One of the rules of business communications I’ve subscribed to 100% in the last few years is the need for repetition. My mind tends to fly from topic to topic and I often get bored with a message long before it’s starting to sink in with the audience. So I’m not going to make that mistake with what I believe to be one of the true keys to builder success with tech—Merchandising!
Merchandising’s focus is the variety or assortment of products offered and the packaging, presentation and promotion of those products in a way that stimulates interest and entices customers to make a purchase. We’re specifically NOT talking about visual merchandising–the practice of developing floor plans and three-dimensional displays to maximize sales—which is a great tech marketing subcategory. For purposes of this discussion, think of merchandising as strategy and planning designed to optimize your tech play.
This is the TecHome Collaboration Continuum we devised a couple of years ago to help companies organize their discussions about the process improvements required with tech. Merchandising is at the very beginning of the process and hand-in-glove with marketing and sales planning.
State of the Market
The truth is most builders don’t have a tech merchandising plan. A 2019 Survey we conducted found just 23% of small to medium sized builders have a documented plan, along with 31% of high-volume builders, but 59% of builders in both segments are working on plans.
Why Merchandising is Important?
Merchandising is foundational. When you establish your strategic intent with technology, methodically and comprehensively think through assortments and applications, and implement that plan through marketing, purchasing, design and operations–you are maximizing benefits. Your marketers are ready to message your standard tech differentiators and set up tech options sales. Your sellers get better packaged offers, earlier and can think through discovery questions that will drive tech options sales. The design and operations teams can think through logistics and jobsite labor requirements to make tech more seamless in the production process. Without a merchandising plan, you are likely throwing together your tech offers on the fly to answer consumer demand you hadn’t planned for. It means more confusion and disruption, less revenue and profit and less satisfied homebuyers. It probably also lost sales.
Developing Your Plan
In a webcast I hosted last week with my good friends and industry experts, Joe Lautner and Nortek/Elan Director of Builder Services, Bret Jacob, we identified five key concepts for developing a home tech merchandising plan:
- Establish a multidisciplinary team to determine strategic intent, assortments and merchandising concept (i.e., organization structure/packaging)
- Bring key vendors into the ideation process early
- Use merchandising perspectives to ideate and organize
- Keep revisiting your strategic intent as you ideate and plan
- Put it in writing and make solid hand-offs to purchasing, operations and marketing/sales
We recommend you form two, overlapping teams to do the work:
- Team 1 is your internal tech strategy team. It should be multi-disciplinary, including representatives of executive/general management, marketing/sales/customer care, purchasing, design/options and construction/operations. The team lead should be an individual skilled at leading a consensus process that’s tightly aligned with strategic business goals. This team will establish strategic intent on technology and collaborate with external partners to build a more granular tech merchandising plan. They will also drive and assist other related tech implementation plans including marketing, design/production and customer care/support.
- Team 2 is comprised of Team 1 plus your most strategic vendors/trade partners, typically platform providers that cut across multiple product and service categories and offer process support across multiple facets of the TecHome Process Continuum. If possible, include a member of the vendors’ corporate marketing/strategy/ design team as well as the vendors’ builder account rep.
Team 1 starts by tackling strategic intent and doing preliminary assortment and packaging ideation. Strategic Intent is a fancy sounding term for what you want to do. We break it down to answering the big question “Why are we offering technology?” with smaller questions like these:
- Customer Appeal?
- Which demographics?
- Household structure
- Which psychographics?
- Competitive Factors?
- Advantages vs. existing homes
- Advantages vs. other new homes
- Business Factors?
- Increase per unit revenue
- Increase per unit profit
- Selling more homes
- Selling homes more quickly
- Extend customer relationship post-occupancy
- For value add
- For revenue generation
- Which demographics?
Team 2 Gets Granular on Assortments and Package, leveraging the product and applications knowledge of key vendor staff.
In both the strategy and tactics, we urge utilization of the four TecHome Builder merchandising perspectives:
- The TecHome Product Taxonomy
- 7 Central Benefits
- Lifestyle Personas
Detailed guidance and the complete merchandising perspectives toolsets are available in our newly released TecHome Builder Guide to Developing a Home Tech Merchandising & Marketing Plan.
You haven’t heard the last from me on Merchandising. Next time I want to drill down on the choice of standard tech offers vs. options as a key to merchandising success.
President, AE Ventures