From the Management Message Archive

Enhanced Option Descriptions:
The key to increased option sales, reducing costly mistakes, and eliminating unhappy buyers.

By Jane Meagher
President, Success Strategies
Written on: September 6, 2006

Message:

As I travel the country working with builders to streamline their design studio operations and increase option sales, I often overhear this conversation:

The salesperson says "... no, that's not how we sell that option"

...and the design consultant replies "of course it is. We've done it that way since the problem with the Smith House at Blueberry Estates."

And the job Super says "I didn't know that. We solved the problem differently at Sunshine Meadows" (and starts to describe his or her solution).

The Construction VP overhears this, and says "We can't do that. It will cause (fill in the blank here from the following choices: 1: a warranty problem, 2: complication for the framer/HVAC system, 3: a cycle-time delay of x days or 4: choose all of the above)".

The VP of Purchasing now chimes in with "Actually, if that's true, we didn't factor the cost of the xxxx into the price."

The Estimator agrees and delivers the somber news "Based on what you're telling me now, we are losing $125 every single time we sell that option."

If you've heard this story before, read on.


Take Your Cue From Other Industries that Do It Better:
To learn how to create option descriptions which will completely and fully explain your options, visit just about any automobile website - I particularly love Lexus. When you're considering the "Navigation and 'Mark Levinson' Audio System" package for your Lexus you're told exactly what you are getting. Not through any ingenious technique, but simply because they have taken the time and effort to actually tell you that what you are purchasing is...

"a seven-speaker 240-watt Premium Audio System with six-disc CD auto-changer in the center console" and, (by the way), "vehicles equipped with a navigation system do not include a cassette player".

In our world, we have a line item that says:

"Sunroom... $12,000."

If the buyer asks, we can locate a blueprint somewhere and tell them with about 70% certainty that yes, the sunroom in their floorplan includes a cathedral ceiling. When asked what happens to the windows in the adjacent family room if the buyer also gets the expanded family room option, we say: "I'll have to call someone to find out, because actually, that is a good question." If the buyer asks whether or not the alarm system includes sensors for the additional exterior door in the sunroom, or heaven forbid, how many steps there are down to grade from this additional door, we will spend the next two weeks talking to everyone in purchasing and construction trying to find out the answers.

On the other hand, as a consumer inquiring about my mere $3,000 investment in the Lexus audio system, I can find out more than I ever wanted to know about the value behind the Mark Levinson name.

In contrast, if I want to know whether or not the opening to my $12,000 sunroom receives casing or how many square feet the air conditioning system can cool (so I can determine if this room will be comfortable), I'll have to wait until I move in to find out for myself. And if I inquire as to, by the way, who is the manufacturer of this air conditioning system and can anyone tell me anything about the credibility of this vendor, the sales and design teams will start talking about me as if I was the most unreasonable buyer in the world, although they might not use as nice a word as "unreasonable" when discussing me.


We Don't Have the Time To Do This
(also known as "But we do have the time to rip it out, re-do it, and lose money")

I often hear builders say "we simply don't have the time or manpower to create accurate detailed descriptions for all our options. Just getting construction, purchasing, and design to agree on the details would be a miracle, let alone documenting it somehow".

While most of the time, we don't get "burned" when options are incorrectly or incompletely explained, the times we do are usually third degree, involving ripping out products installed differently than allegedly explained or not explained... OR... replacing products which don't appear to be exactly what buyers remember being told. And the problems you might experience at 100 homes per year will become headaches at 200 homes per year, migraines at 300 homes per year, and nightmares at 400 homes per year.


Start with a Value-Building Name
So, how do we create an Enhanced Option Description? Let's start with properly naming the product. Homebuilding appears to be behind most other industries. If you were to buy a sweater from any major retailer, the colors offered might be espresso, raspberry, charcoal, or goldenrod. No reputable retailer sells sweaters in brown, red, black, or yellow.

Kohler sells a "Six Jet Body Spa Personal Hydro-massage System", but somehow that ends up as "Add 6 Jets to Shower" when we offer it on an options list. Kohler sells a "Master Shower Tower" and Moen sells a "Vertical Spa" to solve your performance showering needs. When we, as builders, sell it, we re-label it "Multiple Shower Jets".

We still sell "add bullnose to steps" instead of a Designer Staircase and a "trash can pull out and a tilt out sink tray" instead of a Kitchen Convenience Package.


How To Create An Enhanced Option Description:
Enhanced Option Description should include at least a great name, all dimensions, materials, and other specifications of the product, all components of the option item, interactions (how the product affects or is affected by the rest of the home), relevant disclaimer or warranty information, and it wouldn't hurt to use some value-building words either.


The Wrong Way:
If you're like most builders, there is a line item on your options list (or what we call the Available Personal Choices Catalog) which says "Garage Service Door... $750" (I wish I was lying when I say that I have seen this listed as "Man Door - Garage" on more than a few options lists). The first problem is that this limited information doesn't begin to describe the full value of what the buyer is getting for his/her hard-earned $750, so he/she might decide to purchase this item from Home Depot because it APPEARS to be a better value at Home Depot. The second problem is that if you asked five people in your company to provide you with a full description of this item, you will get five different answers. Trust me, I have done this exercise dozens and dozens of times with builders of all sizes, all over the country.


The Right Way:
A six pane (or nine-light) 2'8" x 6'8" exterior fiberglass door is installed on the side of the garage, located as per attached diagram. Includes one additional included-level exterior light fixture adjacent to door with an interior electrical switch. Also includes one interior light switch to activate garage ceiling light. Both switches are located inside garage near the door. Includes a 3' wide concrete service walk which connects to the rear patio. Includes any interior and/or exterior steps or platforms required due to homesite grading conditions. Includes sensor for alarm system. Exterior of door is painted same color as front door. Includes brass-finish lever door hardware featuring keyed lockset with deadbolt.

I'm willing to bet the Home Depot door doesn't come with all that... NOW tell me which is the better value!

If you're sitting there thinking that you don't need all that documented, because after all, that's what the Design Consultant is there for, then I would like to meet your Design Consultant. I would like to promote him/her to Design Studio Consultant of the Century, because my experience has been if you don't first provide these details to your Design personnel, I promise you, they are not sharing it with your buyers. And the reality is, unless it is written down for sales, design, construction and purchasing to all agree upon, there is a strong chance that not everyone is on the same page, and maybe not even in the same book.


Now It's Up To You
If your market is experiencing a slowdown, take advantage of the downtime and methodically review every single option you offer. What's the worst thing that can happen? You'll standardize your practices, verify your option prices, reduce costly mistakes in the field, make sure your buyers get what they expect, and increase your option sales.


Now go dust off that option catalog - and have a great week! - Jane




Jane Meagher is President of Success Strategies, LLC in Manalapan, New Jersey.


Jane Meagher, MIRM, CSP, is President of Success Strategies and a contributor to SMA Consulting. Success Strategies is the nation's leading design studio strategy company, analyzing all aspects of design studio operations to increase profits, improve customer satisfaction, and reduce costly mistakes. Jane's company creates cutting-edge design studios of all sizes, provides comprehensive procedures manuals, and offers the industry's most complete training program for Sales and Design Studio staff.

Success Strategies has clients in over 30 states and Canada, including leading builders in many of the nation's top housing markets. Jane works with builders ranging in size from national Top 10 Builders to regional market leaders, to smaller, local builders, as well as other industry-related organizations, such as Moen, Inc., Shaw Industries, and Kohler, Inc.

For additional information on this management tip or any other homebuilder management concerns call us at 407/447-5209 (Florida office) or 909/335-9100 (California Office).