5 Expensive Signs That it’s Time to Revisit Your Design Studio Policies

When we ask builders what’s not working in their business and design studio, most can quickly think of several issues that they’d like to fix.

But, more often than not, builders don’t immediately see the connection between their pressing concerns and the operations happening in the background (that is, the policies, procedures, processes, documentation and communication that happens throughout the buyer journey)… and how even small flaws in policy and execution can sabotage their success.

Here are 5 expensive signs that you’ve got some policy challenges that need to be addressed.

How many are happening your business right now?

Your deposit policy is builder-centric rather than customer-centric

Whose needs is your design studio deposit policy really protecting? Yours? Or your customers? Even though your deposit policy should meet both your needs and those of your customers… we often find that the reality is a little more one-sided.

Some builders that we work with have set too high or “escalating” deposit amounts (meaning that the higher the investment, the higher the deposit will be).

We understand why builders are motivated to ask for a higher deposit amount: to mitigate risk and increase the chances of recouping their costs should the buyer cancel.

Ultimately, this is shortsighted! The money that you think you’re saving? You’re likely losing it (and more) by creating an artificial barrier to higher option sales because your customers can’t meet your deposit requirements.

Let’s do some quick math on this:

First, how many buyers per year REALLY do cancel and REALLY do leave you with actual non-recouped options?

Then do the math: I bet that the additional options that the other 99% of your buyers didn’t order (due to too-high deposit thresholds) would have MORE than made up for the potential actual builder cost on the true financial loss in the cancelled house.

Bottom line: is your end goal “zero net loss on all homes”? If so, keep the too-high deposit. But if your end goal is “maximum revenue and maximum profit” —  then be more strategic and don’t have knee-jerk reaction policies.

Not only do excessive deposit thresholds cost you money, they also cost you in buyer satisfaction and customer experience — especially during the design appointment, where customers can easily become fixated on the deposit amount and whether they’ll be able to meet it. We’ve seen it many times: a builder-centric deposit policy will sabotage revenue rather than protect it.

Non-compliance with deadlines is the norm

We hear many builders complain about customers being unable to comply with their various deadlines (number of appointments, hours per appointment, time frame between contract and final selections, and so on).

If there is a gap between the time you allow for homebuyer personalization and the actual amount of time it takes to finalize selections, you can respond in a number of ways:

1)  adjust your policy to allow sufficient time for this to occur;

2)  improve your process for communicating that policy so buyers have more awareness and can comply, or;

3) improve your processes so that buyers are better able to comply with the existing timeframe.

Even amongst savvy builders, we commonly find inconsistencies in how the deadline is communicated to customers (both verbally and written) throughout the buyer journey. This is an opportunity to revisit when and how your deadlines are communicated — and whether it’s being done consistently and clearly at every stage.

There are two other BIG causes of non-compliance with deadlines. The first is too many special requests (we’ve written an entire article on this) and the second is offering too many non pre-priced options. If you’re offering products that are “not in the system yet” because you don’t yet have pricing on them,  then it’s likely that you’re going to experience deadline creep.

You’re bending over backwards to accommodate special requests

I won’t go into too much detail on this one, because we’ve explored the loss of control that often comes with accommodating too many special requests — and what to do about it —  in a previous article.

Most builders we speak to already know that they’re saying yes to too many special requests that, at best, cause inefficiencies that add up to something significant… and at worst, can cost thousands when they go wrong.

The good news? You don’t have to say yes to everything to keep your customers happy. (Read the article for more). You CAN change your policy and improve your process for accepting and managing special requests— and when done in a customer-centric way, your profitability and buyer satisfaction will be all the better for it.

Cut-off stages are unclear, inconsistent, or don’t exist

Are you flying in the grey-zone without clear cut-offs for many of your items, or not enforcing policies around when options must be selected — and by which team (sales or design or construction)?

Team members are sometimes unsure about when an item must be ordered by — which means they struggle to adhere to a cut-off stage with customers. For example, you might be uncertain about whether that door can (or should) be sold by sales at the time of contract, whether the design team and add it later, or if it can wait until construction.

To avoid costly mistakes, it’s critical that every available personal choice  has a single point of sale with a clear cut-off (either with sales or design, and in most cases, not in construction) AND that the customer is very clear on what that cut-off stage is… not just for items they are asking to order, but also for those they haven’t asked about!

You don’t require design studio “preview visits”

Do you require your customers to attend a design studio preview visit prior to their appointment(s)?

Many builders don’t. Instead, they open the door to the design studio, where the customer will see hundreds or thousands of items for the first time… and then be required to make their decisions within one or two appointments. Many customers simply aren’t prepared to make confident and lasting decisions because they haven’t had enough time and/or information hasn’t been “frontloaded” for them.

One fix we recommend is having a mandatory preview visit — which is very different from an “open house” or informal invitation to come in and browse around. Your preview visit should be celebratory, but also highly structured and educational. This is an opportunity to introduce your customers to the scope of choices available to them, in both the included and optional features, and then teach them how to make best of use of the studio and it’s tools.  A comprehensive preview program also sets your team up as valuable experts who provide the product education necessary for buyers to make their best decisions.

Structured preview visits aren’t just another chance to wow your customers. You’ll also ensure that your customers leave excited and in a position to succeed in their design appointment — rather than the anxiety and confusion that often occurs (along with the lost revenue that comes with failing to coach and educate your customers towards success).

So there you have it — 5 signs that it’s time to review your design studio policies. We encourage you to print out or forward this article for your next team meeting —  it’s sure to spark some interesting discussions that will help you move towards true operational excellence, more profitable policies, and the world-class customer experience you seek to deliver!

Go deeper with the Design Studio Best Practices WORKSHOP:

If you aren’t sure how to take back control and increase customer satisfaction at the same time, let us show you how. We’ve done it successfully with hundreds of builders and we’d love to support you in streamlining your processes and delighting homebuyers with win-win policies that keep you in control.

 

Learn more here about the September 5 – 6, 2018 WORKSHOP.