As we do on the Market Proof Marketing podcast, let’s begin with story time. The names are changed, but the situations are real. A builder watches a competitor outsell them 3-to-1 in their townhome product line for two months. They are in the same sub-market, similar price range, and targeting the same buyer profile. Pressure from the owner to “fix it” is causing real panic in management, and so they prepare to act fast to catch up. They draft changes to their floor plans, update their incentive structure, and green-light spending 2x more money in areas where they thought the competitor was spending - direct mail and ads on Hulu. The plan seems like it should fill the gaps they have with the competition, but there’s a big problem. They don’t truly know why the competition has been “successful” - they are making too many surface-level assumptions.
Luckily, a marketing manager in the company took the time to actually look into what their competitor was doing – not just a quick scan of their website or a drive-by of their model home – and what they discovered had nothing to do with the marketing strategy, quality of their leads, or on-site sales training approach. Two investors bought multiple townhomes as rental properties over those two months at 10% below typical gross margins.
Mystery solved. Panic decisions averted. Yet a roomful of leaders were ready to blow up their own strategy just because they saw more sales happening down the street. This story isn’t unusual; it’s actually one of the most common ways I’ve seen builders lose focus and burn a lot of money trying to fix an imaginary problem because the true problems seem too daunting to address (or would be too big a hit to their ego).
The market creates pressure, leadership feels it, and the instinct - deeply human and completely understandable - is to look at whoever seems to be doing better and copy them. Here is the core idea I saw that I wanted to write about: you (likely) don't really know why your competitor is winning. And in most cases, you're can’t even be sure they are winning.
Target Fixation: When You Unconsciously Head Where You Don’t Want To Go
Target fixation is something that you’ve watched someone experience if you’ve taught someone how to ride a bike for the first time. You tell them to avoid the mailbox or trash can along their path - “whatever you do don’t go toward the trash can!” The problem is that the brain, under stress, locks onto what it should be avoiding. The person on the bike is now focusing their energy and attention on the trash can instead of the open road, and… WHAM.
Builders do this with their competitors all the time. A national builder in a supply-constrained market noticed that a competitor was taking more reservations for a new phase release. Within a week, the division president had drafted a memo about rethinking their spec program and asking the marketing team to "find out what they're doing differently." Nobody had asked whether the competitor's reservations were converting to sales, what their cancellation rate looked like, or whether they were pricing below cost to clear inventory. Target fixation had already set in.
A regional builder in the Southeast watched a competitor's yard signs multiply across a subdivision and assumed it meant increased traffic. As it turns out, the competitor had flooded the zone with directional signage ahead of a grand opening and was running heavy discounts on homes. Their margin per home that quarter was negative. The regional builder, watching from the outside, saw "success.”
A small private builder got pressure from ownership to put up a bigger, more visible sign at their community entrance because a national competitor across the street had one. There was no data that the sign was driving their competitor's traffic, but it was larger (and uglier). The ownership team has become fixated and had drawn a straight line from sign size to sales results. These are incredbly talented, smart, and well-trained executives who for a moment had thrown everything else out of consideration. It’s a bit shocking, but it happens all the time.
The pattern is clear: noticing something different about another builder, initiating a competitive response, and then pivoting the strategy based on assumptions rather than deep insight and data.
Sorry - It IS More Complex
I've cataloged more than 260 distinct categories of variables that influence the process of building and selling a home. I posted a version of this on LinkedIn a while back, with a mind blowing statistic: the combinations and interactions among those variables create more possible configurations than there are potential chess moves in a game. Chess has roughly 10 to the 120th power. The complexity of a home building business sits somewhere around 10 to the 183rd. (simple graphic that shows 10 to the 183rd in zeros written out too maybe?)
In other words: chess is, mathematically speaking, almost laughably less complex than your business. It doesn't just beat chess in complexity; it laps it so many times that chess starts to look like tic-tac-toe by comparison.
One other way to think about it - if you stacked a chess manual and a complete guide to home building complexity next to one another, the chess book wouldn't even be the length of the introduction in the home building guide. It would be the font choice on the cover page.
Here is a dramatically condensed version of the categorized list, showing how many variables go into each phase of the process:
Every category in that list is a potential reason your competitor is winning. And every single one of them is also a potential reason they're not winning as cleanly as it appears, or that their win isn't actually comparable to your situation at all. If you don't fully understand each piece of their (assumed) success, your attempt to copy it will be at best mediocre, and potentially much worse because everything else is not properly aligned.
Investigate Before You Act
If someone on your team, or at the top of your organization, wants to change strategy in response to what a competitor is doing, ask these five questions first:
- Do we know if they're actually performing better – or does it just look like that? If your competitor has heavy foot traffic or a ton of set appointments, that does not mean they are profiting off of those factors. What about cancellation rates, incentives, or if those leads are not qualified?
- Do we know why they're performing the way they are? What variable in their operation are we pointing to? If the answer is vague ('their marketing is just better'), that's not a reason to act. There is something else happening under the surface.
- Would copying that variable work for us? What would have to be true about our land, team capabilities, brand perception, and operational alignment for this change to produce the same result for us?
- Is this a one-time variation or a structural shift? Two investors buying townhomes is not a trend. A competitor launching a rate buydown program that no one else in the market is matching is worth taking seriously.
- What is the cost of being wrong? If we make this change and the assumption is incorrect, what breaks, what's the financial exposure, and how long until we know?
These questions won't always produce clean answers, but asking them slows the target fixation response and creates space for actual competitive intelligence to inform the decision.
Calm, Competitive, & Curious: The Ideal Leadership Posture
When your boss comes to you saying, “I saw 12 cars in the parking lot of our competitor’s new model home. Find out what they're doing and let's do the same," you should push back and let them know you hear their concerns, but you will look deeper into the situation and respond with more clarity on what is likely happening. When you come back with that data – even if it is incomplete – you're having a more productive conversation. You're building a culture of competitive intelligence rather than competitive panic.
The best competitive intelligence work I've seen from builders doesn't involve a war room or a SWAT team response every time a competitor does something interesting. It looks like a consistent review cycle where a small group examines pricing changes and buyer feedback, asks what's changed and why, and then makes adjustments aligned with your own unique strengths and weaknesses. That kind of posture keeps you informed without target fixation, and it’s an infinitely better place to be.
