In the transition to a 21st Century business model, builders have moved at wildly different speeds. Some have embraced digital business processes, while others have adopted them slowly, if at all.
Of course, we're in a different world today than we were just a month ago. The COVID-19 crisis has put a fire under the backside of all industry players. Builders nationwide suddenly have no choice but to get good at using virtual platforms for coordinating employees, trade partners and customers, while at the same time protecting workers that have to be on the job.
Industry publications have done a great job covering this topic in general terms. For instance, Professional Builder magazine just published the results of a coronavirus business impact survey that garnered more than 1500 responses. It's available here: https://www.probuilder.com/week-2-results-update-our-coronavirus-business-impact-survey
For this article we decided to take a different approach. To get some ideas on how to respond to the crisis, we conducted in-depth interviews of three EEBA board members—all industry leaders who are committed to best practices in every part of their business. Each offers a slightly different perspective, but together they provide valuable insight for builders trying to figure out what to do.
The builders we spoke with were Gene Myers of Thrive Home Builders in Denver, Dennis Webb of Fulton Homes in Phoenix, and Tim O'Brien of Tim O'Brien Homes in Milwaukee. The lessons they shared with us are as follows.
We Already Know How to Work Safely
All of our builders have embraced CDC guidelines for maintaining safe workplaces. Employees have been issued gloves and armed with sanitizer (either off-the shelf or homemade). Site workers drive to jobs in their own vehicles rather than piling into company trucks. They stay a minimum of six feet from one another at all times. No more than one trade can be in a house at any one time. No one shares tools.
While these requirements are new, the fact is that professional builders already have the systems in place to enforce them. "We're treating these like additions to the OSHA requirements we already have to follow," says Myers. As is the case with those OSHA requirements, compliance monitoring is up to the Quality Assurance team. For instance, the first time someone forgets to maintain social distancing they get a warning; the second time they get sent home.
Schedules Need to Adapt
Although all three of our builders are continuing to build homes, only allowing one trade in each home at a time has inevitably slowed down production. That means homes are taking longer to build than usual.
Becoming Virtual Isn't That Hard
As is true for companies in every other industry, office staff at homebuilding companies are working from home and relying on virtual tools for communicating with one another as well as with trades, suppliers and subs.
Companies that were already making extensive use of these virtual tools found the adjustment relatively painless. "We have put a lot of technology in place over the past few years," says Myers. "We can manage trades and suppliers with Build Pro and Supply Pro. Our Quality Assurance department uses FTQ 360 software. We have DocuSign technology for legal documents. And we've just begun deploying Microsoft Teams for companywide collaboration."
Even those companies who weren't particularly virtual to begin with have adapted quickly. As soon as O'Brien sensed that some people would have to work from home, he made sure they all had Zoom accounts and scheduled what he calls "a virtual stress test."
"We sent our people home for two days. We wanted to test the feasibility of using Zoom for daily huddles and other meetings, and we wanted to test our server's ability to connect with everyone remotely," he says. The IT people found a couple of technical glitches, fixed them, then brought everyone back in. A week later the state of Wisconsin issued a "Safer at Home" advisory so O'Brien sent most office staff back home. That stress test made the final transition a lot easier.
You'll Need Online Sales and Marketing
Although customers have been shopping for homes online for years, few builders have been willing to risk a completely digital sales process. Now, all of a sudden, they have no choice.
Webb says that Fulton has been better prepared than most and he believes that other builders can learn from their experience. "We've had a virtual sales process in place for a long time," he says. Sales staff had already been doing some Zoom, Skype and FaceTime appointments with customers, so the need to do more of that hasn't caused much stress.
Fulton has also embraced tools that let customers configure their own homes. "We assumed that fewer people would want to physically come to a design center so we put technology in place to help them make choices online," he says. "That has been successful for us."
For instance, the company offers Matterport virtual tours of models. And thanks to Envision software, which Fulton has integrated with the back office, buyers can experiment with different options scenarios and see how each choice affects the bottom-line home price.
As one outcome of the crisis, Webb predicts that builders will be clamoring to put these and other technologies in place. They will need them to survive if there's another lockdown.
Of course, this begs the question of whether a builder really needs model homes. Our builders say yes, but now believe they will need fewer of them. And while they're each keeping models open for tours, those tours are by appointment only and customers are required to follow strict safety protocols. O'Brien actually tried to keep a model open to walk-in traffic but decided to shut it down when a customer tried to hand a phone to a salesperson. "Some people don't care about social distancing," he says.
Thrive responded to the crisis by outfitting models with web-enabled locks and security cameras and allowing salespeople to show them remotely. Myers sees that option becoming permanent. "It gives us the ability to operate after hours and on weekends, which are the most convenient times for most people to view a model," he says.
Our builders also realize that a work slowdown is a time to do more on marketing, not less. For instance, O'Brien had posted Facebook Live videos sporadically in the past but his staff just began posting them every few days. "We share information about topics that range from building science to our company history. We also post video walkthroughs of communities and models," he says.
These videos have garnered so many views that they will become a permanent part of the marketing arsenal going forward. O'Brien even wants to get partner companies involved, which might include things like having the plumber explain high-efficiency water heaters, or having the lender talk about what zero percent interest rates really mean to buyers.
Business as Usual Will Change
These changes didn't come out of nowhere. As we noted, a lot of builders were already experimenting with new technologies, and the crisis just provided motivation to go all-in. Most won't go backwards.
"Many things will change because of what's happening now," says Webb. "I think we'll see fewer face-to-face meetings, which is not necessarily a bad thing. We will also see less travel and more use of technology to enhance the virtual meeting experience. Homebuilding, one of the last industries to embrace technology, will finally embrace it as a survival tool."
Some things won't change, though. For example, O'Brien sees his company continuing to use virtual tools, but on a limited basis. "The experience we're gaining now will make us more apt to use tools like Zoom when working with out-of-town customers, and we may even look at how we might use technology to eliminate a model home," he says. He also likes the idea of using virtual technology to let people work from home if, for instance, they have a sick kid. "That way they won't have to use up a sick day," he says.
But as a rule, for internal company operations he prefers doing things the old-fashioned way. "We have a strong culture based on face-to-face collaboration and I would worry about it if we weren't able to get together." Chances are a lot of builders will feel the same way.
Health Will Take Center Stage
EEBA has made healthy homebuilding a major educational focus in recent years, and all of our builders believe that COVID-19 will supercharge the market for healthy homes. "The situation we're in now could come and go for some time," says Webb, whose company is already an Indoor airPLUS partner. "If people are stuck at home they want that home to be healthy and beautiful."
He believes that homeowners will be especially receptive to high-efficiency air filtration. Fulton is looking at equipping all homes with air filtration equipment such as the Aprilaire 5000, and the other is the Reme Halo system.
He also points out that filtration will be an incremental improvement for his company. "We have a tremendous advantage over just about every builder in our market, because we do not have to add anything major, but rather just tweak a few items here and there."
Or as Myers puts it: "Because we are already an EEBA builder, our homes are the only ones in our market capable of coping with the pandemic. That's an advantage we plan to exploit in the coming months."
You Can't Do This Alone
That brings us to what may be the most important point. Builders who want to climb the technology ladder and become 21st Century businesses will find the hill a lot less steep if they have help. EEBA provides that help through its educational offerings and through the opportunity to network with other builders on the same path.
"EEBA is a community," says O'Brien. "It's a community of builders. Builders that share information and help one another get better at building high performance homes. In these times of uncertainty we, as a community, are helping one another get better and stay better."