January 17, 2023

How Complicated Upselling is Hurting Construction Firms


These Troubled Times

The last two-to-three years have been challenging for the entire construction industry. Prolonged turmoil of global politics makes the future uncertain. A low market situation affects buyer behavior. The only thing we know is that times will change for the better, and nothing will be quite the same.

The rising cost of energy affects everything. It has raised inflation to an unprecedentedly high level, which in turn has influenced the central banks to raise their key interest rates. An increasing push for sustainable construction is urging construction companies to reduce material wastage, and the rising cost of commodities, including essential building materials, as well as supply chain issues are driving costs up and squeezing margins.

Consumer confidence hasn’t been this low for decades. Having new customers take interest is not easy; getting them excited has become even more difficult. The competition is getting tougher, and at the same time operations need to be more efficient across the board.

The silver lining here is that today’s technology enables more effective construction. It also offers a more effective, less error-prone method of upselling during the building phase. Not only is it a great way to attract more customers, but by utilizing upselling you will also generate more revenue, despite having fewer home sales.

Challenging times have always been a great opportunity for those who are willing to adapt to change. Better margins and improved profitability are always the goal, no matter what the world’s economy is at the given moment.

So, let’s see how upselling done right can help us through these troubled times and into a better future.

The Human Desire to Choose

People want to be creative, especially when it comes to their home. Homes are the pinnacle of our self-expression. The interior of our home tells more about us than all of the social media updates combined. It’s the home where we put on our favorite sweatpants, close the curtains, fall on the sofa, and let it all hang loose.

Most people likely have a certain idea of how they want their home to feel and look, even if the design and decoration is not the first priority in their heart, and styles are many from eclectic bohemian to Scandinavian style of clean lines and lack of clutter.

A recent Deloitte study shows that people are willing to pay up to 20% more for a personalized product.

What people really want is something for each and every taste. They want to be offered something special so that they can feel special, even if it is just a few pre-designed themes that the contractor is offering them to choose from.

This need for choosing starts way before the customer even sits down with a salesperson, and it continues long after the home buyer has moved in. It’s a life of endless possibilities; it’s a never-ending trip to Ikea and back.

Behind the desire for customization is the yearning for control. When we are given the right tools, this yearning can transform itself into creation and self-actualization. With the modern customer, an echoing cube with white walls is just not enough. In home buying, the base price is already high. Once the buyer has spent hundreds of thousands, and is “all-in” with the new home, they want it to be just right.

In order to turn the customers’ desire for choices into better margins and increased profits, it is crucial that the whole experience of homebuying is much more personal and emotional right from the start.

The Problems in the Past

In the past, there have been many good reasons why most of the construction companies have wanted to keep the homebuyer out of the picture during the building phase. Construction projects are complex and often require seamless collaboration among a variety of stakeholders – design and engineering professionals, subcontractors and building site workers. There are logistical issues that must be taken into account, and there is a schedule to keep. In the age of paper and pen, involving the customer was risky business for sure, and more materials and options for the customer to choose from often created more headache for the sales and marketing team, not to mention the building site.

Traditionally, homebuyers have had to look at generic sample pictures or models. Or go to “the showroom,” an experience very similar to the one you get when buying a new pair of jeans and trying them on in a fitting room.

With pretty pictures that are now commonly in use in sales and marketing, the customers buying new apartments often have difficulty understanding the dimensions and visual aspects of their future home during the planning and construction stages. When a customer without knowledge of plans, terms, or the industry, sits down with professionals, some information is always lost. Two-dimensional pictures with finishings from the neighboring apartment do not offer enough information that many of us wish to receive.

When we ask the customer to buy and choose by asking them to visit the company office and see the mock-up models, or when we are making the home buyer to do all the decisions based on just generic pictures and the blueprint, we are a boomer asking the fax number of a tech-savvy twenty-year-old. Filling out the forms and excels is, or at least should be, the thing of the past.

Upselling should streamline the process even further, not cause more headache. It should offer the building company a great way to serve the customer better while improving margins and profitability.

And for that we need more than just generic models and pretty pictures.

The Unbearable Lightness of Shopping

When Apple created iTunes, it was all about how easy it is to make a purchase. When we push the shopping cart down the aisles marked with arrows at Ikea, we strongly feel that we are in charge.

“We do not care about furniture, we care about homes” is one of Ikea’s slogans. “We give a hand to make you shop better” is another slogan that they use.

Material decisions and design alterations should not be complicated. Customer journey should be a pleasure to travel rather than something out of reality show “The Amazing Race.”

In light of the latest studies, homebuyers increasingly value realistic 3D tours as means of getting a better feel of their possible new home. 61% of possible purchasers say they would prefer to schedule in-person tours online, and 63% say it would be easier for them to unlock properties with their phones.

The personalization process itself needs to be simple and fully automated, and there has to be transparency regarding material options and pricing. The information about material changes and alterations must get to the building site on time, and information of these changes and alterations must be up to date and available for all stakeholders.

And if you have to distinguish between what's being promoted and what the customer is actually getting, you are doing it wrong.

At the end of the day, this is the result that you want to achieve, as taken from our customer feedback:

It was the customers' first meeting to get to know their new home, and I asked the customers how it looked. It was exactly what they had imagined, they said. They had visualized the space well through the 3D model and were very satisfied when they had been able to spin their new home on the screen.

So go ahead, spin it! Have fun, make it your own, mold it, create it.

A real digital customer journey starts with BIM-based, dynamic 3D-visualizations of every room in every apartment of a project. With apartment-based 3D modeling and a material configurator, customers can test all the different options in their actual future home. They can pick from a range of materials and finishes and play with different color choices within the 3D visualization, or through a VR headset, settling on their preferred choices which are then fed through to the construction team for integrating into the build.

Only when all these conditions are met can the home buyer make faster and better-informed decisions and have the freedom to express their own creativity to the fullest - as they are already accustomed to in other areas of life - without it causing confusion and more variables in already complex building processes.

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 personalize the color, engine size, and interior. You probably also want to add some upgrades like leather seats, a better sounds system, or a sunroof.

A transaction just a few clicks away with clear understanding of the price and product, whether it be a new car or a kitchen countertop, is upselling done right.

The Options

There are many degrees of enabling the home buyer, and many of today’s construction companies use one of the following:

Some choose not to provide this opportunity at all, some provide a large scale of personalization options, and some developers offer the customer a chance to pick out their favorite from pre-selected and pre-priced customization packages, calling them “themes.” There are some benefits in doing so. 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 standardizes the customer experience and creates efficiencies in the internal processes.

In addition, there are also developers that offer the so-called mixed option, where the customer gets to choose their preferred customization package and is also allowed to make some minor personalization requests.

Some developers have taken this even further by offering a wide range of options for kitchen cabinets, countertop materials, bathroom tiles, taps, appliances and so on, and the customer can tailor their future home according to their taste and budget like they are pushing a shopping cart down the aisles.

We want to offer different themes to choose from to cater different tastes, and we want to be able to offer premium options on materials for those who are willing to go that extra mile and spend a little bit more.

We also want to keep everything manageable and under control, and not end up in a prison of too many choices.

But let’s take this a little further.

What about offering a service of a professional decorator?

What about furniture?

Are you sure it looks good with the living the room table against a grey wall? How about not carrying that yellow sofa to the seventh floor before you are absolutely sure it is the one you really like?

How about trying it out in the digital realm first?

Now imagine all this in high resolution and with a great user interface, camera floating effortlessly from room to room like a jellyfish. Imagine that you step outside to your future balcony and see the scenery without the noise and dirt of the building site and with a view to the park, the beach, or the sun going down. Your new home as “real” as it’s going to be, yet still full of possibilities and promise.

What the heck, let’s take this even further.

What if the carefully chosen sofa is already waiting for the customer when they first move in?

The Results

It starts with the surface materials, finishes, tiles, floors, or with ready-made themes that are not too confusing and complicated.

It ends in selling the furniture and different services, and with the help of BIM-based modeling and digital twins, the providers and manufacturers can upload all their products on to the system, offering an online marketplace experience, including services like interior design and professional decorator to go with it.

The possibilities are limitless, for both the customer and the building company. Not only is upselling a great way to allure new customers and shine in customer success, but it is also an excellent way to improve margins and profitability on today’s highly competitive market.

When we provide the customer with exact 3D renderings, and with the exact specifics, even with the real window view, we are taking the customer journey to the next generation level. When we offer a facility for suppliers to add furniture packs, appliances, and materials in different price categories to the platform, and for people to see what they will look like in the 3D environment, we end up changing how people view the whole home buying experience.

Also, when we already know in advance what kind of tiles or what kind of household appliances are preferred in the area in question, the stock situation and supply in the next project can be adjusted accordingly. Predicting the future streamlines production even further and increases the profit margin substantially.

Staring at the blueprints at the company office and going through the brochures of different tile manufacturers while the customer service person is tapping their pen, looking out the window and thinking about the trip they took a few months back is not the winning formula here.

A "from the comfort of your own sofa” -approach with comprehensive 3D modeling and a vast selection of materials and personalization choices, however, is.

Better Times A-Coming

Challenging times have always been a great opportunity for those how are willing to adapt to change. In a world deluged by irrelevant information, clarity is power. Clear communication creates happiness and ease. No matter what the industry or the business, companies with a happy customer base tend to thrive.

Upselling, which is now materializing as digital construction finally takes its big steps towards the future, leads to better customer success, better margins, and increased profits. It also enables more sustainable and more environmentally friendly construction by allowing customers to make more environmentally friendly choices for the future.

Coming out of the somber market situation ahead with regards to the tech game will put you in a much better situation than your competition. Or as Charles Darwin put it: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”

Better times are coming - the technology is already here.

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