A Builder's Summer Reading List

Summer is upon us. Now would be a good time to select a few books for your summer reading.

Every so often, friends, knowing I am a marketing junkie, ask me about my favorite marketing books. More often, I attempt, usually unsuccessfully, to explain a marketing concept sourced from a great marketing mind. Many of these concepts have real world application for homebuilders. This month I share with you my favorite marketing books and the reasons why they made it to my list.

All these books share a number of features. First, they get to the point and state marketing principles in a straight-forward way. Second, they are relatively short. I can't stand verbose writing and am too ADD to put up with a slowly developing theme. Finally, I believe they are valid and relevant to builders. Here are my top 10 marketing books:

1. Wisdom of a Genie by Jack Trout. Jack Trout is one of the great marketing thinkers of all time. He got us all to expand our thinking about the 4 P's to include "Positioning" as a 5th P. What I like about this book is that Trout boils down his decades of marketing knowledge in a fun, quick read written as a parable. If you are an operator and don't want to get snowed by your marketing chief, this is the book for you.
2. The 22 Immutable Laws of Marketing by Jack Trout. Trout brings simple marketing rules that help you clarify your thoughts and think through many a marketing conundrum. He explains why it's better to be first than better and many other great marketing truths.
3. The Regis Touch by Regis McKenna. Regis McKenna is probably one of the most successful technology marketers in America. His McKenna Group has been instrumental in some of the great technology marketing stories. Credited with coining the term relationship marketing, he explains the concept in an easy to implement manner.
4. Ogilvy on Advertising by David Ogilvy. Ogilvy is considered by many to be an advertising genius. He is the man who also brought us so many classic quotes such as "50% of all advertising is wasted. The only problem is I don't know which half." There is lots of great information in a super package.
5. The Innovator's Dilemma by Clayton M. Christensen. This is a must read for anyone curious about why industry leaders are rarely at the forefront of innovation.
6. Purple Cow by Seth Godin. Many of Godin's books are among my favorites. He was made famous with his "Permission Marketing." He argues that safe is risky. Because of the clutter out there, you have to be worth remarking about. That's where Purple Cow comes in.
7. The Tipping Point: How Little Things Can Make a Big Difference by Malcolm Gladwell. Gladwell does a good job of explaining how ideas spread through populations. It gives us clues about how green building and other new concepts spread through consumers.
8. Unleashing the Idea Virus by Seth Godin. In many ways Godin builds on the ideas of Gladwell, but gives us very practical methods for making word of mouth happen using interactive tools. As a special bonus, this one is free. Download this book free.
9. All Marketers Are Liars by Seth Godin. Godin brings all of his writing together to explain how our stories drive marketing success.
10. Why We Buy: The Science of Shopping by Paco Underhill. Underhill, through scientific observation, explains why your front-and-center merchandising is utterly lost on many shoppers. A bit dense, but if merchandising is part of your job, you will want to read this one.

I hope you enjoy reading some of these that you might have missed. What did I miss? Drop me a line and let me know who you think I left off at kuhnen@earthlink.net or 817-658-7698.

Homebuilder Online Lead Conversion Rates

Several builders have asked me "What should my online lead conversion rate be?" and it is a perennial favorite when I speak about online sales counselor (OSC) programs. This month I share with you a few guideposts you can use when setting up your initial goals and expectations.

There is not a specific lead conversion rate target for a best practice OSC program. Every builder operates with a different set of variables. Some of the factors that affect your conversion rate include:

1. The strength of your market - hot markets get better, more complete leads
2. Your calls-to-action - a good offer gets consumers clicking
3. The usability of your website - if they can't find the button, don't expect them to use it
4. The quality of leads - leads from your own website are always your best leads
5. The effectiveness of your lead handling process and your on-site sales force.

Does this mean, there is no answer? Let me share with you a starting point.

Breaking it Down

To get one sale you need physical traffic units. My work with builders with active OSC programs suggests a closing percentage between 25% and 35% for appointments set by your OSC. Start with a goal of 25% (1:4) and go from there. You need just 4 appointments to generate a sale.

To get an appointment, you need dialogs with leads. Start with a goal of 50% dialogs turning into appointments or (1:2). So, you need 8 lead dialogs at this point. If you confirm your appointments the night before, you can expect at least 80% of the appointments to be kept. If your ratios are heading in the wrong direction, make the handoff to the onsite warmer with a 3-way call.

Unfortunately, not everyone will want to talk with your OSC no matter how well they write emails and how strong their phone skills. A good starting point is setting a goal of 15% to 20% of leads turning into dialogs, or about (1:6). So, it takes about 50 leads to generate one sale. That is a 2% closing ratio. Is 2% bad? It depends. Good OSC's often tout ratios twice as good or as you are about to learn, significantly better.

It's important to start measuring these variables and try to improve where it makes sense. The real question is not how do I compare to some national norm, but are my ratios heading in the right direction. It's about focusing on improving your ratios.

Let's keep going up the marketing channel. How many website visitors will it take to generate 50 leads? I like to break this down into how many will respond to your call-to-action (i.e., click on a lead button) and those willing to complete the online form. A good form completion factor is about 1/3. Yes, 2/3 of users bail out after clicking on the link, but a good call-to-action can get people clicking. If 1 in 20 click to the form and 1/3 complete the form, count on it taking 60 unique visitors to generate one lead. In a good market, this can be as strong a 1 in 10, but 1 in 30 or 40 is still strong.

So, the bottom line is that you may need 3,000 unique visitors (60 visitors x 50 leads) to your website to generate one sale to a lead generated from your website. Where are you going to get your next 3,000 website visitors? If you are driving them there through search engine marketing and spending $0.50/click to get them there, it will cost $1,500. Improve your Internet lead follow-up process, and you can do better.

How Good Can You Do?

Mike Lyon, from Simmons Homes in Tulsa, Oklahoma is one of the best online sales counselors I have had the pleasure of speaking with. Simmons is the leading builder in Tulsa, Oklahoma and has reasonably good lead volume coming from their website, www.newhomesource.com, and www.move.com.

How important is the Internet to Simmons? According the Lyon, "We see an average of around 20-25% of our total sales volume as actual Internet customers." Let me put that figure in perspective, in hot markets with long interest lists, high percentages are common. It's not so common in the more pedestrian markets most of us live in today. By my calculations, Simmons is running at about a 6% conversion.

Where Lyon really excels is converting leads into kept appointments. His key is quick, consistent and personalized follow-up to each and every lead. "No lead is slipping through the cracks. When you couple that with a fast and personal response to an email request or phone call, customers will respond in the form of an appointment. That is the true measure - lead volume means nothing if you can't convert them into an appointment and ultimately a contract." says Lyon.

Lyon's appointment rates from leads are at my top range of experience. Does he have a secret of converting leads into appointments? He does, "Asking for the appointment. Sounds simple, but the bottom line is most OSC's are not asking enough. I ask for the appointment in almost all of my email or phone conversations." Maybe you should too.

If you have responded well and qualified the lead, then there is no reason you should not be asking for the appointment. Do this and see how strong your Internet lead conversion rates can be."

California Headache Continues

Last night I sent out a notice to a number of friends and colleagues soliciting their support for the Chicago Police Memorial Fund as a run in that city’s marathon in October.  One well connected supporter in California stepped up right away.  I took the opportunity to thank him and ask how the market was really doing.  He’s an optimistic guy by nature, so I will keep his name confidential.  This was his quote:

“Believe the press in certain parts of California - if you're within 25 miles of the coast you're generally o.k. (exception: downtown San Diego).  Anything inland is in trouble.  And the Central Valley is a total bloodbath. I see a huge number of small- to mid-size builders going under in the Valley.  They're fighting to stay afloat as it is, and that's without the flood of foreclosures that is coming around the bend with great force.”

My assumption was that we were only hearing the bad news.  Perhaps we still have a ways to go.  So, more than ever builders need to find ways to follow-up on every lead and traffic unit.  Consider also how you can drive other revenue.  Fulton Homes in Phoenix claims a 61% increase in options revenue after making some big changes in their options technology and processes.  See the article in TecHome Builder Online at: http://www.techomebuilder.com/news/19331.html.

Permission Marketing Made Remarkable

I ran across a service recently. The concept is pretty cool, but not the easiest to explain. As simply as I can put it, a reward program called HomePerks. Builders or Realtors or your gardener could sign up and start giving their customers or prospects HomePerks. These are in the for of points (HomePerks) and you can spend them on gifts or give them to friends. Okay, I think I yawned too. The company putting it on is a business partner and I would probably sit through a demo, but a lot of people would not. I not only went there on my own, signed up, surveyed the website, explored how the program works, and even found a few things to potentially buy. Let me share with you how they got me to do it. It was one of the best permission marketing examples I have seen.

The sales guy, let’s call home Brian, sends me an online certificate for 500 HomePerks with the promise that I can register in 60 seconds and redeem them for over 1,500 products. Well what do I do, on my own I go to the site (a very fine site by the way), register (generating a “Lead” for the person giving the Perks), and shop a bit. Slick, but no so slick as to turn you off. All I can say is, what a cool way to get a registration or generate a lead. Still a tough concept to sell, but remarkable permission marketing might help.