Today more than ever home buyers and remodeling customers are fixated on price. Our nation’s consumer mindset is an intangible force behind most sales negotiations, including those involving major purchases of new homes or remodeling projects. The impact on our industry is builders feeling beat up and exhausted trying to overcome this issue and ultimately competing with one another on price.
The problem however, is not just the customers and their attitudes. Selling our products requires a healthy attitude on the seller side of the table too. Like it or not, customers in today’s world mostly come pre-programmed. But here’s the catch; so do we! Once builders begin to recognize the depth of this scripting on the part of both seller and buyer, a strategy to break this cycle and consistently win profitable sales becomes clear.
Builders producing custom homes and remodeling projects are not commodities dealers! To produce profitable results in the custom building industry requires vast expertise, knowledge and intestinal fortitude; unique products with unique value. When drawn into the endless downward spiral of competing on price, we allow ourselves to be perceived as commodities, bought and sold on price; a no-win proposition. Custom builders focused on profitable results understand that competing on price is a death wish. Competing to be unique however (as opposed to being the best), is where competitive advantage is gained and the challenging issue of price becomes secondary!
Strategy expert Michael Porter captures this mindset with these thoughts: competing to be unique requires focus on creating superior value, not on imitating competitors. Because customers receiving value (as they define it) have unique choices, price is only one variable, and usually not the most important one. Companies that learn how to define and deliver value can earn sustainable returns (profit). Competing to be the best feeds on imitation. Competing to be unique thrives on innovation.