Monday, April 21, 2014

Modular Housing Industry's #1 Failure

Did you hear the one about the site builder that wanted to go modular? He ordered a house from a factory, lost his shirt and never built another modular home.

That is what happens to a vast majority of site builders that want to try modular. Here is a very typical scenario of what happens when he/she decides to go the modular route.

For arguments sake, let’s assume that a factory rep contacted the builder and set up an appointment to talk about buying modular homes. When the rep sits down and talks about the advantages of modular, he/she will always say that modular homes cost less and that the builder can make more money. They may also mention that the home has about 20% more material and goes together in a day. I’ve heard many sales reps say that the home is only on the production line for about a week and that everyone working on it are highly skilled professionals.

Then the rep invites the builder for a factory tour and shortly afterwards ships a designer package to the builder which may include samples of flooring, siding and trim along with all the brochures they can find laying around the factory’s sample room and a handful of house plan books. Usually at this point the rep declares it a win for the home team and sits back and waits for the builder to send over some quotes and order their first home.

After a few weeks, the factory’s Sales Manager calls the rep into his office and asks why the new builder hasn’t sent anything over to quote or worse, hasn’t ordered anything. The rep calls the builder and finds out that they currently have only one prospect and not ready to send anything over to have quoted.

The rep reports back that the builder is close to ordering their first home and the Sales Manager gets off the rep’s back; at least for a couple more weeks. The rep decides to never try prospecting site builders again and sticks with working to switch established modular builders over to their factory.

In some cases the site builder buys a home from the factory and because of little or no help in understanding the basics of building a modular home ends up losing money and swears to never build another modular home as long as they live.

What should have happened is for the rep to have been trained in what a “new to modular” builder should expect in what they will be receiving from the factory, how to work with subs, how to market and sell modular homes and how the service departments works to help them in case of a problem.

In too many cases, the rep is not prepared to do any more that be a Vanna White and flip through possible solutions after the builder makes a call and asks for help. In a lot of cases, the builder will begin to feel a total disconnect with the factory.

And we wonder why site builders go back to making sawdust instead of buying modular homes.

I’ve been asked numerous times what can be done about this problem. Here are my suggestions:

  • Develop industry training courses for Sales Managers and reps to better prepare them to understand the home builder.
  • Every “new to modular” builder must attend an “industry sponsored” training program where they will learn what is involved in building their first home.
  • Industry training for the factory team to promote and develop marketing and business plans for the builder.

We all ask who could do this for the factory and builder and nobody seems to have an answer and more often than not, the factory folks don’t want to spend any money to help themselves because of they are afraid that a well trained staff and educated builders will jump from factory to factory.

I am issuing a challenge to every factory owner, GM, Sales Manager, CEO, COO, CFO and sales rep to come up with suggestions that will bring in a new wave of successful “new to modular” builder. Send them to me at and I will personally start putting together programs and people to get this started.

Everyone says that modular is the future of homebuilding but nobody at the factory level is preparing to see it become reality.


Harris - Finish Werks said...

Suggestion #1 - ON THE JOB TRAINING BY REP: require the Rep to be onsite for the new builder's first Set. Reps have forgotten how to interface, face-to-face. The Rep might even help get the Set Crew and crane organized since this is 100% foreign to any stick builder (and often the source of the biggest lo$$es. COST: gas money and lunch. ROI: much appreciation from the builder - that kind that KEEPS THEM LOYAL.

Suggestion #2 ON THE JOB TRAINING - OTHER BUILDER: make the builder attend another modular builder's Set, or visit a home under construction. Rep picks up the phone, asks Experienced Builder "hey Joe, can new mod builder Fred hang out on your next Set?"

The factories have to get creative and plug in their LOYAL builders. I know I wouldn't mind another stick builder asking me some questions on Set day.

Besides, any reasonably smart builder considering modular would rather speak to a real, live builder of the factory he's considering partnering with. Any factory Rep can put on a decent dog and pony show. But feedback from an actual customer is always more legitimate.

Anonymous said...

Your "For arguments sake" para says it all - Modular homes cost less and use 20% more materials - Really, there are advantages to the factory volume buying but not 20% less.

We use 20% more materials - total disconnect to the builder who scratches his/her head after the above comments.

Delivery times quoted are totally fiction and while many factories have experienced teams there are some that are not resulting in builder/rep/factory/consumer conflicts and finger pointing

Factory reps need to understand the builder's operation and provide real expectations and costs including how the entire process works from order, production, transport, set (definite a source of confusion and conflicts in perceptions), button up and close out of the home.

Anonymous said...

Maybe the Sales Mgr could ask their builders what are we doing right and where can we improve our services.

Better, maybe a Sales Mgr has no field experience and they need to be present on set day with a new builder or once in awhile with a loyal builder.