Original article appeared in Big Builder Magazine

Special Delivery: options & upgrades

©2003 Judith Stock

Design centers that cater to new home buyers for options and upgrades selection can run the spectrum from floor space in corporate headquarters to freestanding facilities and everything in between. The standards are this: there are no standards.

Add to this the fact that method, operation, and delivery has eluded a clear definition of success. However, one element stands out, the design center is a substantial profit center.

Blueprint for Better Design Centers:

"So far this year, 30 percent of our profit comes from our design centers," says John Rymer, vice president sales and marketing, Morrison Homes, Atlanta.

With four design centers in the metropolitan areas of Tampa, Orlando, Sacramento and Atlanta, plans are underway for Morrison Homes to open four more by year's end. "We've found that if buyers felt they could have better options and upgrades selection they would be willing to drive 45 minutes," says Rymer. "The easier we make it, the more options and upgrades our home buyers will purchase."

Linda Sargent, director of sales, marketing and design center for Centex Homes, Raleigh, NC, says their 4,000-square-feet design center occupies floor space within the corporate offices. For customer convenience, options and upgrades can also be viewed in their furnished models.

"Buyers demand more personalization and come here with a wish list," says Sargent. "We closed 665 homes last year."

With a separate design center in a Newport Beach complex for properties with a base price of over one million, Michael Brown, vice president mortgage and design center operations, John Laing Homes, says they also operate four design centers.

Brown says their new Irvine design center is a partnership with Leonard's Carpet Service. "This is Leonard's core business and they operate nine other design centers in Southern California."

Going Beyond Client Expectations:

Rymer says options and upgrades selection should be an exciting time. "We make each sample in the design center look as good as possible. It's an event, not just a process."

"We have open house where buyers preview options without feeling pressured," says Rymer. "New home buyers can browse and chat with designers. The second meeting is a one on one appointment where they select options."

The most successful strategy in this market Rymer says has been the ability to listen, to take that information and reposition the available choices in the center.

With 170 design centers located within their housing communities, Kira McCarron, vice president of marketing, Toll Brothers, Huntington Valley, PA, says it's important to find out the client's desires. "We want to know about their lives, hobbies, children and how they entertain. If they have a home office, what do they need. Then we can recommend an options package best suited to their lifestyle."

Working Strategies:

"The most profitable options and upgrades tend to be room additions," says James Boyd, senior vice president of CA, Toll Brothers. "When we add a 16 x 20 foot conservatory to the house we make a good margin by making the foundation a little bigger."

John Bawduniak, vice president of sales, MHI, Houston says, "We do any upgrade the customer is willing to pay for. This is a niche we can fill."

MHI design center customers visit the design center twice, first for orientation, second for selection. "The center gets our home buyers for four hours. Then customers are handed back to our new home sales counselors," says Bawduniak. "We survey each home buyer after their visit and get few complaints." As each center is contracted out, the survey is a good checkpoint on quality of service.

Knowledge is a powerful sales tool. Learning what works and what doesn't, Ryland Group contracts with J.D. Power and Associates to survey new home buyers after their design center visit to gain useful information about customer experience.

"We spend time and money to help our design center be a combination of warm personal space and highly functioning retail space so people can hear, see, and touch upgrades and options to make informed decisions," says Eric Elder, senior vice president of marketing, Ryland Group, Calabasas, CA.

The staff is center stage:

About successful sales strategies, the John Laing Homes design staff asks customers three questions: "What do they want? What do they need? What do they have to have?

"We sell 400 to 600 homes annually and every new home buyer goes through our design center," says Brown.

The design center customer is best served says Brown by guidance counselors who understand the buyers budget and needs. "Interior designers should sell options. If I were buying a home, I would want current information from a design professional."

To follow options and upgrade sales from origination to completion, Brown will introduce wireless hand-held devices for staff within two to three months.

Rymer says their larger design centers are staffed with an administration person who assists the design consultants. In the smaller ones, design staff will typically handle both jobs. "All the options and upgrades are loaded into our computers and used when meeting with customers. Once options are selected, the sales, finance, and construction team can all view the options electronically."

"We work hard not to miss anything. Our field managers all have Palm Pilots," says Sargent. "This process makes sure the features are put into the home correctly the first time, cutting down on the margin of error."

Balanced on the future:

McCarron says her company has worked for 35 years to make the upgrades and options process run smoothly. "It will become more and more of our business in the future. Last year we closed 4,400 homes. The luxury market is demanding. We've spent a lot of time to systematize the process and make it easier on our clients and us, which has led to increased profitability."

"New home buyers are beginning to realize they want to wire their homes for the future," says Elder. "Options and upgrades follow consumer trends. It is all based on demand and that demand is increasing."

With no end in sight, it seems a sure bet that options and upgrades will continue to be a larger portion of the economic pie in the building industry.