During a question and answer session at a recent industry conference, a home builder asked Moody’s Analytics chief economist Mark Zandi for his thoughts about the labor
Builders Debate In-House Marketing Versus Outsourcing
Two successful custom-home builders and an industry consultant discuss the merits of using outside consultants
Custom Builder: Why would a custom builder want to hire an outside consultant to achieve their business and marketing goals?
Wendy Cohen: A lot of custom builders are often very busy managing their companies and don't have the experience or the time to be able to do it in-house. Often, outsourcing turns out to be the most affordable and efficient way to get the highest level of talent to help them create a business or marketing strategy.
CB: Wendy is a former builder, so she understands the business from the inside. I would think that would be a good quality to look for in a consultant.
Deborah Malone: The last thing you want to do is hire a firm that doesn't understand the construction business, because for the first six months you're going to be spending money training them. I always check to see if they've ever worked with builders.
CB: Rob, you started working with Wendy about three months ago. Why did you seek her help?
Robert Egge: I've been in business for 30 years and have always had more work than I could handle. But recently my pipeline just dried up, and part of the reason I think that happened is that we've never done any marketing.
I interviewed three or four different consultants. The thing that really sold me on Wendy was the fact that she knew the building business from my side.
CB: Were you specifically focused on getting the word out about your company and doing a better job with your Web site and so forth?
Egge: I had a very nice Web site, but it was just a portfolio, and I wanted to update it. It didn't make sense for me to hire a marketing person and pay them $40,000 to $80,000 a year in salary and benefits. It's likely there would have been a learning curve.
CB: Deborah, are you responsible for making sure that your marketing strategy is executed, or do you have other people who pitch in and help?
Malone: I do almost all of it, though I'll bring in consultants if I'm slammed. Sometimes consultants I've worked with in the past bring me new marketing ideas at no cost.
Cohen: A consultant needs to be able to show successful examples of a Web site redesign or campaign or special promotion or grand opening. But it's also important to consider what extra business opportunities or connections that consultant can bring to the table.
CB: Let's say you're a very small custom builder and you can't afford a consultant. Are there other resources — Builder 20 Clubs, for example?
Egge: For me, the Builder 20 Clubs are a great experience. I've been a member of a 20 Club for six years.
Malone: The best bang for your buck is the Custom Builder Symposium. Some of the best marketing and customer service people will critique your plans and processes for free. You can go to the International Builders' Show every other year or every third year. It's really geared to production builders, but small builders need to look at the big guys, because they've taken all the waste out of the process.
I also recommend checking out the Luxury Marketing Council, which has chapters all over the United States and offers great opportunities for networking with other vendors of luxury products and services. And if you live in a town with amazing colleges, you've got access to people who have no practical home-building experience but know everything about business and marketing. I hire interns every year.
CB: Can you quantify the number of leads or sales that you get either by working with a consultant or your own efforts?
Malone: If you're a crappy businessperson, I don't care how great your marketing firm is; you'll get clients in, but you won't close them. You have to be congruent to your corporate culture.
Cohen: A builder can come up with a great marketing strategy, but if they're not practicing it in their operations, it's all for naught.
Malone: Absolutely, and they'll blame it on their marketing person or the PR firm. It's not that you've hired a salesperson for your firm; you've hired someone to brand your business. You have to get customers to say, "Oh, I've heard of you," even though they really haven't — they've seen an article in a magazine or your name on a truck or your signs.
At the end of the year, a marketing or PR firm can say, "These are the people that we contacted and because of those contacts, we were able to get you 33 pages in written text, two magazine covers," etc. But your true ROI on marketing is that it's not going to be as hard to close people, because they already know who you are.
CB: What should a builder expect to pay for the services of an outside consultant?
Cohen: It depends on what your goals are and how much time you need that consultant to help you implement them. For instance, we might work on a single project for two or three months and charge a flat fee. If you pay by the hour, the fee might be $175, $200 or $250.
The value of a monthly retainer is that typically the consultant is willing to reduce their hourly fee and be available on call. I have a lot of clients who prefer that method because they don't like the feeling that the meter is running.
CB: Rob and Deborah, what are the main reasons you'd want to use a consulting firm?
Egge: I wear a lot of hats in this business and I'm pretty confident about most of what I do, but I just don't have marketing expertise. Wendy brings that to the table plus great business connections.
Malone: I've heard horror stories about builders paying for ads and getting nothing out of it because the ad agency wasn't knowledgeable about the housing business. A good consultant can negotiate the best prices for print ads. You'll actually save money because you'll alleviate some costly mistakes.