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How a home builder redefined their customer experience and dominated their niche


A home builder in a growing, large tri-state area was number six of a group of twelve builders. Annual gross revenue was close to $49M on about 300 closings. They were growing at the market rate of 7%, but in sixth place, they were not taking any market share away from their competitors.

Their challenges:

The feedback they were getting from the people going through the model homes suggested their price was a little higher than the comparable competition. No matter what they did to cut costs and reduce the sales price of a home, they could not make a greater dent in the market.

They were playing a “catch up” game of doing what the outperforming competition was doing. By the time they caught up, the competition was already on to a new feature, floor plan or incentive.

Basically, they were doing “more of the same” and expecting a different outcome. The business model which got them to the number six position was still be used - keeping them in the number 6 position. The business model was based on updating existing floor plans (kept design and procurement costs down) reducing the number of home buyer options by making them standard (easy on the buyer) and provide a modern look to the homes by spending more on the staging (improve buyers first impression).

The solutions:

Developed and implemented a new, proactive business model that anticipated the needs and wants of home buyers by market. They added a home design team responsible for new designs, sourcing, and supply (build a new design where could take advantage of new materials and supplies at a competitive price). To become the authority, they hired a full-time customer advocate executive who developed and managed a loyalty dashboard, using the information from the loyalty process to develop a category, position the builder as the authority in that category, and invite outside sales and marketing firms to interact in a setting that offered them participation in the category community.

Within a year they were offering new floor plans, new community designs, and features, creating beautiful models with strong “curb appeal” and staged for the buying segment. The price was slightly higher than the competition but was offset with rebates (from supplies, i.e., appliances, security systems, heat and air systems, home automation, etc.). Offered, on-the-spot financing through bank alliances - in effect making key lenders part of their category community. (This benefited customers by providing lower rates and quicker ownership for buyers which, in turn, translated into lower inventory costs). Traffic through the models more than tripled the first month.

The builder went from the number six position to number two with 18 months. Soon thereafter the category moved to number one and stayed there until being be purchased two years later (purchased at an industry-high multiple).

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