4 Ways For New Home Builders To Compete

by Russ Stephens | Jan 28, 2020

Are you turning down work? Or are you signing up every client that wants to build a new home with you?

If you are not turning away clients, then you're not overbooked. Which means you’re probably competing on price at some level. And if you’re competing on price, your margins are not where they need to be, which means you’re not able to scale your building company or draw the salary you deserve.

What if you could create more clients than you could cope with? Would you feel guilty turning people away? Or would you use the situation to your advantage and increase your margins to the industry benchmark?

Experts refer to this as creating an ‘In-balance’ in the marketplace. And it allows new home builders to enjoy higher margins and consistent flow of work, year on year.

There are 4 different ways for residential builders to create demand for their services and yet 99% of new home builders are using the same one. Professional New Home Builders create demand for their services through niching, relationships and convenience, while old school builders use price.

Stop Playing By The Same Rules As Other Builders

Instead, change the game and create an in-balance in your marketplace. When you do this, you'll be able to charge a premium for your services, regardless of market conditions.

One of the biggest myths in our industry is that new home builders are competing against each other on price. Truth is, price is just one of 4 ways to compete in the marketplace, and each of the four strategies is dominated by one big player.

However, price is the strategy that is favoured by the vast majority of small builders...because it’s easy! The other 3 strategies take commitment, hard work and a clear marketing system.

One of the biggest myths in our industry is that new home builders are competing against each other on price. Truth is, price is just one of 4 ways to compete in the marketplace, and each of the four strategies is dominated by one big player.

4 Ways For New Home Builders To CompeteSo don’t think you’re hard done by because in your area everyone is only interested in the price. Instead, be honest with yourself, the reason you are competing on price is because you’ve not put in the hard yards and set your building company up to compete with a different strategy.

Utilise Innovation 

There are 3 other ways you can win in a competitive market without competing on price. The first is through innovation.

Being innovative may sound difficult, but really it’s just a process of elimination. To win at innovation you need to dominate a niche.

Think about it, who was the first person to fly solo across the Atlantic? It made Charles Lindbergh very famous in his day. But who was the second person? Bert Hinkler is not well remembered by history but the 3rd person is; Amelia Earhart, the first WOMAN to fly solo across the Atlantic.  

Becoming the leader in a sub category is an easy way to create in-balance in the demand and supply formula and become overbooked. Rather than being just another new home builder, what jobs do you enjoy doing? Large, complex architectural homes, duplexes or maybe traditional heritage style homes.

Whatever it is you want more of, focus your marketing on that particular niche. Use it in your Unique Selling Proposition (USP), feature those homes in your plan range, feature case studies from past clients that have built that particular style home with your company. Being innovative is all about getting out of a game you cannot win, a game that is filled with competitors of all sizes, and operating in a smaller market that you can dominate.

For a small building company with a turnover of $0 to $10m, this is your biggest advantage over the major players, so use it!

"Strategy without tactics is the slowest route to victory.
Tactics without strategy is the noise before defeat"
- Sun Tzu

Own The Relationship

How’s your relationship with your electrician or plumber? Are you constantly trying to find an alternative electrician or plumber that can do the work cheaper, or are you happy with the service they provide? If it is the latter, then your electrician or plumber ‘owns’ the relationship. They are no longer competing solely on price, because they have built a relationship with you.

You can do the same with your clients by starting the relationship well before they need a builder... at the design stage.

New Home Builders that manage the design process enjoy far higher margins than builders that quote ‘own plans’, because they own the relationship. Therefore, they no longer need to be the cheapest builder in order to win the contract, and in most cases, they are the only builder quoting on the project.

Other ways to own the relationship with a potential client is through communication. Regular communication builds trust and rapport, so the more you communicate, the better your chances of taking a potential client through to contract.

To do this successfully you need to be able to communicate with your prospects via their preferred channel, whether that is email, text, phone, in person meeting, messenger, or LinkedIn chat.

Another tool that will strengthen your relationship is an online client portal such as BuilderTrend or Coconstruct. These project management tools allow you to manage your communication with potential clients long before they are in a position to sign a contract.

Remove Friction & Create Convenience

The third way to create more clients than you can cope with, without resorting to price is through convenience. When you remove friction from the sales process you make buying easier for your clients, which increases sales; and leads to your building company becoming overbooked.

One way to do this is by reviewing and improving your existing processes. Look to implement automation wherever possible in order to eliminate bottlenecks and increase efficiency.

Social proof is another way to make the buying process easier for your prospects. A natural human condition is to look for shortcuts that allow our brains to do less work and save calories, it’s part of our survival instinct.

This is why reviews, case studies and testimonials are so important. They allow us to reduce the amount of time spent researching different companies because we can simply go by the recommendation of a trusted friend or family member. Also, it’s why referrals are so much more likely to proceed to a contract at a higher margin than an opportunity created from paid advertising.

4 Ways For Home Builders To CompeteAnother way to remove friction from the sales process is by operating a display home. Display homes provide an ideal opportunity for busy consumers to walk in and engage in a high level conversation at a time that suits them.

When you master convenience, you tip the scales on the demand and supply balance in your favour.  

So what if you could create more clients than you could cope with? Would you feel guilty turning people away? Or would you use the situation to your advantage and increase your margins to the industry benchmark?

Would it help you to enjoy higher margins and a consistent flow of work year on year?

If you are not turning away clients, then you’re not overbooked. Which means you’re probably competing on price at some level.

We feel your frustration! And that's why we are offering free marketing strategy sessions to new home builders.

When you have the right strategy, you can change the rules, and create an ‘in-balance’ in the demand and supply equation. And when you do that, you'll be able to charge a premium for your services, regardless of market conditions, and enjoy a consistent flow of work year on year.

Click on the link below to learn more.

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