Over the last couple of articles, I’ve spent some time discussing improvements that would improve both the energy efficiency and the ability of the truss system to withstand extreme weather conditions. If you’ve read those articles, you will know that I think it is ridiculous that we continue to design and price our products – our highly engineered, specialty products – to appeal to a buyer that is largely motivated by finding the lowest price.
Yes, I trust that many of you would be quick to point out that YOUR customers don’t buy purely on price but also value the service your people provide and the quality of the product you produce. I have no doubt that is true, and I hope that you can use that goodwill to maintain and grow your business. I also know from my own firsthand experience that there are component manufacturers that refuse to engage in marketing their products and services in a way that is heavily reliant on having the lowest bottom-line price but insist on producing quality products and providing exemplary service. If you have managed to successfully position and maintain your company in the latter group, I congratulate you. I would speculate that your customers are happier with the products and services they receive from you, and their business benefits. I would also speculate that your employees are happy to know they can be proud of the products and services they provide.
It may also seem that my articles suggest that the builder is solely accountable for this race-to-the-bottom mentality that seems to dominate the component industry. Certainly, there is some responsibility with the builder, but I know that they also need to look to what is most important to their client, the home buyer.
I’m reminded of an industry focus group I was in a number of years ago. I don’t recall the details of most of the discussion that day, but comments made by one of the participants have stuck with me for nearly 20 years now.
This individual was a senior VP of operations for a large home builder that was consistently producing 3-4,000 homes per year at that time. As part of their marketing and planning efforts, they decided to survey potential clients visiting one of their model homes. They asked their prospective customers a series of questions, and for each there were three available responses: Is this feature something you would like to have in your home?; Do you believe this should be available in our homes?; Would you be willing to pay more for your home in order to have this feature?
Some of the features that participants were asked about included:
- Upgraded hardwood or tile flooring – everyone liked it and wanted it to be available to choose, and the vast majority were willing to pay extra.
- Upgraded cabinets and countertops – again, they liked it, they wanted it available, and they were willing to pay to get it.
- Upgraded trim package – you got it, everyone wants it, and they’ll pay to get it.
- Similar questions dealing with other possible finish options, plumbing and light fixtures etc. – in almost every case, they liked it, wanted to be able to choose it, and would pay accordingly.
One of the final questions directed the survey participants to mockups of possible wall construction with explanations of the benefits offered. Option A was the then-typical code assembly, while Option B offered about a 50% increase in R-value along with improved air sealing. This time their responses changed. Did they want better wall construction? Yes, please. Were they prepared to pay for it? Almost universally, no!
I was, and continue to be, struck by how clear an example this presented of how the market speaks. People would pay for what they could see and touch, but they would not pay for what was hidden from view even when it would save them money and improve their comfort over time. I also was astounded that people would pay more up front for options that in every case could be upgraded later, perhaps at significant cost, but upgradeable, nonetheless. What they wouldn’t pay more for were the few features that are virtually impossible to upgrade later. After all, when was the last time a friend talked about the renovation they were doing to strip the walls back to bare studs so they could add more insulation and make their house more airtight?
In today’s world, the pendulum is slowly beginning to swing toward improved resiliency and energy efficiency, but the market generally is only moving in that direction at the insistence of our building code bodies.
I would suggest that if you want your company to be ready to capitalize on the wave of change that is coming for energy efficient and resilient homes, you need to understand what that will look like for your products, and maybe for additional products that your clients will need. You need to engage with your direct and indirect clients to understand what they see coming next year, and five or ten years from now. Is this something that is discussed inside the walls of your company? I’d love to know what you are seeing. Please share your thoughts with me.