There have been many silver linings for the residential construction industry throughout the pandemic. Families relegated to their houses were driven to reconsider the value their shelters bring to daily life, and almost every one identified areas where they needed to improve their living situations. Low interest rates have led to accessible financing, and families moving for more space and land have increased comparative property values throughout many suburbs.
All of this good stuff is manna for today’s remodeling industry. But just one year ago we were in crisis mode. At that time, few prospects were willing to plop down a big deposit on an addition project, not knowing if they were going to have a job the following month, or even week. The wise remodeling companies knew they would be foremost in every homeowner’s mind who yearned to improve the spaces they were confined to. We work in the space of a basic human need - shelter - and there will always be value in the work we do. Indeed, as the year has played out, most remodelers are now facing a surge of leads, as demand for our essential services is, perhaps, as high as it’s ever been.
Now we are facing a completely different crisis: We don’t lack for sales (quite the opposite), but instead face a production crisis of increasing lead times, and rising material prices. For companies whose primary service is providing the labor to put these materials in place this is a significant challenge. But for those companies who consider themselves experts in the field of planning and organizing a project, there is a huge opportunity.
Value as a Commodity
Most remodelers, present company included, have struggled at some point with building a solid construction backlog. With your company running on construction work-in-place, you are at the mercy of factors outside of your control now more than ever. So, now is an opportunity to focus on the value you provide that you can control. This is selling your value as an expert advisor in the field of home improvement and charging real money for it.
We are residential construction industry professionals and not commodity traders. Prices are going up and lead-times are extending; this will eventually balance out, but right now is the perfect time to offer valuable services for clients to begin planning their project. This can be through architectural and interior design, financial offerings, budgeting, pre-construction planning, or any other item that is critical before starting construction on every project.
Leveraging this value is most obvious for design-build companies. There is always a clear front-end design and planning phase, but make sure you are charging enough to be profitable, this should be equal to, if not more profitable than you require on the construction end. If you are one of those companies that uses design as a loss-leader or a credit line item in construction, stop. Sell this as the valuable service that it is, make it profitable, and put a backlog of projects on the shelf, ready to build according to the schedule that works for your company to be healthy, and for your clients to be satisfied.
Three Ways to Leverage Your Value
Up your design game. Historically, design cycle time has been a burden to getting to the real money… construction. So lean-in, improve your deliverables, blow your clients minds, and make it fun. Give your clients an experience that helps them get excited about what their home will be. Virtual flythroughs, mood boards, home tours, inspiration videos, there are so many ways to take the design and selections process from checklist to experience. Don’t stress that you can’t start building it tomorrow… no one can, so make the process full of dreams and energy.
Be an expert. Even if your company does not design, you are still an expert in everything involved in a project before the sledgehammer hits the plaster. Outline your pre-construction steps, define why you are the best at them, and sell it as a service. Next time someone asks why they should pay you for a quote, you can clearly walk through everything that should be involved if they hire a professional and demonstrate that you are the best solution to planning for an efficient construction process. If they already have a full design package, up the game, and schedule a collaborative review with the owners and architects at the architect’s office. Establish yourself as a steward for the owners and their project, and the person with the closest finger to the pulse of the current construction market. This will go a long way with both the clients and design professionals.
Bring in new offerings. Way back in 2020, the play was to get a shovel in the ground as fast as you could. Now, no matter how many processes you lean, and how many times you read The Toyota Way, you cannot make that sheet of plywood get to the cabinet shop any faster. This means your design and pre-construction process will be stretched out with more projects than you are designed to handle. This is an opportunity to connect with new vendors, build relationships, learn, and build more sophisticated projects, all while keeping your clients engaged. There may be services you do not currently offer like furnishings, window treatments, low voltage lighting, landscaping, or A/V. Put them on your checklist of design & pre-construction, and connect your clients with these vendors. You may have the capacity to guide clients through this with the vendors, but if not, you can connect clients directly with them, and they are able to dig deeper into the details of their once-in-a-lifetime remodel. Either-way you are filling the longer design time with more value for the client, and presenting offerings that most of your competition does not.
We are in a Holding Pattern
I remember sitting on airplane that was delayed for hours. One of the flight attendants came on the mic and said, “While we’re waiting, I wanted to let you know that we have a hundredth birthday on the flight today” Everyone started looking around, and then she said, “So everyone make sure to wish our pilot, Jim, a happy birthday when you exit the plane!”
Now that is having a little fun with something 100% out of their control, and it’s memorable. I’m not suggesting that telling jokes will solve the anxiety inherent in the current situation, but having fun with the process is a big part of the customer experience. And if we knew that all of the flights were going to be delayed, we would definitely have bought tickets and even paid more for the one with the stand-up act or the one that played a riveting documentary of our final destination.