This builder’s marketing strategy resembles that of a retail store. And it has yielded great benefits.
- With a retail approach, metrics correlate all decisions to their effect on sales. Builders who do this will better understand what motivates people to buy.
- Tactics like loss leaders and financial incentives can be used to lead buyers to specific products.
- The brand message needs to be crafted to attract the builder’s ideal buyers, and made the centerpiece of the marketing strategy.
Offsite builders work hard to innovate the homebuilding industry and grow its market share, and this magazine has published many company profiles showing how they do so.
At the same time, however, there are many innovative and successful conventional builders. The offsite industry can learn valuable best practices from these builders, ones which can help them become more competitive.
One area where many conventional builders shine is marketing, and a great example is Tempe, Arizona-based Fulton Homes. The company’s marketing innovation is that its strategy and tactics have been modeled after the world of retail.
This approach was instituted by Dennis Webb, Fulton’s Vice President of Operations. Webb’s life experiences have had a strong influence on his approach to production homebuilding. While in college, he spent time selling suits, before going on to serve in retail management, working for the Hartmarx Corporation and Eagleson’s Big and Tall for Men.
After transitioning to homebuilding 28 years ago, Webb realized that builders were primarily product-centric, whereas retailers were more client driven. That was when he thought, “Why can’t you apply the principles of retail to new homebuilding?”
Doing so is simple in concept. “Find out what your customers want and give it to them,” Webb says. The goal of a retail marketing plan is to drive buyers to your sales operation, and to determine how to apply the five Ps — Product, Price, Promotion, Place and People. What kind of house do they want? What can they pay? How will you promote it? Where is it located? Do you have the people needed to sell it?
Customers First
Many homebuilders seem to have forgotten that customers are the most important part of their business. Webb advises them to emulate retailers by using metrics to help them understand what motivates customers and why. For instance, in a retail setting, product placement and convenience are important. This same concept can be applied to where a specific development is located and its convenience factor. “In retail, they measure everything, and we’ve applied that discipline at Fulton Homes,” says Webb.
Fulton has created customer-based surveys and internal data to measure the effectiveness of their designers and the closing ratio of their lenders, to rate project managers and to drill down on customers’ primary reasons for building. All of this generates data that allows the company to make better decisions.
Data is gathered on what options are selling in different home types, how well sales associates are performing individually and per development, the most popular home styles, the dollar volume each rep is selling, monthly average sales volume per office and what percentage of potential buyers cancel orders.
With its model home inventory, Webb follows retail’s system of automatic stock replenishment. “When a specific model sells, we automatically build the same model again to replace the one we sold,” he says.
Land, too, is never acquired blindly, Webb says. Applying the product placement and convenience principle, Fulton considers logistics regarding transportation corridors to industrial and business districts in order to attract the people who work there. Webb ads that, before acquiring land, “Fulton Homes always has a targeted demographic in mind,” for each specific home, examples being 50+ buyers and young families.
When it comes to planning a development, the company takes a “shopping center approach,” Webb says. Like a shopping center, the builder’s communities are places where most needs are met in regard to place, product and people. This may involve amenities that go beyond the homes and are focused more on the community itself, like manmade lakes, hiking and biking trails, swimming pools, pickleball courts, club houses and gyms, all within the community and a short walk or drive from one another.
Offering Choices
A development typically will offer three to four series of homes to draw customers in. This allows buyers to choose from a range of home styles at various price points and experience different amenities. Fulton Homes’ communities feature a variety of model homes, including traditional, transitional and modern styles.
Moreover, retail principles bear out how standard and optional offerings are merchandised and displayed. In the company’s centrally located 13,000 square foot design center, which replicates a retail storefront, prospective homebuyers can browse products on display in home-like settings.
They can personalize their home with products in good, better, best scenarios, while also seeing transparent pricing. For example, the customer may see three levels of stoves that clearly show the pricing and exhibit features that distinctly contrast the differences between good, better and best.
To induce sales, options are often incentivized. For example, that could include offering a free gift with purchase, like a $175 patio fan when a customer upgrades the standard light fixture to ceiling fans throughout the new home.
In addition to its design center and model homes, the company also offers each prospective buyer an online digital design center so they can select products using visualization tools while also getting transparent pricing. (For more on this, see “Visualization Tools for Offsite Builders” in the July 2024 issue.)
Pricing and Branding
To generate traffic in a development, Fulton often offers select homes at a lower price as a loss leader. Because home prices typically fall into specific online search criteria, the company may price its homes below certain thresholds; for instance, rather than $805,900, it may lower the price of a home to $799,900. This also applies to options pricing. For example, a hardwood flooring upgrade may be priced at a slight reduction — say, $7.99 per sq. ft. rather than $8.00 — to induce the sale. “It just sounds better,” Webb says of the price point.
Fulton’s markup and pricing system also follows the retail model. Items that are easily compared by a buyer to those in a big box store (appliances and ceiling fans, for example) may have a lower price, while structural upgrades may have a higher markup. That mark-up philosophy, Webb says, stems from “the homebuyers perceived value.”
The centerpiece of Fulton’s marketing strategy is its brand positioning. The company is known for producing high-quality, zero-energy ready, solar-panel ready homes that also offer a healthy indoor environment. This is a feature that is especially attractive to higher income buyers. Fulton Homes’ “unique selling proposition, which sets us apart from the competition, is that we build efficient, healthy homes locally,” Webb says.
Doing philanthropic good works is also instrumental to Fulton’s brand, which has identified it as a caring company that is invested in the betterment of the community it serves. For instance, the company has given more than $300 million to the local community, including grants to send Native American students to college and to build homes on their land. Fulton’s employees also volunteer at Feed My Starving Children in Mesa, Arizona, Books and Toys for Girls and Boys holiday drive, and Cause For Paws.
When it comes to branding, Webb says, “There isn’t any one thing, but a bunch of little things, that make up our brand.” Elements in the sales office, physical and digital design centers, model homes and promotions, are all crafted to reinforce the message of high-quality, healthy, efficient homes.
Coming full circle, Webb concludes that the retail selling model is a successful formula for the building industry when the five Ps are applied. He says that “the Product needs to be superior and appealing to buyers. The Price must be competitive. You must always Promote your product. Profit is achieved by selling at a higher perceived value and, lastly, your People need to be extraordinarily and constantly generating new ideas.”
Reed Dillon is a content brand specialist, marketing consultant and freelance writer that focusses on offsite and new construction. He is the owner of Creative Brand Content in Moneta, Virginia: [email protected]. All images courtesy of Fulton Homes.
