1. Maintaining Quality and Performance
in a Rapid Growth Market
Build Exchange: Residential
October 9, 2012
Erik Pekarski, Vice President, IBACOS
www.ibacos.com
2. Have we hit the bottom?
• New home
construction and
sales appear to
have bottomed
• But is the pending
recovery enough to
support a robust
return to
profitability?
3. Two Sides of the Coin
Robust Recovery
• (Arguably) We have trimmed OH to levels that are efficient
and profitable
• Sales/Community have nowhere to go but up
• Margins are decent and should get better
• Competition is virtually non-existent (in relative terms)
Tepid Recovery
• It’s tough to get approved for a mortgage
• Move-up market is stymied by buyers unable or unwilling
to sell their current home
• Forecasted 2013 and 2014 SFD demand is still less than
50% of peak years of 2004 and 2005
• We can’t count on price appreciation to be a driver
5. What are they thinking?
• What are their
expectations?
• What will they buy?
• What does the 2020
home look like in their
minds?
• What can they afford?
• Will they trust us?
• What makes them feel
good again?
(it’s ok to buy)
• What builder profile
will they be
drawn to?
6. Challenges Linked to
the New Buyer
• Delivery
• Setting expectations
• New / changed TCG’s
• New promises and warranties
• Managing quality with increased intensity
• Monetizing quality and performance
• Sincere selling strategies
• Service programs that illustrate a higher level of
care and intent
• Warranties that speak to the “unhandy” consumer group
• Satisfaction programs that support repeat and referral business by
virtue instead of publicity awards
8. How do we make
these things matter?
• Land Acquisition
• VE / Purchasing/
Logistics
• Performance
What does this
• Cycle Time
• Quality
mean to the
• Risk homebuyer?
• Warranty
• Value
9. Balancing Our
Approach to Recovery
We need to be brilliant at production…
…but a balanced sales strategy, delivery, and post-close
game plan drives sales velocity and R&R business.
One does not succeed
without the other.
10. What does this mean
to you?
Obviously we need to get it right to meet the new market
standards and guarantee the investment.
The quicker, the better. Some builders are focused on
the greater whole, and some are choosing a few “until
the market picks up.”
So what’s the magic banana?
What’s first?
11. All or nothing....
It’s all first
If we can’t convert
and increase
R&R business,
then none of it
matters
12. The Relationship Profit Chain
We need to VALUE that which we have
not valued before.
Sales, service and relationship building are a big part
of the profit equation. The product is not just the house.
It is the buying, servicing and living
EXPERIENCE
that drives loyalty to a brand.
13. www.theresearchalliance.org
Leader-to-Leader Connections
Best Practices to Bridge Today’s Critical Gaps
A Vision of Where the Industry Is Headed
leveraging
Addison Homes e-co lab La Mirada Homes Schumacher Homes
Beazer Homes Eco Craft Homes Landmark Renovation Shea Homes
Brookfield Homes EQA Communities Lend Lease M/I Homes Standard Pacific
Charter Homes Highland Homes McCall Homes Stanley Martin Homes
Citizens Homes History Maker Homes Meritage Homes studio26 homes
Cobblestone Homes Hubbell Homes Mistick Construction Taylor Morrison
Cornell Homes Ideal Homes Orleans Homes Toll Brothers
D. R. Horton Imagine Homes Pine Mountain Builders Veridian Homes
Darling Homes Insight Homes Providence Homes Wathen-Castanos
David Weekley K. Hovnanian Pulte Homes Wayne Homes
Dominion Homes KB Home Richmond American Westport Homes
Doucette Communities Keystone Custom S&A Homes Winchester Homes
DSLD Homes
Introduction. Erik Pekarski – Hotel and Resort, Pulte Homes, Damac in Dubai, IBACOSWe have heard from a few people today that bring a lot of concerns to light as we enter into a higher production housing market. I have known 2 of them for about a decade. I like what they say and I like how they think. Their expertise gives me the opportunity to indulge mine. Throughout my career my my roles have revolved entirely around one centralized concept. How can I serve the customer better. In my mind, regardless of your day jobs the most important factor is that you are either right now a homeowner or will be in the next few decades. Either way, you should be asking me what I am going to do to make it better this time around.
Our repeat and referral buyers have been hurt. Questions around commitment. Are you going to love me better this time around?Drain of echo boomers wallets and pride. Cushion gone for our growing Active Adult market. Trust us with your remaining savings? Or will you rent?All other buyers waiting to see what is going to happen next.
Encapsulate. Builders are going to have to do more at the exact point when the are least equipped to do it
We need to recognize that the world has changed. What Steve and Alan have said is SO true and it speaks to processes that directly translate into higher levels of profitability, efficiency and sustainable margins. BUT the solution this time around is SO MUCH MORE THAN THAT....how we handle our inequities will be how we are rewarded in sales velocity. Cycle time – ON TIME EVERY TIME. Materials and Logistics – COMPLETE at closeValue Engineering and Standardized Take-offs – PriceLand Acquisition – LocationWarranty – PromiseLitigation – RelationshipService – Repeat and Referral Business
Strike a balance between upstream systems and processes and how they affect / translate to the downstream systems and processesLand Acquisition – Location VE / Purchasing/ Logistics - PriceCycle Time - On Time Every Time - Projected ClosingsWarranty – Promise – Post Closing CostsPerformance - ValueRisk – Quality and Relationships – Reduction of Litigation CostsQuality – ReputationRevenue – Sales and Service
Core Competency. Selling Value. Delivering the Dream. Providing relationship driven service programs that focus on the people instead of the product.
All of it.
These things are core to the new standard of building, selling and delivering homes. Quality. Performance. Efficiency. Marketing. Extreme Relationship Building. Call to action. Repeat....
