Offering material options to customers - Why do it and How to manage it
Buying a home is most likely the biggest investment people make in their lives so one would expect a great customer experience and the chance to configure their home to their taste and needs.
But still, in 2021, many developers and builders do not offer the personalisation option to their customers. And those who do, know that it's a complex process to manage.
In this article, we will go through 3 reasons why you should offer your material options to homebuyers and how you can manage the process effectively.
1. Because your customers expect you to
Nowadays this is the modern way of selling homes. As in all other purchases you make you want them to personalised. Just think about the last purchases you have made, how many of them were personalised? Maybe you bought a new phone recently, did you choose the colour of it? How much memory it should have? Or maybe what headsets should come with the phone? When you eat your hamburger for lunch you want extra bacon and no tomatoes. Those are all personalised options you make every day.
The construction industry is often compared to the car industry. When you buy a new car you want to choose if it should be electric or gasoline. You also want to personalise the colour, engine size, and interior. You probably also want to add some upgrades like leather seats, a better sounds system or a sunroof.
The same thing applies to homebuyers. Buying a home is most likely the most expensive investment they will make, which means that they want it fully customised. Everything needs to be their taste and the homebuyers want to choose the colour of their future kitchen cabinets, countertop material, bathroom tiles, taps, appliances and so on.
Another good reason why is because your competitors are doing it. This means that this might actually be the difference between gaining or losing a new customer.
2. Because it accelerates off-plan sales and increases revenue
Offering options for off-plan buyers is a great incentive to close deals. Imagine a meeting with a potential customer who wants to buy a home. If you offer the customer the opportunity to customise the home by choosing the floor, tiles, kitchen cabinets and appliances. Due to the deadline of the building project the customer needs to sign within a month to have time to customise the home. But if the deadline passes, the buyer will get the standard choices only. This way you encourage decision making. As sales and marketing professionals already know, deadlines are a great incentive to boost your sales. Deadlines make customers more inclined to buy something and they encourage customers to sign.
This is also a great opportunity to offer the customer something extra to actually close a deal. In the case of new built houses, it is very hard and sometimes even impossible to offer the buyer discounts. Instead, you can offer better flooring, exclusive countertop material or give the customer a certain amount of “money” to spend on upgrades if they close a sale quickly. These types of upgrades are usually worked in the margins which means it often makes no difference for the developers and house-builders.
Deloitte recently made a study that shows that people are willing to pay up to 20% more for a personalised product. That applies mostly to items that are not that expensive. In houses and apartments, the base price is already high so the upselling potential on average is lower. On our platform, with tens of thousands of homes, we have recorded an average upsell of 4.9%.
Putting that into numbers: For a house that costs 300.000€ that is an extra revenue of nearly 15.000€!
3. It improves your brand image
By adopting the customer-centric approach you will create a great customer experience.
Customer experience is not only a way to get loyal customers that comes back to buy more, especially not in the housing business where that rarely happens. The experience your customer gets when buying a home from you will be transferred to the buyer's friends and acquaintances. A happy customer will share their experiences, the great help they got and how they got to customise their homes. They will also share the process of choices on their social media and we all know that is the best marketing your company can get.
This will also increase the interest of your company. It will give you the reputation of being a company that gives a good customer experience by offering homebuyers to customise their houses to reflect their personalities. That is what you want to be known for, offering quality homes that the buyer gets to customise to their own.
Of course, this will also make you more attractive as an employer.
Managing the material choice process is a very complicated task. There are many stakeholders and processes that have to be in order for projects to finish on time and on budget and for the end product to be correct. Here are some tips and tricks for how to control the whole process efficiently.
1. Range of choices
The secret is not about allowing the customer to do whatever they want, it is about making them feel like they are. By giving the customer enough choices to choose from, it will give them the impression that they are customising everything when they really are just choosing from a range of options defined by the developer or builder.
However, this is always a balancing act. You want the buyers to have this feeling but you don’t want to overwhelm them with options. If there’s too much to choose from, the customer will have a hard time to actually make a decision.
Obviously, there are many ways how you can structure the process. Something that we have seen to be effective is to package the choices into "Themes" that are put together by your designer or development team. Themes could be simply by packaging lighter colours or darker colours or stating the level of materials like 'Gold' or 'Luxury'.
Naturally, there are buyers that want to make detailed options. Then you can offer upgrades that come with an extra cost. Offer detailed options as colours of the kitchen tap for example. In the Nordic countries, it is really trendy to have a black or a golden tap right now and many are ready to put some extra money to have a trendy home.
For really demanding customers you may offer custom requests, to some extent. Sometimes buyers will ask for additional materials or custom changes regardless of what you offer. If you do serve them, make sure you are covering all angles timing and costing wise.
2. Control your supply chain
Standardise the choices and the suppliers across your developments. Of course, this is not always possible but do so as much as possible. Especially for larger companies standardisation is key for efficiency and cost. Buying in large quantities from one or two sources will get a better price per unit. Also having the same range of materials available across the development range standardises the customer experience and creates efficiencies in the internal processes.
Make sure you have a good relationship with your suppliers and always apply good communication. Be on top of things such as order dates, lead times, delivery dates, stock and pricing. Communicate to the supply chain about possible higher demands for certain materials by giving forecasts, especially for larger projects.
3. Use a sophisticated software
Offering different choices for your customers is the easy part! Homebuyers often know what kind of style they want in their future homes and they can visit showrooms where they get personal guidance and a paper to fill out.
The real challenge start when the paper is filled out. What do you do with it then? You put it into Excel, manually? An Excel that will grow to a very large spreadsheet with different tabs for different suppliers and apartments? This creates enormous amounts of data that need management, calculations, budgeting etc. By handling this data manually the human error will be a big issue. Even for the most experienced ones, it is very challenging to fill out endless spreadsheets without adding or forgetting a 0 or typing something wrong.
The next issue is how to transfer this data to the actual construction site. How do you make sure that they always have the latest updates? Because they will come, the changes. So many of them.
Minor errors in the process will create major issues on the construction site. One wrong number in the spreadsheet can cause huge delays and enormous amounts of money lost. Can you just imagine the amount of waste you will get from accidentally adding one number too much in your order? Or the issues you get from ordering too little of something: the whole constructions site might have to wait for one pallet of tiles, that turns out o be from a different batch and look a bit different.
What image will your company give if the customers get to move in later or have a bad customer experience?!
With GBuilder you can manage all these tasks in one solution and benefit from a Common Data Environment (CDE).
GBuilder is a BIM-based customer journey management software that streamlines the interaction between customers, internal and external teams. We will help you to digitalise the process and improve your customer journey. Read more here.