have to wait for the walk-in traffic. You are actually able to generate interest and tap into buyers across the US.
Just as the couple in the article, there are many buyers out there who need a home and will make informed decisions quickly when they have the right information at their fingertips.
Your Next Homebuyer
There is a great post by Bernice Ross over at REIBlog that talks about the upcoming wave of real estate buyers. Drop by and read the whole article.
Section #6 talks about the new generation of buyers and the tools used for communication. They will be heavy on technology and online communication. No secret and something I can validate. The highest percentage of our leads are from younger/first time buyers. This group loves communicating online and they have higher conversion rates on appointments.
Here is an excerpt of the article:
The Great Divide: the Generational Communication Gap
A major challenge that we face as an industry is that the median age of Realtors in the United States is over 50. While there are more than 79 million boomers and traditionalists (those born before 1964), our industry has been somewhat myopic in terms of meeting the needs of Gen X and Gen Y. The Gen X generation was born between 1965 and 1976, and makes up roughly 17 percent of the population, or 40 million. Gen Y, born between 1977 and 1994, makes up about 25 percent of the population, or 60 million people.
Opportunity: Boomers and traditionalists did not grow up with computers. They prefer face-to-face, telephone or e-mail communication. In contrast, Gen X and Gen Y have had computers since elementary school. Mobile access is a way of life. “E-mail is the new snail mail.” When you contact members of Gen X and Gen Y, you had better text message. When they contact you, they also expect instantaneous response. While boomers and traditionalists respond well to brand marketing, the Gen X and Gen Y crowd prefers lifestyle marketing. According to a study from California State University at Chico, “It’s more important to be interactive and to show people having fun. Gen X and Gen Y want to be marketed with a strong dose of the truth coupled with irony and humor. For them, it’s not about reaching the masses; it’s about building a community.” This is evidenced by the stellar growth experienced by such sites as SecondLife.com, YouTube.com and MySpace.com. Gen X and Gen Y want interactivity, and these sites provide it. We are already seeing brick-and-mortar stores showing up on SecondLife.com. Both agents and brokerages may want to consider moving some of their advertising dollars from traditional print advertising to these new venues. Also, since blogs are interactive, they provide the ideal way to reach Gen X and Gen Y.
1/4 of American adults looking for real estate online
A recent report from Pew Internet states that 39% of all internet users have looked online for information about a place to live – double the overall number of Americans who had done so in 2000
This statistic is not to be confused with the 80+% of active home shoppers who start their new home search online…the 39% refers to every adult that is hooked up to the internet.
The number of internet users who go online to look for information about a place to live has grown steadily over the past six years. Now, nearly two in five adult internet users in the U.S. (39%) have done this, up from 34% in 2004 and 27% in 2000.
This means that overall, more than a quarter of all adults in the U.S. (27%) have looked online for information about housing, more than double the overall number of Americans who had done so in 2000 (13%).
Also, more than half (51%) of the youngest adult American internet users, 18 to 29 years old, have searched online for housing information. This compares with 43% of internet users 30 to 49 years old; 27% of internet users age 50 to 64; and 15% of internet users age 65 and older.
