A 48 percent cancellation rate was the new home construction industry’s dirty little secret in the first quarter of 2007. Almost half of the time, a buyer purchased a home, agreed upon a price, signed a contract, picked out a few options and initiated construction—and then actually cancelled the deal and walked!

How does something like this happen? Take this example: A home buyer puts $4,500 down on a $450,000 home, but soon realizes another local builder has an existing, very similar spec home. So the buyer offers to purchase the other home if the builder comes down in price from $450,000 to $400,000. The second builder sees an opportunity to reduce its inventory and takes the deal. The buyer saves $40,500 by cancelling on the first builder. Unfortunately, the original home is added to the housing market’s ever-growing inventory.

How does this affect you? Well, you’ve probably approached a builder bursting with excitement about all of the fantastic new technologies you can offer, and the builder can’t tell you “NO” fast enough. The builder’s primary concern is cost, and how to reduce it. In fact, this builder wants to take some technology out of its standards to lower its base home costs. You argue, “But homeowners need our solutions today!” The builder replies, “I’ve never heard them ask me for that, and I’m not even sure what it does myself!”

What can you do? Become a retailer!

I know, I know. “Retail” is a dirty little word in our professionally installed business, but you—the professional dealer—need to learn how to “retail” your technology solutions for your builder! You need to become the builder’s technology partner of choice, its Technology Translation Officer (TTO). First, though, you’ll need to learn two new languages.

Language #1: “Builder Value

There are three parts to learning this language:

Set the foundation. How can you lower a builder’s total install cost per home, lower its cancellation rates and earn it more money? Look over the builder’s specs and make sure it offers a very basic structured wiring system and security prewire. By doing so, you lay the foundation for a conversation with the homeowner about upgrade options, instead of being the upgrades. I’ve found that if they don’t have something to begin with in the base spec, it’s much harder to get them to upgrade the
category from scratch.

Customize. The number one reason a home buyer purchases new construction is the ability to customize. It’s also the number one thing your builder can do to lower cancellation rates. Make yourself the reason people want to stay in their new homes. Because of your technology, it’s now their new home, not the somewhat cheaper, similar square-footage spec home in the development nearby.

This is their new home, with their office wired for fax, phone and data, with their TV in multiple locations and their new home theater system with their front projection system that they had no idea really didn’t cost any more than the 42-inch plasma they were considering, but wow, it’s got a 100-inch screen—just wait until the guys see the game on that! Oh yeah, and their new home has cameras on the door, an intercom system, whole-house audio with an iPod dock. Their new home is so cool that no spec home can compare. So, no, they don’t want to cancel their contract.

Earn builders more money. Ask the builder how much it made in technology sales last year. The builder probably doesn’t know, and shame on us for not communicating with them better about it. I speak with builders every day who know exactly how much they’re making from kitchen upgrades, flooring upgrades, granite upgrades, but very few can tell me how much they make from a
category called “technology upgrades.” You need to own that category and make it a point to tell your builder how much you’re making them per home in upgrades.

Shoot for at least two percent of the cost of the home. Track it for each home and let the builder know what it’s making from your partnership.

To do all of this—to be the builder’s TTO—you need to meet with every home-owner. Only you understand your offering well enough to translate it for the builder to the buyer.

Language #2: “Consumer Value Proposition”-Speak (Retailing)

There are two parts to learning this language:

The female factor. You’re selling to the woman of the house. Women account for 75 percent of the share of the wallet buying decisions in America! Don’t sell speakers that have this kind of tweeter or this many amps. Sell a mood, an emotion! Sell solutions that make their lives easier, their homes more inviting, their children safer.

Present yourself as a solutions provider that will help them select the cool things they always wanted in their home but never even knew were possible. Show them how they can watch the kids sleeping in their beds upstairs from the TV downstairs, or watch them swimming outside from their home office. Show them why and how their laptops will access the internet wirelessly, so they can surf the web from the kitchen countertop. Show them how much better their living room will look with a flat-panel TV mounted on the wall.

Solutions, ease of use, comfort, looks and safety sell—not amps, speeds, pixels and tech talk they don’t really want to know. They expect you to know and help them sort through it all!

Demo. OK, now crank up your model home and let the guy see that projector and 100-inch screen for his home theater! Allow them to see it, feel it, touch it and experience your professionalism—but always remember you’re not selling widgets; you’re selling an experience.

So go out there and help your builder with all of the solutions in your arsenal, the solutions the builder needs, but for which it never even thought about asking you. Become your builder’s TTO!

Remember—when speaking to the builder, it’s about how you can help it lower its base install costs and cancellation rate, and increase its profits. And make sure to meet with all of the buyers and remember—you’re on the team that’s building their dream home when you go for that sale!