(If you would like to read the discussion between Kimberly, Carol and Kevin, the video transcription below.)
You hear it all the time. Homebuilding is a numbers game, but what numbers and what do they mean? Kevin Oakley, from Do You Convert stops by The Sales and Marketing Power Hour to help hosts, Carol Morgan from Denim Marketing and Kimberly Mackey from New Homes Solutions Consulting break it all down for you.
We dive into marketing metrics, which ones are important and how you can predict what will happen with appointments, traffic, and what you should do to “bridge the gap.” Then, we look at Scorecards, and Pipelines, the numbers you should measure for sales accountability to predict your sales pace for at least the next 90 days.
Stop worrying about the market and focus on consistently doing the right things over and over to produce predictable results.
Welcome to another edition of the Sales and Marketing Power Hour with your host Carol Morgan with Denim Marketing and Kimberly Mackey with New Homes Solutions Consulting.
Carol: Top of the afternoon you guys. I’m Carol Morgan, founder, and president of Denim Marketing, based here in Hotlanta, Georgia where we’re excited to be a little cooler this week. Cooler is the high 80s instead of the high 90s. At Denim Marketing we specialize in all things content, so social media, blogging, we still do traditional public relations and score lots of media coverage for our clients, so if you need help with any of those, give me a shout.
Kimberly: I am Kimberly Mackey for those of you who don’t know, and I am the founder of New Homes Solutions Consulting. I like to say that I’m the person who makes sure that sales is the engine that drives the train, rather than running it off the tracks. I’m an immersion consultant I go in and work with you with your systems. your processes and procedures, and make sure that everything is running in order. Most people think I am a sales trainer, and that’s because I do, and that’s what you mostly see me doing visually, but I also do a lot of the behind-the-scenes stuff. I am happy to help you to be able to navigate the market. Without further ado, Kevin Oakley, who really needs no intro, but Kevin why don’t you tell us a little bit about yourself. Maybe even something that people don’t know about you.
Kevin: You might know this, but you still need it to be reinforced, and that’s the I hate waffles, and I love pancakes. The main reason is the waffles are the exact same recipe as pancakes, but it just calls for more oil. Who needs more oil in their life? We’re all trying to be healthy and trying to be careful.
Kimberly: Are you trying to convince us that pancakes are health food?
Carol: I think so. I don’t know about that.
Kevin: I started in the business in 2003, I worked for 3 different home building organizations prior to joining my client at Do You Convert. We work with home building organizations all over the country on online sales and digital marketing and strategy. My favorite time ever in this business was 2007 to 2012. To me there is a relief in what is happening, and those of us who’ve been through this knew that what was to come in some form or fashion. Now that it’s here, I’m finding all those old uh muscles that I haven’t had to use in a while coming right back again. It was fun, and this is going to sound a little dark, but the reason it’s fun is I am competitive. Don’t play a board game at the Oakley household. There are 6 of us, and we’re all competitive. In a down market, it’s all about stealing market share which means you truly are beating your competitor. You’re out maneuvering, out strategizing, and out executing, and it’s fun. I can be fun. I just think all 3 of us and other folks in the industry who have been through those times, it’s important for everyone to remember that. I think it was Myers who once said, “Lightning strikes once and getting straight by lightning once is not surprising.” Until you can have repeated success in different market conditions, be careful about crowning yourself an expert in anything, because you’re not even sure yet what you don’t know. Hopefully we’re here to provide some value and give you all some encouraging insights and opportunities of how you can outmaneuver this market. Thanks for letting me hang out with you both today and the 125 plus registrants.
Carol: Thanks for hanging out.
Kimberly: We ended up with 170 or so. Crazy.
Carol: I don’t know if you all noticed, Kevin put on this shirt specially to match our graphics when he had his photo taken. He matches perfectly, so he’s now gotten our most fashionable celebrity guest award. Anyone else who’s on in the future is going to have to you know do as well as Kevin did with their photo.
Kimberly: We might have to get a little plastic trophy or something. Our next Sales and Marketing Power Hour is August 17th, so mark your calendar. Stay tuned. In the meantime, of course, we keep the conversation going on our Facebook group which is Sales Marketing Power Hour so make sure you join us on there. It’s usually a lively conversation. Join in. This is not a one-way conversation. We want to hear from you. We want to hear what’s going on. Ask any questions you want, share a funny because we all like to laugh, and we all need a little humor every once in a while, too. I’m going to screen share because we’re not about PowerPoint slides, but we do have some visuals for you today, so periodically I’ll jump those back and forth. Let’s talk about the market because I think people are freaking out about the market. Kevin should they be? Should they be freaking?
Kevin: No. You should be on high alert. You should be aware, but in terms of what you do with that nervous energy, you must be careful. One of the things in the stock world they say is that one of the worst times to make an investment is when you’re down. The irrationality kicks in. We’re telling ourselves a lot of things that we want to be true but aren’t necessarily true. Remember March of 2020 when the whole world paused, and we were all going to become zombies? The same thing happened that’s happening right now. Appointment-to-sale conversions dropped, a lot of marketers were told to pause advertising. It was a period of reassessment, and if you over overreact it probably might mean that you haven’t been through the last market correction. Understanding that endurance is as important as quickly reacting to the environment. If you’re trying everything to get back to the same results you had in February of this year and expecting that to work, you don’t understand the endurance part of what’s going to happen. So, no we should not be panicked at all; we should be aware.
Kimberly: Throwing stuff out and seeing what sticks is never a good strategy. Let’s try this or let’s try that. No. Breathe, people. Take a minute. You don’t need to just throw everything out there. There are some tried and true things that we know are necessities, but first and foremost is understanding where you are which is what we’re going to talk about today. Do you want to talk about the market? Carol, I know you’ve got some market stats too.
Carol: I’ve got some stats for the southeast that don’t look terrible. I know everybody’s freaking out which we talk about. Inventory is creeping up a little bit here in Atlanta. I think we’re up to we’re up to 1.4 months of supply, folks! Okay let’s just take that into consideration. 1.4. Oh my gosh! the sky must be falling. Normal is 6 months of supply. There’s nothing out there. There’s nothing for people to buy still. That’s not terrible, but it is creeping up weekly right now. We have to keep an eye on that. We’ve got a long way to go before we hit normal. Pending sales are still close to 2021 and 2019 levels until the 2nd and 3rd weeks of June when the rates closed in on 6% and the national news got ugly. The national news likes to be ugly because they don’t want to say anything good since nobody reads good news. The 3rd week of June, pending sales in the Atlanta Market are down about 16% from 2021 and down 8% from our benchmark year of 2019. However, year-to-date through the 3rd week of June, we’re still 2% up over 2021 and we’re still 9% over 2019. That’s kind of the ballpark with real live data that goes through you know this month not just through April or May. What I’m seeing with our builders is they still can’t build them or can’t close them fast enough. I don’t have anyone that’s sitting on a ton of inventory. I don’t know about you guys but most of my builders are building a few at a time.
Kevin: I just asked that question to a couple hundred marketers. How many completely finished homes do you have?
Kimberly: You have to clarify it with completely finished.
Kevin: Yes. My favorite was Sally Slocum from M/I Homes who said, “If you went on our website, the number would be 230-something, but if you consider completely finished, meaning it has siding and has appliances, and it has landscaping, we have 4.” There really are only 2 kinds of buyers for the most part. The feedback we hear from the builders is there are people looking for that completely finished home. Why? Because if you talk to someone who’s gone through the construction process as a buyer and you’re thinking about buying an almost finished home, meaning it might be done the next 6months, and you talk to family, friends, neighbors, co-workers about what their experience has been – I mean in my own story, I moved into my house in December, and my master shower is just now partially complete because I still can’t get the hinges that are necessary 6 months later – so they’re not getting reinforcement of you should believe the timeline you’re being told. They don’t want to be homeless or have to move twice in such a period of uncertainty that we have. I want to jump back Kimberly, to your initial question of I think one thing that’s helpful is when should we start panicking? Panic might be too strong of a word no matter what, but what you should be concerned when consumers are not coming to your website in large quantities and you’re unable to fill that gap with advertising. In the great financial crisis, there was a period where it did not matter how much advertising you did, consumers were just not interested in shopping, so that’s 1 thing to watch. Remember, a lot of people are going to talk about lack of walk-in traffic. Remember to check your watch and your calendar; we still live in 2022 where before they are going to walk in, they are going to visit your site. That is still that is the main pathway. That’s one reason to get concerned. The 2nd thing is when you have large numbers of completely finished inventory that are going significantly beyond the average days on market. The average stays on market nationally right now is 16 days, so even if you have 15 finished homes, if they’ve been sitting for less than two weeks, now is not the time to overreact.
Kimberly: It’s always a numbers game. You’ve got to get people through these homes particularly in some of these tertiary markets where I serve. It’s a niche buyer. It’s not like in Tampa where I am, where you do have tons of people still coming through. Even though traffic is down, people are still coming through models, but if you’ve got inventory sitting in some of these tertiary markets, remember you’ve got to get people to see them. They’ve got to get people to know about them and know that they are there, because right now inventory is down everywhere. I don’t care if you’re in the hottest market in the world or you’re in some of these tertiary markets, there is low inventory everywhere. People need to know there is some because there are buyers.
Kevin: We talked about the two places where data would lead you to be concerned. Lack of activity on fully finished homes and lack of activity on the website. Internally, what’s causing a lot of the stress is ownership looking at the homes under construction that are unsold. They’re looking at a calendar like a builder I was talking to in Texas, and they said they were going to have 120 homes completely done in October. Whereas historically right now, they might have 20-ish done every month that the team is allowed to sell. My first thought is, “Are those really going to be done all in October?” If you’ve been in this industry for a while, you know that from a construction standpoint, if you’re only able to finish, and quality walk, and turn over 20 homes on average a month,your team is not going to suddenly, magically out of thin air have 100 homes that they’re going to turn to the sales team and tell them that they’re 100% done and they really will be. That’s one stress. The other stress is a salesperson who is full of recency bias thinking, “I used to write this many contracts, I used to see this many people.” Those are the internal emotional sources of stress that are separate from the data that we need to be watching.
Kimberly: In our industry, we’ve told people this is coming. We’ve told them. We’ve told them it’s coming. I know you’ve been preaching it, and if anybody follows you on Twitter, they see it. You’re providing the data. Carol’s been talking to her clients about it. It took about 6 weeks longer than we all predicted it would. The war in Ukraine threw the whole monkey wrench in there, and then when the Fed jumped those rates like they did, as quickly as they did. There’s shock. Carol you even have some data to show that the first 2 weeks after every 1 of these the interest increases, things slowed down. The web traffic didn’t necessarily pause, but the traffic traffic paused. Then those people who are still trying to buy a home, “Okay, wait. let’s stop panicking. Let’s think this it’s only going to go up for a while, so maybe we better go ahead and make our move.”
Carol: I think the big thing is marketing and education. We talked a little bit about this pre-show. People who just pulled the plug on marketing. “Oh, we have so many leads. We’ve got so many this.” Now is the time to reevaluate. What have you been doing with your marketing for the last 2 or 3 years? Did you turn off that train? Time to start again, folks.
Kevin: I posted a tongue-in-cheek meme, and I know it’s sensitive topic. To your point Carol, they stopped advertising, which is okay, but you still have to keep marketing. Their decision on how they were going to market was going to 100% move towards an all-online digital transaction where the consumer will always beat down your door and please let me push that button. The meme was a play on words; “You said buy now would save us.” Then the little cat says, “No, I meant bye. Now.” Now go get to work on the rest of marketing.
Carol: I would love to say that there are Builders who’ve just turned off their advertising, but I’ve been to websites recently that haven’t been posted on in two years. There are no blogs. There are no updates. You go to Facebook pages, and there is no content. It’s reminiscent of the first Great Recession. Anyone who remembers that is going to go to those pages and think that this builder didn’t make it through you know Covid. They’re not even viable anymore.
Kimberly: Same thing with the salespeople that turned off. They’re not out doing the grassroots. They’re not working on referrals. When was the last time a salesperson asked for a referral from a customer that they just poo pooed through the process? “Look, this is what we’ve got. You either take it or you leave it. Sorry.” I’m not blaming salespeople because they did check out, and it got hard, and they were being beaten up, and it was a tough time to be a salesperson. I get all that, but how are you going to go and ask for a referral when you didn’t start with the relationship? right and then let’s REALTORS®? REALTORS®? Wait, what are those people?
Carol: Should we be nice to them?
Kimberly: These are the people whose commission we’re going to cut out. I’m getting flyer, after flyer, after flyer in my inbox stating the rates have gone up, we’re going to pay you bonuses. Let’s think next time because this Market’s going to go up. it’s going to go down, it’s going to go sideways, it’s going to twist around on its ear. You don’t have knee jerk this stuff.
Kevin: The last thing before we start getting into some of the data because we I know we got a lot to talk through is, in this current environment setting, your expectation of you or your team doing anything – maybe you were selling 50 or 100 homes a month and now you’re selling 10 or 12, there is nothing you’re going to do that is going to bring back the 50 to 100 a month right now. There are a very small number of builders who never raise prices to the extreme level that other builders have, and those builders are still doing great overall, but they are in the minority. For the most part you have to understand that you’re going to have to start thinking like a scientist and look at the numbers and start incrementally doing scientific experiments in 2 to f4 week sprints to figure out how to how to match the messaging to the market and the positioning to the market. Once you figure out that answer, then you step on the gas and keep bringing in more traffic with the ads.
Kimberly: The other part of this is nurturing the pipeline that you have and not cutting off that pipeline that you already have. If you have not been nurturing that pipeline, they’ve got questions. We’ve got to understand mortgages right now. When’s the last time you took your mortgage broker to lunch and understood what the options and choices and product are and what does it means for my buyer? Not just doing the mortgage calculator. I say the words mortgage calculator, and some salespeople look at me like I’ve grown two heads. Mortgage what? Then I blow their mind and I start talking about rent-to-ownership versus ownership calculators. What?
Kevin: The most depressed group of individuals right now are mortgage brokers and agents because their world has completely been turned upside down. Think about all the energy to go from marketing, online sales, and sales that it takes to get the customer to the point of saying, “Let’s look at this.” If you don’t cover any of the financing with them and help them understand some of this before you pass it off, you’re sending them to an emotional black hole where if they don’t come in up here with some education, the person sitting across the desk from them is probably not going to push their emotional limit any higher. Something else that we haven’t spent a lot of time training and helping salespeople understand is how to discuss financing. That’s going to have to change.
Kimberly: We lived on that in the in the previous Great Recession. You had to figure this stuff out because suddenly, all the loan programs that everybody had gotten so comfortable with just went poof overnight. They were gone. I remember one time, as a sales manager, I asked my loan officer for our division, “What about FHA?” “FHA? We haven’t used FHA.” So, I said, “Well, it might be time to dust that puppy off. Let’s look at this.” The debt to incomes were getting a little out of whack and we could go higher if we use the FHA products. A good salesperson and a good sales leader can suggest these types of things and run numbers multiple ways to make sales happen. The biggest fear right now is buyers thinking they can no longer qualify because they’ve listened to the media. No, there are other programs out there. There are ways. You can get this to happen.
Carol: Do we want to talk marketing? I think we’ve already talked about Kevin’s most important numbers and what they mean. Let’s talk a little bit about conversions because I think conversions are still confusing and people don’t really understand them. Do you want to give us a little overview of that, Kevin?
Kevin: One of the most common things that we see people struggling with is – at Do You Convert we don’t do this, but it’s a standard practice for people who aren’t as used to new home marketing – to set up conversion activities on your site that are informing what marketing is working and doing but doesn’t mean conversion in the way that that I use the word. If I don’t have contact information in the CRM system that person doesn’t exist to me as marketer, so that when I talk about a conversion event occurring on your website, I mean something where you have contact information, or in the case of a phone call where a large percent of the time you’re going to get contact information and you’re using ways to track that that call volume and activity to watch. Compared to 2021 the aggregate data set that that we look at at Do You Convert among roughly 15 to 16 billion dollars a year in revenue of different organizations, is that website activity is up the last 30 days compared to the same time period in 2021 about uh 2 and a half to 3%. That might surprise a lot of you, but that gap is negative about 25 to 35% on the organic side which is your best form of traffic most likely to convert most and likely to purchase. We’re supplementing that finally with ad spend. When you spend the ad dollars and no one even comes to the website, that’s when you start sweating a little bit, but that’s not happening. They’re still willing to come take a look at what we have to offer. That’s good because as long as they keep coming back look at what we have to offer, we can keep adjusting things to try to get conversions. That’s where a lot of the pain is being felt. Kimberly’s got the slide up there. Year over year, we’re down almost 17% in lead volume. You look at those numbers, and that’s there are 104,000 conversions that have occurred on these home builders’ websites in the last 30 days. That’s still a lot of people willing to give out contact information. There are lots of numbers. Sometimes even for me, numbers make my head hurt a little. The important thing is even though that conversion number is down, what should be occurring next – remember these are all leads -from a lead-to-appointment perspective, the number of people who reach out to you by call, text, chat, Zoom or whatever, the lead-to-appointment ratio should be going higher because it’s the law of large numbers. The bigger the number of people, the average quality of those leads will be lower because you’re talking about a bigger pool. Those who are in today’s market saying they’re going to start this process despite all the things they hear, read, and understand, they should be going to an appointment at a higher rate. If they’re not, there are things to check and inspect there. That doesn’t mean that those appointments are going to convert to sales at a higher rate, but we should be seeing at least lead-to-appointment going higher. Even though those are lower, a lot of the feedback we hear from online sales is that “Yes, things are a little bit slower on the inbound side, but I finally have time to do outbound activities again and start to listen and talk and engage with these customers.” For the most part they’re still very willing to continue through the process in some cases even faster than they were the previous 30 days. Like you were talking about, the market gets shocked by a change, especially a sudden change in interest rates, and it takes about 2 to 3 weeks for it to normalize. It’s hard to see on these graphs because there’s so many line movements up and down by day of the week, but we tend to see that where if WebEx activity takes a dive, it tends to recover about 2 to 3 weeks later, not always to a higher high, but it doesn’t just keep dropping at the same speed that it was when the initial shock happened.
Kimberly: Does this take into account also that someone’s website actually has strong calls to action? When they get there, there’s something to look at; there’s an interactive floor plan and there’s something to do on that website.
Carol: Ooh, that’s an idea!
Kevin: I love doing this kind of stuff and I’m always thinking in my mind of all the messages I’m going to get or ways I’ll be misquoted. I’ll tee up my haters; here’s one way you can misquote me. Marketers and owners tend to love to poke their finger at the advertising source and say this is or is not a good advertising source. There are some things in data you should be looking at to determine what sources are providing you better quality traffic; however, at the end of the day, the most important thing, unless you’re buying leads from Zillow or REALTOR.com or somewhere else and they’re not going to your site, your website is ultimately to blame. It’s not just the UI. It’s what you’re putting on the website in terms of pricing, availability, transparency of information and data, but to just say, “This advertising medium doesn’t work.” That’s interesting, and the beauty of having aggregate data sets is we can reply, “But it does for 95% of the other builders.” Your own website is something you have complete control over and one of the things you have to do in any market like this where you’re feeling like the world is spinning out of your control is say, “I have 100% control of what goes on my site.” Including the ability to lie. Not that I would recommend you do that, but you could because it’s completely under your control. There will be consequences for it, but you get to change anything and everything about what is on that website.
Kimberly: You have to think like a buyer too with the right site.
Kevin: I talked to someone on a call on Monday, and they said they worked a Parade of Homes event, and a prospect went through and was just gushing over this builder’s homes and plans. They said, “We are absolutely going to buy a home from you, and we’ve been on your website for the last three or four months for hours at a time researching floor plans.” This is a semi-custom builder, but they had never come out until the Parade of Homes. Why? Because that builder doesn’t offer the ability to come out. It’s still by appointment only. I correlate that to trying to hit a home run with every swing. We could get away with that in 2021, but as demand and buyer psychology shifts, as marketers and salespeople, we must be more patient. Remember this; if you can’t get the sale, get the next appointment. What is that? I mean and if I can’t get the next appointment, I must have a reason for the follow-up, and if I can’t get any of that, I must at least get registration information in the system, so I have the opportunity to follow up. It requires more patience at a time of higher stress. That’s what makes it so hard. I must get a sale now. If you focus on those activities that would hit a home run, you’re more likely to fail. I guess it’s not that dissimilar to my golf game. I used to be good at golf until I started thinking about golf. Now I’m terrible and I just don’t want to play anymore because I’m overthinking it or I’m trying to hit every shot perfectly instead of just making sure I get the club on the ball and it’s going forward.
Kimberly: This a time where people have been closing on first appointments – we used to call that floor pop – or every person that came in the door were put on a waitlist and they were lucky to buy. It is time to remember that we have to go back, and we have to nurture, and we have to start with relationships first with these people in order to make that conversion. You’re not going to always close them on the first visit, so that’s why we have be back appointments.
Kevin: Pre-pandemic Jeff Shore used to do – I’m not sure if he’s redone this – but I remember he did this study and found out that there really was no such thing as a 4th or 5th appointment. If they if they weren’t going to buy after the 2nd or 3rd, but there’s this bias of what appointment do you think people typically purchase on? Then he asked them the last sale they made. Which appointment did they buy on? Most often it was the second appointment. Psychologically your salesperson feels like if they gave the best presentation, and overcame objections, and asked for the sale, and the buyer said no, recent habit says- what’s the what’s the pop song? Thank You Next. Thank you. Next. Come on in. Instead of understanding that person might be your best prospect and you need to continue to nurture and follow up.
Carol: Cultivate. Kimberly has her conversion slide up.
Kimberly: This is a tool from traction, and I use traction a lot from Gino Wickman, if you haven’t read the book. I use Ninety.io and have a link that for anybody who’s setting up their metrics so they can understand it with goal average. Then we track it on a weekly basis. Kevin, I put this these numbers are for newer builder of mine that we just built some of this for, so they don’t have all the data in. so I don’t want anybody to panic when they see a 0% on there. We’re still building, but these are the things that we’re tracking. Web sessions and trying for them to understand what those web sessions are. The percentage of new users on their site. You can see what the average is. Again, trying to figure out what’ the goal is. We don’t know that goal is. For each builder it’s a little bit different. Then our goal conversion ratio. Something is askew with their interactive floor plan data migrating where it’s supposed to, so that is being addressed. Interactive floor plan sessions and having the data from those is it’s so valuable.
Kevin: What people like to ask a lot is what is, “If I’m going to compare myself to another builder, what is the one data point?” There is no single data point because any data point outside of context with another connected data point is meaningless. I spent a lot of time watching macroeconomic data to try to help builders stay ahead of what’s going on, and this one economist keeps bragging to his audience that his portfolio is up 1100% in the last 6 months, so you should listen to his advice. That’s a meaningless step because unless I have the percentage connected to. How much money is invested? If you only put $100 in some high risky thing and it went up 1100%, am I impressed? No. You must have a data point connected with another data point, and cost per lead is one of those things that’s a hot button right now. What should my cost per lead be, Kevin, or am I doing better in comparison? You can game that. Marketers can game that. We can create Facebook lead ads and get $2 leads all day long that aren’t going to go through this process like you’re talking about. You can compare yourself to a national Builder whose average cost per lead still is $20, but %80 of their leads are coming just from Florida, Texas and Utah. All the rest of them their average cost per lead is $500, but blended, they’re getting $5 a lead in in Florida and Texas at high volume, so you’re thinking, “Man I must suck if my cost per lead is a $100.”
Kimberly: Historically it’s been $500.
Kevin: The most important thing is to is to be tracking web activity and lead volume. Your interactive floor plan sessions is an interesting metric to look at and tells you something, so it’s not irrelevant. If there’s one data point on this sheet that would have a 0 in it because due to lack of data, I’m okay with that one in comparison to knowing how many leads I have and how many website users I have as a starting point.
Kimberly: What I like about the interactive floor plans, particularly if you’re using a CRM, and this is one of those where I can get misquoted, but I don’t even care at this point. I’ve been on a binge over this. You need a CRM that integrates with your website. You need to know which of your buyers is coming back on that website, and what they’re looking at. and when they’re looking at it. You need to have all of that connected. If you don’t have that, I could manage your leads with a spreadsheet better than I can your operating system. I’m going to call a couple out by name, but particularly Builder Trend. Listen to me Builder Trend. I love you. I absolutely love the Builder Trend product, and I encourage my builders to use it, and I get in there and help them use your product, but you’re not a CRM. So many of my smaller builders say, “They told me it was a CRM.” No, there’s a difference. In order to have any of this have some meaning, you’ve got to know what’s happening behind the scenes. If you don’t have an interactive CRM that gives you that data, then you are not going to be able to have any useful knowledge of where your buyers are coming from. We should never put all our eggs in one basket. I’ve got builders who say, “We just list all our homes on the MLS.” “Good. I’m glad you do. I hope you put your to-be-builts are on there too because it’ll help you with your appraisals because those are tanking too.” That shouldn’t be your only lead source’ They’ve got to come from multiple places, and your website can have that if you think like a buyer, and you think location and product. You’ve got to have the information on there and those strong calls to action.
Kevin: This one of the big things I like to talk a lot about because we went from talking not about data at all 10 years ago in in forms like this as much, to now talking so much about the data. The data needs to inform your decision-making process. You might even disagree with me, and it’s okay if you do, but I I’m not okay with the data making the decision for you. You still have to use your brain, and what I mean by that is, the data might say that a particular part of this process needs to be addressed, but what we’ve seen is that builders who have rolled out large interest rate promotions or buy-down programs based upon the data saying that everything is more or less working except appointment-to-sale is dropped. Then we ask the salespeople, “What do you need? “We need a better interest rate.” You give that to them, and shockingly your sales rate does not increase by 100%. You get incremental sales based upon individual stories. Thinking about it scientifically and saying we think this is what the data informs, and it rules out a whole lot of things now we don’t have to consider, but within that, don’t just say there’s only one answer here. You do have to use your brain and continue to think. Carol was talking about before there are builders who cut the advertising because the data says I’m they’re seeing as much from a particular advertising source without understanding that it’s going to impact your organic traffic too, and you love that.
Carol: Absolutely. it’s all connected
Kimberly: I think when we get too myopic over any of these figures. Look at it as an aggregate. You can’t just think that in 3 weeks, it did this. This is over time. I think that’s an important thing for people to remember. You’ve got to stretch this out and look at it over time. Some of the times when I’m building traction for people, we don’t have the number. I don’t know this number yet. It’s going to take us a couple of months before we ever start even guessing at what this number is for you because you’ve just never tracked it. We don’t know what the goal of it is. Let’s look at what the actual is, and then let’s look how can we incrementally improve that.
Kevin: I guess the word is trigger. That’s what the kids say these days, right? If you want to trigger me, ask me the question like this. “Why is this Wednesday’s traffic or sales activity so much different than last Wednesday?” You’re looking at a 24-hour period of time and comparing it to a previous 24-hour period of time. Who the heck knows?
Carol: Who cares? You might be able to figure out why, but you’re guessing.
Kevin: That’s right. A quick fun story because I love telling stories; we’re working with a builder in Guatemala City and talking to them and their lead volume is increased, and things are great there, but their on-site appointment volume is down. I asked to tell me why, and they said they had a bunch of rain and the main road into the community is impassable due to a giant sinkhole. They had no way of fixing said sinkhole until the government decides to fix it. This is a 2nd or 3rd world country, so it might be a while. No matter what you’re dealing with right now, it’s probably not like that. You don’t have a sinkhole. If you can still drive your neighborhood, you’re one ahead of these folks.
Kimberly: That puts things in perspective, doesn’t it?
Carol: You touched on something that I think is huge. With metrics you need to look at not only month over month, but year over year so that you can see that seasonality and see the cycles that are involved.
Kevin: You can take almost any chart – not even about housing, and you can look at employment data statistics, and if you just sliced out 2020 and 2021 and sandwich those lines back together, the interesting thing is 9 times out of 10, you would never know that something was missing. It’s almost like it’s just gone back to where it was in 2019 and slightly higher or lower depending on what metric you’re looking at.
Kimberly: We talked about the historic, so how do you take those numbers? Let’s slice out ‘21 and ‘20 for sure because those are just anomalies, we know that. How do we take that data and then predict and look at what’s going to happen because that’s the crux of what we’re talking about here today?
Kevin: My favorite way to do that is to look at the last 30- and 90-days’ worth of data in this current period. I’d look at both, and I would look at your trend on all those metrics. Web activity, lead volume, appointment volume, sale volume, and then I would think forward and use my brain in addition to the data. July is an interesting month coming up. I’m excited for it. Lots of good pool time and vacations to be had for everyone hopefully, but it usually kind of sucks to sell homes in July in our industry. My joke has always been June or July – one of those two months is going to suck. I just don’t know which one. in a normal cyclical seasonality that we have, 1 of those 2 months is tougher. Great sales organizations will get their sales goals aligned with those realities. That’s all we’re. Take the last 90 days and the last 30, look at the trends, and see the website traffic to lead ratio used to be 2%, but now it’s 1 and a half in June. What do I think it’s going to be in July and August? It’s probably going to be a little bit lower. When you’re forecasting, you take those historical trends and then you forecast into the future. Then the math is just going to bubble up and show the amount of traffic you need, but it’s all based upon what you believe about the future. Do you have a big incentive of promotion that you believe is going to increase appointment-to-sale ratios? Then factor that in, and maybe that can outweigh the lower lead volume that you’re likely to experience in July unless you do a big adjustment in how you’re marketing and advertising. It’s all about your assumptions, and that’s probably the most important conversation to have as a leadership team so that you get everyone’s perspective versus just one of you. If marketing does this without talking to the sales management and getting their buy-in, that they think their team can hit an 8% appointment-to-sale ratio in July. To steal from other great people in our industry, Jeff Shore states the whole path kind of rolls out right in front of you not to sell a home but to how do you market and look at the sales process that’s necessary to get there.
Kimberly: That’s where we get into pipelines, too, which we’ll get into in a few minutes. You can literally map this stuff out, guys, and see how everybody’s moving through if you utilize that.
Kevin: I think this is interesting that you must know who you work for, whether that’s a division president or an owner and understand their perspective on things. Right before this, I got off a call with a builder based out of the Virginia Market. Their ownership has been around a long time, and they think like an investor. She gave this presentation on the state of the market and how they were doing, and how they needed to focus on conversions and appointments versus just traffic, and she got a big high 5 and a great job from the owner after the meeting. Then the owner said but traffic, traffic, traffic. Her initial reaction was, “I thought he said I did a good job, but he didn’t seem to listen to what I was telling him.” I said, “No, he is an investor. What he’s saying is he really liked your presentation, he trusts your ability, he thinks you’re smart, and he’s saying show me the numbers.” Kimberly we, were talking about in terms of forecasting, you can do 3 different forecasted models and present it to the owner. Sometimes people get surprised if you tell your ownership, “We need to invest 20 grand between price adjustments, ad spend, website improvements, visualization tools, based upon this forecasted trend, this is what I think we would get as a result.” There are a bunch of owners who would say, “No problem.” They might not do that if you if you didn’t put in the work by showing it to them with choices.
Kimberly: Most of most of the leadership that I deal with are high drivers, but they have enough analytical in them, but you only get you get your 3 points to get across, so you better make those 3 points count. I think we should do this, this is why, and this is the result. Too often we go in with this scatter-shot approach where we’re just throwing everything. If we try this and we try that and we’re just throwing in suggestions. A well thought out plan, that’s why, and here’s the result.
Kevin: As people within a homebuilding industry get worn down by the stress of it all, what people like me tend to start hearing is, “What do they expect me to do?” What they expect you to do is to continue to tell them a better story with the data to give them an opportunity to make a final decision, but if you just keep showing up with a shrugging motion asking, “What do you expect me to do?” it’s not going to be a long tenure, probably.
Kimberly: Marketers tend to geek out over all these numbers.
Carol: We love numbers.
Kimberly: But on the sales side, it goes over our salespeople’s heads like talking mortgage numbers with them. As a sales leader and a top producing salesperson, if you don’t understand the data, and you don’t understand your numbers, your tenure in this business is not going to be very long. That was something that I figured out in this industry very early on. It was, “Here are the keys Mackey, go sell something.” How do I make this work? I figured out how many REALTORS® I need; these are how many appointments I need. Fortunately, I came from a business background, so I already had that exposure. This traction slide is from the app is Ninety.io, and the link is Linktr.ee/NewHomesSolutions. REALTOR® meetings. What is the goal for your sales team? If we’re talking about sales numbers, are you tracking how they are doing against goal? I think it’s one thing to track it if I have a builder doesn’t have a CRM. First, that’s going to be high on my list on their SWAT as a weakness that we’ve got to address right away. I will use what I call planned encounter forms. We’re going to track how many REALTORS® you saw, who they and what the result was. We’re going to track the weekly appointments and how many appointments your OSCs are making. Salespeople also need to make appointments, so we split for this builder. We expect the OSC to schedule half of the appointments, and we expect the on-site agent to schedule half of her appointments as well. This is a smaller builder, but the goal here is the10 leads. As Kevin was talking earlier, your 10% conversion rate. You need 10 leads at any level of qualification, 5 first appointments, 2 be-backs which is that 2nd or 3rd appointment that we were talking about before, which will give you 1 sale per week. If your salesperson takes 2 weeks’ vacation a year, that’s 50 sales a year. So, it’s one sale per week or 4 a month. To get there, these are the numbers that that we’re tracking along with some others, but these to me are the ones that stand out. Gross sales and cans and net sales lead to sale closing ratio. As you can see, we’re a little low on that one.
Carol: I see you’ve got online sales counselor, and sales and conversions on here. How important are those online sales counselor appointments, and what should we expect from our online sales counselors? We talked about this a little bit before we went live today, but I know builders that got rid of all their online sales counselors because they had so many leads that they didn’t need them. How about reality check on that? Where are we with that and what should we be expecting from them? The builders that chopped their hand off as far as I can tell, what’s the best step for them?
Kevin: One of my favorite things to try to reinforce to everyone right now is that the online sales position existed in the early and mid-2000s, but it didn’t come into prominence until around 2009. It was not a role that was ever designed to be the sifter of so much activity that we need to figure out who’s worthy of going through. Online sales became in a crucial part to home builders’ lives because there were not enough leads to go around. I’ll say it again to reinforce it, online sales grew as a position in our industry when there were not enough leads. Why? Because every single phone call was worth having a dedicated person ready to answer so that you never miss them because the speed of response lets you steal a market share from another builder who is slower. Those appointments are incredibly valuable, but it’s the speed of response, and getting that response in a market where there is not an unlimited number of leads that makes this position so important. All this ebbs and flows, and it’s a balancing act. but one of the things that Jesse, and Jen Barkin, and Mike Lyon all are talking about with our builders is for the online sales position right now, when in doubt, send them out. Because of the law of numbers when there’s fewer leads, by definition they should be higher quality, and as long as we’re covering the very basics in making sure that they don’t think they’re about to go visit you to rent a home or to buy a shed for their backyard, if they want to come out and you have pricing on your website, you let them come out. That’s where, as sales management, we have to be really quick. If there’s any sense of, “I don’t know why I got that appointment.” It’s because it was that or no appointment. We still want to cover areas of qualification if we can, but when in doubt, send them out. We have to have that opportunity. The consumer is more nervous, and if we can get them to come out in an environment where they generally are nervous, that’s a good thing.
Kimberly: At least give your salesperson an at-bat.
Kevin: This is my other favorite story that’s going to blow someone’s mind, I think people like hearing stories about how other builders are screwed up too. By the way, I mean we all we’re all screwed up people by definition. Humans equal imperfection. If you’ve got humans at your company, you’ve got some imperfections. At an on your lot builder, a salesperson asked if they could cancel their educational event for the weekend that they that they hold on a monthly or bi-weekly basis. They wanted to cancel it on a Wednesday due to lack of interest. The marketer asked, “Tell me about this lack of interest.” The answer was, “I only have six families who have RSVPed.” Now the that’s not even the most ironic part. The most ironic part is that regardless of what happens with that event occurring or not occurring, that salesperson is working in the model that Saturday. What that means is this perspective of this individual was, “I don’t want to talk to 6 tire kickers or 6 people who just want some information and to be educated about this on your lot process. I would rather sit here and only have 1 person who is serious show up and write that sale.” Completely oblivious to the potential opportunity that no one will walk in, and if they so, they’ll be just as unqualified in that person’s mind as the people who would have attended that event. That’s real life. Right. That’s what’s happening right now.
Kimberly: Six people who are willing to sign up for an event.
Carol: And go to it.
Kimberly: This is how skewed our perspective has gotten.
Kevin: This is an in-person event.
Kimberly: I don’t I don’t need to be in front of hundreds of people
whenever I go out and do a presentation. If I’ve got 5 strong, qualified sales leaders or people who can make decisions, put me in front of that group versus a group of 300 people who couldn’t care less what I have to say.
Kevin: Another interesting thing about how math works. I hate math like I hate making my bed, but my wife says it must be done. and I’m telling you that the math must be done here. If your conversion ratio on appointment-to-sale is typically 10%, and because the market gets tougher, or your home’s overpriced, your conversion ratio drops from 10% to 6%. That means instead of 10 appointments to get one sale, you now need 17 appointments which is almost double in a market condition that is tougher. If you keep working the math all the way up to website traffic that you need to get those 17 appointments versus 10, you have to increase website activity by 66% at that community or for that home in order to get those additional opportunities in leads to get the 17 appointments that you need instead of 10. So, regarding that appointment-to-sale ratio, if you said, “I’m not letting you leave this room until you pick a single metric.”, ironically, it’s not even a marketing metric because that ratio is everything; it’s a summation of your product positioning, your price point, your messaging and your advertising. Everything leads up to that moment where they’re sitting in front of the sales counselor, and they ask them to purchase. If less than 1 out of 10 is saying yes, then everything else becomes not just slightly less efficient – again, website activity having to increase by 66% means that it becomes way less efficient-with small changes in that appointment-to-sale number. That means that yes, sales trainers are worth it, yes, competitive analysis is worth it, yes, market research is worth it, yes, talking about positioning your company correctly from a PR perspective is where all those things are worth it because they all lead down to that appointment-to-sale.
Kimberly: You can’t just look at appointment-to-sale and think it’s because I’ve got a bad salesperson. You absolutely can’t. There have been builders that I’ve taken that metric away from. “You’re not ready for this. it’s like you can’t handle the truth. You might have a hundred leads coming through the door or 100 traffic coming through the door, but 90 can’t buy because they can’t afford your product. So, why are you driving the wrong kind of traffic? Or you just happen to be in a location that people are coming because it’s a touristy destination. There’s so much that goes into this, and you can’t look at these in a vacuum.
Kevin: A lot of sales and marketing teams starting to not be as simpatico anymore with fingers starting to be pointed in different ways. This is where marketing needs salespeople to be their fingertips. We have to know what’s happening on the ground and get all the feedback of what’s going on that they can provide. We need them to put everything in the CRM system so we can analyze the data, but similarly, marketers need to have salespeople’s back. Don’t just sit back and let the owner or the sales manager just rip on a salesperson. If you know in your own mind that they don’t have the best opportunity yet, that’s your opportunity to, in some form, jump in front of that bullet, and take it, and say, “No, I haven’t provided enough of the right kind of buyer, but here’s the challenges I have in getting them. I either need more budget, or I need shifted messaging, or the price point is not competitive compared to the marketplace.” If you want to keep sales and marketing working together, that’s the type of interaction that needs to happen. You’re right, Kimberly, a lot of people at the top want things to be relatively simple, so they see that change in appointment-to-sale, and the easy answer is screwed up and you’ve gotten lazy. you’re but that’s not necessarily the case. Ultimately, appointment-to-sale is as much an indication as is the amount of advertised incentive that you are offering. this People hate me for this; advertising promotions and incentives are letting the whole marketplace understand that you were wrong about your pricing and positioning of their product. It’s saying, “Whoops! We were wrong. We didn’t get this right.” A bad appointment-to-sale ratio means as much that leadership is to blame as the salesperson is, in my opinion.
Kimberly: You have to look at all of it. One of the things that we are unfortunately out of time for, so maybe we’ll do another whole thing on the value of pipelines. If you have a CRM, if you’re using HubSpot, or a Sales Force, or Zoho – there’s a whole list of them – they have a predictive Pipeline. You move your A and your B prospects through the stages of the sale. If you don’t have a visual of that, you can make a pipeline for everything. I’m working with builders to manage their entire business through the pipeline; with their build process and everything else. Pipelines are so incredibly valuable, but they are undervalued in the sales department. I’m just going to put a plug in right now that if your CRM doesn’t, and a lot of our industry CRMs unfortunately don’t have them, make your own if you’re going to use one. I love our industry CRMs, and I’m pushing them to build those pipelines in. I know it’s in the works for one of our larger ones, but we must have that pipeline; we must be able to predict where these people are. Where are they in the buying process? As a salesperson, my salespeople get so excited as they get to click and drag their prospects through this because they can see how many sales they’re going to have this month, next month, and the month after. We can predict our sales pace at least 3 months, and for some of my builders if they’re on your site or it’s a very niche product we can actually predict it longer. At least 90 days’ worth of sales you should be able to predict.
Kevin: I think the clarifying point there I would say is that you can predict en masse meaning when you have those numbers, you can make predictions. I agree with you can forecast well individually. This is sometimes what marketers get messed up with when it comes to marketing automation. They think that that means that I can look at Carol and predict what Carol specifically is going to do in the next 60 days, and I’m just telling you can’t. Again, she’s a human being which means by definition I am irrational so you cannot predict what’s going to happen, because not only am I irrational, I live with an irrational woman named Melanie. She’s my wife she’s also a Russian. My kids are irrational. In a group the math does work, and you can’t predict, but individually, especially early in the process, prediction on an individual lead is incredibly difficult.
Kimberly: It is, but you get to the point when you’re that close and you build that relationship-based sale, you can see that this is going to be my August buyer and this is going to be my September, but sometimes they flip-flop, and they surprise you. Sometimes they drop out, but that’s just another place where then we can plug that one that’s coming in right behind. There’s a lot to be said for working those pipelines, but we must work those CRMs. Leaders, you must get in here and know those numbers and teach your salespeople to understand the numbers, so they get the value of it too because garbage in garbage out. Parting words Kevin? I see we have a comment in the chat.
Kevin: Beth Lemon asked if the appointment to sale ratio is okay but the lead to sell ratio is down. Does that mean we need to do better at getting actual appointments or just increasing website traffic? Without seeing the numbers, my assumption would be that means your lead to appointment ratio is down. Not knowing your specific situation, Beth, recheck everything that you’re doing in terms of requirements or qualifications that must be met in order to set those appointments. If your appointment to sale ratio is okay in your words or going up, but it’s only doing that because you’re only letting 2 people get past the online sales gateway, that’s not the purpose of online sales. It is not to say, “Only the best shall pass.” So, if you’re only letting 2 of them come through out of a hundred because they meet the qualification levels, then certainly your appointment to sale ratio should be higher. It’s about balancing those 2 metrics, and 1 of the ways that sometimes we talk about with builders that helps is asking what their minimum appointment goal is. Meaning until you hit 30, the online sales team keeps qualification levels lower, and then if your capacity as a sales team is that you can only handle 30 in this time period, then incrementally past that you start rationing up those qualification levels. But in today’s environment you probably don’t have to worry about that. I would focus on getting more appointments and making sure that you’re not creating extra steps or processes.
Kimberly: Knowing her specific system, hers are only down by a week, so not enough to panic. I had that conversation with some of your leadership yesterday about what we needed to focus on. Kevin’s right about those OSC appointments but also are our salespeople scheduling enough appointments and are they keeping them consistent? It’s not let’s do 12 in one week and 3 the next or 20 appointments in one week. You’re not breathing with 20. That’s way too many. Let’s get these 5 first appointments every single week, and then your numbers will play out over time.
Kevin: Someone um yesterday said that they had 20 appointments in in the last week but only 7 price outs. Tell me more about that. In today’s environment someone showing up to the point where you’re qualifying as an appointment but we’re not pricing something out or printing out a sheet on an inventory home and going through that, how do we not get there? This seems strange to me.
Kimberly: A lot of that is dusting the rust off with your sales team. Maybe they’re not seeing the buying signals because nobody’s waving a check in their face. It’s just it’s different. It’s changed, and it just recently changed. It’s going to take us some time to catch back up to that. Carol, parting thoughts because we are way over time here?
Carol: My parting thought is really figure out what numbers you want to look at and watch them. If you need help with those numbers from a sales perspective, call Kimberly. If you need really geeky help with those numbers, call Kevin. I would say we’re good at Google Analytics here and watching marketing metrics, but I think Do You Convert really takes it to a whole new really cool level. I always like talking to Kevin because I am always learning something to do but watch your numbers.
Kevin: Denim does a great job as well. My main thing would be going back to patience and endurance. Be alert. I think the biggest thing that I’m not seeing enough of still is rapid competitive analysis. In a in a changing market environment if a competitor adjusts their packaging, and by that I mean everything that goes into the customer interaction and product and price, and you are not aware that they changed it in 3 weeks, they could get 4 sales that you’re not going to get until you realize that they adjusted price or changed options or came out with different messaging. You’ve got to be on competitive analysis like a hawk right now.
Kimberly: People haven’t been doing competitive analysis for 2 years.
Kevin: At the Builder show I asked how many of do regular competitive analysis, and I think there were about 3 or 4 hands that went up to the to the point that Lori Tarver from uh Park Square got up and asked, “Are you all serious?” She’s just in the audience. “Is this real? We’re not doing this?”
Carol: That’s what 1 percent or 3 percent. That’s pretty low, but I don’t think people are doing it. I think there are a lot of things that haven’t happened in the last two years. Kevin: Maybe in a future Power Hour you need to remind them all how to do it.
Kimberly: That’s a good idea. I will send out to everybody who registered and who is on with us today the notes from this. You’ll get the contact information. Reach out to any of us; we’re happy to help you. This is something obviously very ambitious to cover in an hour and have you understand it, so we don’t expect you to be an expert after an hour, but we certainly want to give you the questions to ask. because that’s the place to start. Thank you, Kevin. It’s always it’s always fun having you on. I usually get really fired up and we did good today. We kept our we kept it cool. We didn’t get all fired up, and we geek out over these numbers. Thanks for having me on your program recently I think you guys had Carol on the program recently too.
Kevin: Absolutely. This is it in my mind. Everything that we’ve done and been through, this is now our responsibility to help everyone who hasn’t been through this type of environment before. It is a lot of fun to be able to help, but it’s also a big responsibility but we all take it seriously.
Kimberly: Thank you to everybody who joined us today and for the active chat that we have going on. We’ll go through if we miss something in the chat, and we’ll reach out to you directly. Thanks again everybody. Have a great day.
Carol: Happy July 4th.