One of the most common complaints I hear from building material manufacturers is, “I can’t sell upgrades to builders.” However, due to an increasing demand from new homebuyers, upgrades are on the rise, meaning that some builders are now very interested in offering them. As this article from the New York Times points out, it’s higher-end homebuyers who are doing most of the upgrading, which means that it’s luxury builders who are currently offering the most upgrades. The reason that buyers of homes above $750,000 are choosing to use the upgrades that builders are offering is because they’re looking to create a house that truly meets their needs.
Since the burst of the housing bubble in 2008, homes in the higher end price range have been making a steady comeback. And while most building material manufacturers focus on the volume builder for their upgrade sales—which is the shortsighted and wrong way to sell upgrades—luxury builders are the best opportunity to start with upgrades.
If you want to sell something premium, start at the top where there is demand and aspiration.
Think of the upgraded features in the automobile industry. They get their start in the lower volume, high-end cars. Awareness and demand for these features eventually trickles down into high-volume cars and eventually became the industry norm for all cars. Building material manufacturers should take this same approach to selling upgrades and take advantage of the opportunity that luxury builders are currently creating.
If you’re looking to capitalize on this opportunity, you should keep in mind the following:
Don’t be afraid to start small.
And don’t be afraid to join forces. Chances are your competitors face the same problems as you. Your goal at first should be to see a builder upgrade with your type of product, even if that means he buys your competition. As the market grows, you’ll get your fair share of the upgrades.
Now is a great time to sell upgrades to builders. Celebrate each sale, no matter how small. As you begin to implement upgrades, you should measure how many builders are offering your upgrades rather than measuring the number of units or sales dollars generated. There will be time to measure these things later.
As you work to grow the market, don’t forget:
Upgrading is hard work that takes patience.
If you want to see your sales people stay focused on the upgrade, you’ll need to let them know that you appreciate their efforts.