Wednesday, November 26, 2014

9 Things That Can Influence a New Home Purchase

If you want to get people to buy a new home from you, you need to understand how people make purchasing decisions.

Quality built homes and builder reputation matter; that goes without saying. What about when your home matches the customer’s needs and wants, and they trust you, the builder? What are the things that influence the purchasing decisions once those fundamentals are in place?

New home purchases usually start with a Google. Most people do online research and compare different builders in their area. What happens after can make or break your business.

Here are 9 things you should know about purchasing decisions:

1. Peer reviews matter
Nearly 90 percent of new home buyers said they look for online reviews prior to beginning their house hunting.

Start gathering reviews on your site. Ask your past customers to give you one or two sentences that can be added to your website. Ask their permission if you can use their names otherwise either use their initials.

Don’t delete the negative reviews some may send you – they actually help sales if there are only a few of them. If there’s tons of negative reviews about your business on the Internet, most people are naturally turned off and look elsewhere. That is one hard thing to overcome.

2. People gather information from mixed sources
Even though social media and internet rule, customers make purchase decisions using a combination of old media, new media, and old-fashioned conversations with friends and family, especially when it comes to building a new home.

According to a recent study, the most common methods of gathering information prior to buying a home are:
  • Looking you up on Google
  • Face-to-face conversation with a salesperson or other company representative
  • Face-to-face conversation with a person not associated with the company

59% of people consult friends and family for purchasing decisions. They want reassured that they are not alone in making the decision. Asking people around us for recommendations is still commonplace. This means the experience you provided your past customers matters a great deal.

3. People don’t often know why they prefer something
There’s a famous study about jam tasting.

These scientists asked a big sample of consumers to rank jams on taste, ordering them from top to bottom.

Then the scientists re-did the study with a different, but still statistically representative, group except this time they asked the sample to put the jams in order of taste and write down why. The result when they did that was that the order literally flipped, so the ones that the first group ranked as best tasting were judged to be the worst by the second group and vice versa.

The reason was that they were asking the conscious brain to suddenly get involved in something that it really doesn’t know, and suddenly there are all these sort of social pressures, e.g. what they “should” choose, leading the answers away from what the people actually liked.

People make instant decisions with their sub-conscious. When they have to explain the choice, the choice might change all together since the rational mind is then involved.

Takeaway: don’t trust people when they explain why they bought something or didn’t. They might not know themselves.

This is one of the missing pieces in the modular home sales process. When asked what they think of modular housing, the customer’s immediate response is negative based on what their sub-conscious is telling them. If you could see what is happening in there you would probably see double wide trailers being blown off their foundations in a tornado.

Now ask them to describe their thoughts about modular and you will find that what they don’t know could fill volumes.

4. Mass leads the way
Most of our preferences are learned and largely formed by social norms and expectations that producers have a strong hand in shaping.

A Washington Post column uses the example of clam chowder. It used to be thin decades ago, but is now almost uniformly super thick. What happened? At some point, restaurateurs got in the habit of adding flour to make chowder thicker and thicker, and now this is what consumers have come to expect constitutes a bowl of “authentic” clam chowder. Now that has become what the consumer prefers.

These learned preferences can just as easily involve characteristics that, from an objective standpoint, do not make a product any better and might even make them worse — particularly when it relates to texture.

Ravi Dhar, a marketing professor at the Yale School of Management, notes that although Heinz ketchup does not reliably win in blind taste tests, it has established itself as the gold standard in its category because it is thicker. In the marketing world, Dhar says, “meaningless attributes often lead to meaningful differentiation.”

Ever wondered why so many products on the store shelves are so similar? Wouldn’t it be better to make them different? Not necessarily.

There are huge incentives in consumer markets even for competing companies to make everything the same.

Our preferences evolve as the society evolves. A “family car” used to mean a station wagon in people’s minds. Then it was the family van. Now it is an SUV.

In home buying where people have had a lot of experience of living in homes, it pays to be like the market standard. Set yourself up as the Gold Standard in your marketing area.

5. Cognitive fluency
Cognitive fluency is the human tendency to prefer things that are familiar and easy to understand. For home builders this means that the easier to understand what modular construction is, the more likely people are to buy it.

Psychologists have determined, for example, that shares in companies with easy-to-pronounce names do indeed significantly outperform those with hard-to-pronounce names. Coincidence? Nope.

Suggestion: make your new home selections and pricing as easy to understand as possible.

Previous positive experiences matter.

Cognitive fluency also explains why you stick with brand and service providers you have used before, why you often order the same thing from the menu – it’s easy. You’ve tried it, it worked, and you don’t want to spend a bunch of time researching alternatives and risking a bad purchase.

As a modular home builder, this means it’s super important to make a great first impression. Show your homes are packed with value. Price only sells in mass produced consumer products, not new homes.

Once they have their first positive experience with you, it’s much easier to move toward building their home.

6. Hard to read, hard to buy.
Make your website easy to read.

When people read something in a difficult-to-read font, they transfer that sense of difficulty onto the topic they’re reading about.

Norbert Schwarz, a leading fluency researcher, and his former student Hyunjin Song have found that when people read about an exercise regimen or a recipe in a less legible font, they tend to rate the exercise regimen more difficult and the recipe more complicated than if they read about them in a clearer font.

The same goes for buying new homes. Easy to read fonts on your website will double the number of people willing to click on your contact info and seek more information and maybe even an appointiment.

Bottom line: make everything as simple as possible.

7. Does social media have an impact on purchasing decisions?
Another recent study found that consumers are 67% more likely to buy from the brands they follow on Twitter, and 51% more likely to buy from a brand they follow on Facebook.

Social media does impact home buying decisions, but it’s a slow relationship building process and just shouting “buy this” works on a very small number of people especially if you have few ‘likes’ and most of them are your friends and relatives.

The purpose of social media is to get the home buyer to visit your website. It is not to give opinions on social matters. Create a Facebook page strictly for your business.

8. Emotional decisions, rational justifications
Do people make decisions based on emotions or logic?

McCombs marketing professor Raj Raghunathan and Ph.D. student Szu-Chi Huang point to their research study that shows comparative features are important, but mostly as justification after a buyer makes a decision based on emotional response.

Buyers seem compelled to justify their emotional choices with non-emotional reasons.
Emotions rule in all areas.

The earlier you make the emotional connection with the new home buyer the better, because once a potential new home buyer decides they like, either site building or modular, the more difficult it is for them to backpedal.

Rational thinking will only justify their emotional choice.

9. It’s the subconscious that drives buying decisions

For the last 50 or 60 years, market research as an industry has relied on an understanding that people make decisions based on rational conscious thought processes. What the science tells us now is turning that fundamental belief on its head – most decision making happens at the non-conscious level.

We have a tendency to focus on facts and numbers, but in many cases it’s the subliminal that makes people decide one way or the other.

People are complex and we are just beginning to scratch the surface of what they really want. Sometimes we make buying decisions even when we aren’t paying attention to the products.

The more you can get a home buyer to move from their sub-conscious to their conscious level, the better chance you have of helping them decide that you and modular housing is the best way to go. 

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