Building Products November/December 1999

All Aboard
More and more builders are going online to strengthen their business and boost profits.

By Gerry Donohue

Until last fall, Todd Wacome had stayed away from the World Wide Web. "I was a little scared of the Web," admits Wacome, president of Wynwood Associates, a custom home building firm in Andover, Mass. "I thought it was really complicated."

Today, Wacome has a highly functional Web site that he designed and maintains himself (www.wynwood.net). Craig Savage, who has written about and consulted on computers in the construction industry for more than a decade, gushes about Wacome's site, calling it "simple, clever, and elegant."

The Web is like that. It is developing so quickly and in so many unforeseen ways that new technologies develop faster than Polaroids, and neophytes become experts overnight. Home building has been slow to embrace the Web, but the transformation in this industry has nevertheless been remarkable.

Led largely by small home builders, the Web has progressed from being a marketing tool to being a comprehensive business system. And every day more builders are going online to market their businesses, communicate with their clients and vendors, research products, and manage projects.

According to John Geoffroy, president of Construction Data Control (CDCI) in Atlanta, about 25 percent of home building companies use the Internet for some aspect of their businesses. Usage is highest among small builders. Geoffroy estimates that about half of all custom builders have an online presence.

Reaching Generation X

Most builders view the Web as a marketing tool. That was the first application, and it has stuck. The Web seems like a marketer's dream. It's available 24 hours a day, reaches prospects across town and across the ocean, and provides comprehensive information that each prospect can manipulate to meet his or her needs.

The Web's marketing advantages specifically suit large builders. With their standard floor plans, catalogs of options, and multiple locations, large builders can communicate a lot of relevant information to prospects quickly and efficiently.

U.S. Home (www.ushome.com) of Houston has put all of its elevations, floor plans, and communities on its Web site. According to Kelly Somoza, U.S. Home's vice president of investor relations, more and more buyers are doing their initial research on the Web before going to a community.

"Maybe they've been driving by one of our communities every day but they haven't had a chance to stop and walk the models," she says. "They see our Web address on our community sign, so they go home at night and download floor plans and elevations."

Somoza says U.S. Home actually sold a home to a buyer who never visited the community until the day he signed the contract. "He was relocating from New Jersey to Houston," she says. "He did all his research on the Web and then used e-mail to communicate with his Realtor and our salesperson."

Other builders report similar results. Colony Homes (www.colonyhomes.com ), which builds in Atlanta and Raleigh, N.C., had more user visits on its Web site in April and May than in all of 1998. And according to Colony's marketing director, Andrea Anker, the company can attribute nine sales to initial Web contacts in those two months.

"Our buyers are generations X and Y, and they don't use the newspaper as their primary information source," says Anker. "They go online first. We created a site that matches the way they search. It's very simple. They can find exactly what they want to know in two to four clicks."

The Web's marketing advantages may not be as substantial for small builders. "Our business is a touch-and-feel business," says Eriech Horvath, president of Horvath Custom Builders in Columbus, Ohio. "Our sales pitch is that we provide a high comfort level for our buyers, and it's hard to communicate that over the Web. People want to talk to you."

Horvath, who created his Web site ( www.horvathcustombuilders.com ) about a year ago, says he gets a couple of e-mail queries each week. "They're exploring, asking questions, but nothing has panned out."

Kim Medlin, a technophile custom builder in Atlanta, doesn't have any expectations that the Web or his Web site (www.atlanta-custom-homes.com ) will bring him new business. Yet, he says, he relies heavily on the Web for his marketing.

"A lot of my customers are corporate executives and Internet savvy," says Medlin. "Having a Web site builds my credibility." Medlin invites prospects to visit his site or goes online with them in his office. "It's really just an online brochure. I don't have a printed brochure."

Two-Way Communication

Although marketing is the focus of most Web-related activity in housing, a small but growing number of builders are using the Web in other parts of their businesses.

Take a fairly common event in custom home building. The builder has a question about a crown molding detail. He needs an answer from both the architect and the buyer. He sets up a meeting with both of them at the house at the first available time, which is in three days. Until then, progress on the house either slows or stops completely.

How does e-mail change that? "You could use a digital camera to photograph the detail and then e-mail it to both the architect and the client," says Craig Savage. "That way you could have an answer in one hour and everyone could be back to work."

For builders, e-mail has significant attractions. It's fast, can be answered at the user's convenience, provides a written record, and is the preferred way to communicate for many of today's home buyers.

At U.S. Home, all the salespeople have e-mail capability and use it to communicate with their customers. In Atlanta, Kim Medlin sends all of his clients a weekly status report on their projects. He says the e-mail reports become a two-way communication -- an electronic dialogue about questions or concerns.

E-mail also becomes a written record of communications with clients or vendors. For instance, says John Geoffroy, clients typically blame schedule delays on the builder, when often it's the buyer's failure to make selections on time that bogs down the process.

"With the Internet, you eliminate that problem," he says. "You have message after message telling them what you need. It makes the process a lot easier for the builder."

Communications between builders and trades have not reached the same level. Many builders say trade contractors only recently have accepted the fax machine as a viable form of communication. At Colony Homes, however, the trades better get online soon. "Within one year, we plan to link up with all of our trade partners," says Dave Schmitt, president of Colony Homes. "We expect e-mail to be our form of communication. We won't push paper to them anymore."

Continued . . . A Product Research Tool