Home suite home

Source: Technology Digital

Date :31/05/2007 10:47:26

Top builders and manufactures are turning to a revolutionary software program to automate and customize the home feature buying process.

By David Weldon

Architect and author Sarah Susanka is a huge advocate of what she calls the “just right home.”

By that, Susanka means a home that is not necessarily the largest that a homebuyer can afford, but one that has all the features that truly improve a person’s lifestyle.

Indeed, spend time talking with the author of “Home By Design: Transforming Your House Into Home,” and most of the conversation is likely to be dominated by touchy-feely topics such as light and mood.

But Susanka is also quick to advocate technology features in a home that offer communication access and music and lighting enhancement. Not the overkill, mind you, which an ultimate tech pad can offer: such as a sprawling home theater, in-room music speakers recessed in every nook and cranny, and lighting and temperature control features at every switch. But strategically placed features that make the most-used rooms more enjoyable to work in, entertain in, and relax in.

“The challenge is finding that edge, where it’s just the right amount for the customer,” Susanka says.

For homebuilders in 2007, that is indeed the challenge: how to best sell home features beyond just the basics that truly make your customers happy and loyal, in a market that by all measures is lousy.

Consider: The National Association of Home Builders (NAHB) reports that new housing construction is down by a reported 15 percent from a year ago, and the number of new permits taken has decreased each month for the past several months. The NAHB went so far as to also issue a prediction that the average sizes of new houses are probably reaching a plateau, something that hasn’t happened in three decades.

The lousy picture carries into the real estate market, where there is increased inventory each month, listings take longer to sell, mortgage interest rates are on rise and selling prices are steadily on the decline.

The impact of all this for homebuilders is the need to trim costs by becoming more efficient, and the need to sell more features within the home, or more “upgrades”.

Most large-scale homebuilders report that up to 25 percent of the final profit in building and selling a house comes from upgraded features, so the stakes are high.

That fact is well known to Jonathan Smoke, president of Bluesmoke LLC in Atlanta, GA. Smoke recently started the company in order to provide valuable information and market intelligence to the builder market on how to best target communities, select land, design properties, and address consumer needs in the buying and building process. Useful information was something sorely lacking to the builder, Smoke says.

Smoke had spent the past few years as chief information officer at Beazer Homes, the sixth largest homebuilder in the country, where he helped prepare the company for the integration of the Envision suite of software applications, which ties manufacturers to builders, to the customer — in a way never possible before.

Envision launched three years ago, and was created by the builder consortium New Home Technologies. Approximately 100 of the nation’s largest builders and manufacturers were involved in the initial launch.

The Envision software suite helps builders with back-end processes such as ordering, pricing, and inventory, and integrates to the builder’s customer resource management (CRM) system. By far the most ambitions application is the options manager, which ties all participating home product manufacturers into one gigantic database, listing every product they carry, including warrant and product care information. That database is in turn accessed by all member builders, who can filter the approximately 30,000 total items any way they wish, and make those items available to customers to view and study when selecting what they want in their home design.

“Envision was a logical evolution of what we needed to be doing for the consumer, to give them better visibility into what they could get to customize a home,” Smoke says. “It allowed the customer to browse items, get prices, and look at everything as a total package.”

In the case of Beazer Homes, Smoke says the company was potentially offering 10,000 different product options in their home styles, from lighting styles, to cabinet knobs, to plumping fixtures, to technology features.

But those 10,000 items were obviously not available to every homebuyer. Available items are usually narrowed down into ranges for each home style, in each community under development, Smoke says.

More importantly, sales staff couldn’t be expected to know a fraction of the products they could actually offer a customer, and most often would retreat into their “comfort zones,” as Smoke calls it — stressing only the products they had some knowledge of, or “that made sense to them.”

Selling home features that impress the builder’s salesperson obviously isn’t the most customer-friendly approach. It also doesn’t do much to foster a sense of relationship with the customer, who the company would like to serve again.

Smoke says the solution here is to offer the customer more information, and useful information, on what choices they have, which ones make sense for their lifestyle, and how they would all fit in the finished product. Taking all of that process to the Internet not only frees up studio design staff, it gives customers control.

Exactly what customers get with Envision is the ability to view and play around with home fixtures or features in various room designs, through the builder’s home web site. The customer never touches the Envision database, only the filtered builder access to it, according to Melissa Morman, chief operating officer at Builder Homesite, which developed the Envision tool on behalf of manufacturers and builders.

Once a homebuyer has signed a contract with a homebuilder to construct a new home, they are given a password for the builder’s website, which lets them link off the homepage to the options tool. The homebuyer can access every feature and fixture that the builder offers, play mix-and-match with the items they like, get pricing estimates for the custom features they desire, and have an idea of what they want very early in the process. That also helps eliminate changes to the buyer’s purchase package once construction gets underway.

“Envision allows the customer to start the browsing at home. They can create a wish list of items they’re interested in. Then our designer can access the wish list before the customer even comes in for their first meeting at our studio,” explains Lisa M. Kalmbach, senior vice president of studios, at KB Homes, in Pleasantville, Calif.

Kalmbach was involved with the Envision launch, and says she is a firm believer now in its value to both builders and customers.

“KB Homes saw a 13 percent increase in sales on average from our buyers using Envision versus our buyers who didn’t use Envision,” Kamlbach says, but with some customers, the increase is sales was much higher. For KB Homes, one of the top five builders in the country, with approximately 39,000 housing starts in 2006, that is a lot of sales.

The reason that KB has numbers on features sales with and without the use of the Envision tool is that, unlike most builders initially involved with the Envision product, KB decided to test-run the product before making a full commitment, Kalmbach explains. “We wanted to get the customer’s response first. We are in the process now of understanding the full benefits to the consumer.”

But KB Homes is now convinced of the value in selling features through Envision, and Kalmbach says the company expects to see an even greater increase in sales through the Envision tool once KB Homes has fully integrated it into their back-end systems. Once that happens, KB Homes customers will be able to get pricing information as well, and KB will be able to integrate the Envision tool with its order-entry systems.

In the meantime, Kalmbach says Envision has already greatly increased customer satisfaction, and that is already a major victory.

“They’re happier, they’re educating themselves, and they are taking control of the selection process,” Kalmbach says.

Builders are also happier, according to Melissa Morman.

“The results that builders are getting are very exciting,” Morman reports. “We now have some hard core, quantifiable results, and builders are getting approximately 13 percent to 15 percent in upgrade sales — thousands of dollars in profits.” To reap those benefits, member builders pay a $75 fee per home sale that uses the Envision tool.

Morman says the next upgrade of the Envision tool is already in the works, which will help the builder offer long-term care for the products and features selected by customers.

“The next tool will be Envision Living,” Morman says. “It will let the buyer register warranty information and order service and repairs online.”

“The strategy with the next step is to bring the next level of service to the customer and to contractors,” Morman says, enabling the builder and manufacturers to truly have a long term relationship with the customer.