Great Experiences Make More Money
Did you know that customers are willing to pay more for the same product if they have a great experience? In fact, according to a survey from Price Waterhouse Cooper, buyers will spend 16% more for a superior customer experience. That means that consumers will spend more for the same product if the experience purchasing that product is excellent.
This shouldn’t come as a huge shock, because we see it every day. Lowes and Home Depot have consistently lower prices than Ace hardware, and most products sold at ACE are also at Lowes/HD. If consumers only cared about price, Lowes and HD would be putting ACE out of business. The opposite is true. ACE is seeing record sales, and there doesn’t seem to be an end in sight.
What does ACE do differently? It’s simple – they have a better experience for the customer. Their associates are friendly and helpful. The associates are also knowledgeable and can help customers learn more about home repair. Customers can find what they need, buy what they need, and be out of the store in a reasonable time. ACE can do this, in part, because they charge more, and have higher margins on their products.
A Look at the Numbers
I think I know what a lot of us are thinking. Manufactured Housing is different. Our buyers are looking for a affordable product, and there’s no way they’d pay a 16% price premium for a better experience. I agree. Let’s take a quarter of that 16% price premium, which is a 4% price premium, and apply that to some real numbers.
A medium sized manufactured home retailer will sell about 75 homes per year. Based on this year’s data, we can say that the median price of a manufactured home is around $100,000, all set/delivery/site work included. That puts the gross revenue of a medium store around $7,500,000. If that store bumped price 4% to cover the cost of an excellent customer experience, that would give them $300,000 to work with.
Of course, we’re all in this to make money, so no one wants to spend all the $300K on customer experience, so let’s look at it like a product. We’ll assign a 20% margin to “customer experience” product, which means you’ll add $60,000 to the bottom line, and spend $240,000 on an improved experience.
Let’s look at a few ways you could spend that customer experience budget to help you sell more homes.
5 Tips to Help Improve Customer Experience
To discover the type of experience that buyer demographic is looking for, we have to ask some questions. What types of businesses do they visit? What type of experience do that value? Which businesses excel at selling to that group, and which are struggling?
Below, we’ve listed some ideas and tips to help you improve your customer experience and appeal to a younger buyer group, based on consumer surveys and businesses that have excelled at reaching the younger buyer demographic.
Tip 1 – Comfortable Sales Center
This needs to be priority number 1. According to Housing Wire , 40% of Americans say that purchasing a new home is the most stressful event in their life. Everyone wants to own a home, but most people dread the process. This is where your comfortable sales center comes in. When the environment is comfortable, the purchase becomes less stressful. And less stress means more buyers and more word of mouth.
Clean bathrooms, a paved parking lot, refreshments, a play area for kids, golf carts for large lots, landscaping, paved pathways to model homes, etc. are all examples of ways to make a sales center more comfortable. Look at businesses that have shown tremendous growth in similar industries for more ideas. CarMax is a great example. Carmax was created in the 90s in response to the poor customer experience in used automobile dealerships. They looked at the pain points is used car sales, primarily pushy salespeople, poor quality cars, and buyers remorse, and eliminated them. Today, they have dealerships in 41 states, and sell over 750,000 cars per year.
Go visit a large item retail business like Carmax and see what works. How are you greeted? Where do you wait? What does the process feel like? The answers to these question can help improve the customer experience at your sales center.
Tip 2 – Complete Homes
It’s no secret that housing is becoming less affordable for the average American. This decrease in affordability has caused many young people to look towards manufactured housing as a higher value alternative to traditional site built housing. Unfortunately, many of them have never set foot in a completed manufactured home, so they don’t realize how nice the homes can be. The traditional manufactured home buyer has experience with manufactured housing, either they lived in one, grew up around them, or had family that lived in one. Many of today’s buyers do not have that experience.
For this reason, you need to have multiple homes on your lot that are set, finished, and have decor. This allows the new buyers to visualize how their home will look, and feel better about the final product. If the only home buyers can walk through have unfinished marriage lines, finish samples strewn about the house, no skirting, etc., they will not realize how nice the final product will be, and they will dismiss manufactured housing as a viable alternative to site built housing.
Tip 3 – Simple, Digital Financing
Did you know the largest home lender in the nation has no paper applications, no branches, and is a pure online process? Rocket Mortgage originated nearly $320B in loans in 2020, the most of any lender. And all this was done from a 100% digital experience. Why? Because home buyers prefer a simple, digital financing experience, and Rocket Mortgage delivers that to them.
According a survey from V12, nearly 75% of buyers want to complete the credit application and financing paperwork for large purchases online. Manufactured home customers are no different, especially those in the 24-35 age group – they want to do their financing online.
I realize that much of that is out of the dealer’s control, but you can remind your lenders that customers prefer an online experience, and the lender needs to make that experience as simple and quick as possible. The proof of concept is already there – the largest, most successful lenders are digital lenders, and the manufactured housing industry needs to follow suit.
Tip 4 – Take Customer Feedback Seriously
This may seem like a given, but it can be very easy for any business owner to dismiss customer feedback as the customer’s problem, not the business. I hear things like “They just can’t be happy”, “Millenials are lazy”, “They’re crack heads”, and other dismissals of customer feed back.
They may all be true, but those people complaining are still capable of buying homes, and if you adapt your experience to make even the most miserable buyer happy, all the other buyers will then be happier than ever.
Jeff Bezos said that, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” The only complaints I hear about Amazon is that it’s too easy to spend money there. What if the only complaint about your business was that it’s too easy to buy a new home?