In their sales strategies, home builders often focus on the number of business opportunities they win or lose. In that case, the number of incoming leads and the profit margins are keys to monitor the sales activity. But what if you could increase your overall returns with the same sales pipeline? This can be done by focussing on sales velocity. Improving the speed at which new home projects are sold leads to greater returns.
What is Sales Velocity ?
The sales velocity equation looks like this:
It is quite easy to understand. Sales velocity is a metric that tells you how fast you’re likely to sell a new home project. Effectively, sales velocity enables you to measure how quickly incoming potential homebuyers are moving through the sales cycle and how much revenue you can expect over a certain period of time. The faster homebuyers engage with you in a new home project, the shorter the sales cycle is and the higher the revenue generated is at the end of the day.
In short, the greater your sales velocity, the faster your company can make money.
Why Does Sales Velocity Matter in New Home Construction Projects?
To boost your home building business, it is useful to measure how fast you can sell new home construction projects and monitor your sales velocity. Let’s step back and take a look at why it matters for home builders.
1. To Measure the Success of Your Home Building Business
Sales velocity is a great measure of the success and the growth of your company. It is a way to measure the efficiency of your sales strategy. The faster you sell a new construction project, the more you increase your sales pipeline and revenue.
2. To Forecast Your Sales
Knowing how to measure how fast you or your team is able to sell a new construction project will enable you to evaluate how many deals you can convert in the months to come. Sales velocity is a great metric to follow to set up clear and measurable objectives and optimize your sales pipeline.
3. To Increase Revenue
Improving sales velocity means that homebuyers will engage quicker with you in their new home construction projects and then move on quicker from one step to another in your sales conversion funnel. The speed in which you reach each step of the funnel can be measured. The longer it is, the less your chances of converting a prospect into a client will happen. A faster pipeline naturally leads to more time available to manage new potential incoming homebuyers and then increase revenue.
How to Leverage Sales Velocity to Accelerate Returns?
Improving your sales velocity can have a massive impact on your business.
Now let’s take a look at the equation and evaluate which component can be leveraged to increase revenue.
The number of opportunities (which is your incoming leads), as well as your average deal size probably won’t change overnight. Conversion rate and sales cycle length are the metrics to focus on and that can be improved quickly. In the scenario below, driven by an increase in both conversion rate and Sales cycle length, sales velocity is doubled. This can have a massive impact on your revenue growth. It accelerates returns and allows the sales team to move on to the next home project and start a new sales cycle again.
5 Ways to Boost Your Sales Velocity in New Home Construction Project
1. Respond Faster to Your Incoming Leads
Responding more quickly to the potential homebuyers that are ready to enter your sales funnel is a simple way to increase your conversion rate and then improve your sales velocity rate.
When a potential home buyer makes first contact with a new home project – whatever the lead source – be it direct phone call, contact form, etc. – the reactivity with which you are able to grab your phone and contact them back is decisive.
A study run by Sales Force showed that the conversion rate is 25% higher if an incoming lead is called back within the 30 minutes following her request. On top of that, your chances to convert them are 2 times higher if your 2nd call happens within the following 24 hours. It means that if improving your conversion rate is your goal, you can’t miss the momentum.
Reactivity, especially at the very beginning of the sales cycle, is key to improve your sales velocity and make more revenue in the end.
2. Monitor Your Sales Activity in a Centralized Tool
The first thing to keep in mind is that you won’t be able to improve your sales velocity efficiently if you don’t set up goals, and if you don’t monitor your sales metrics. On the other hand, a good way to get more clients is to track and store every single conversation detail into a centralized tool. This allows you to have the relevant client information at hand each time the homebuyer calls you.
All your sales activity can be centralized in a CRM. This platform dedicated to customer relationship management makes it possible to store and sort the information available on a customer in order to personalize the relationship as much as possible. Your different lead generation sources can be plugged to your CRM so that it can be filled out at lower effort. Having centralized information facilitates this first contact with the homebuyer and will be a big help throughout the sales process.
3. Improve the Qualification Process to Provide Potential Home Buyers with Truly Personalized Home Design Projects
Without a good understanding of the needs and wishes of the homebuyers, you won’t be able to provide them with the right solution quickly. To improve your conversion rate and convert quickly, it is key to find out what your client really wants: what are their daily habits, how do they use each room of the house, what are their main priorities, what are their design tastes, etc.
In your sales process, set up clear and well defined engaging questions to make sure you get everything you need to be able to draw a fully personalized home design project and engage the homebuyer with you in your sales funnel. This discovery phase is key in the process of accelerating your pre-sales process. It will enable you to better position your proposal at the top of the list in relation to your competitors’.
4. Provide preliminary designs as quickly as possible to stay ahead of your competitors
A common issue in the home building industry is the time that the homebuyer has to wait for the first preliminary designs. It can sometimes take weeks. If you take too long it will give the homebuyer the opportunity to meet your competitors. You have to stay ahead of your competitors by moving the client to the next stage of the sales cycle as fast as you can.
The tools you’re using are crucial to accelerate this step. CAD software, which is frequently used by architects or home designers, is quite complex and it will often take a few days work before your proposal will be ready to present to you client. Considering that you may lose 1 out of 5 business opportunities, the hours, or even days, spent on these proposals will feel like a waste of time. Finding a 3D home design software which has an easy to use interface so that you can draw your floor plans and get high quality stunning renderings in a few hours is key. Architects and home designers can spend their time on validated projects or home design projects with higher profit margin.
5. Accelerate the Homebuyer’s Decision Making With High Quality 3D Renderings
To progress quicker in the sales cycle, one key is to accelerate the homebuyer’s decision making. How? One sure way to achieve it is to make them understand what the future home will look like and to ensure that they are comfortable with their decisions and avoid any nasty surprises which may arise.
If a simple 2D blueprint is the only sales material you have, it will be hard to accelerate this stage in the sales cycle. Most of the time, based on a 2D floor plan, homebuyers find it difficult to picture what their future home will look like.
That’s where 3D views enter the game.
When visiting a home that is already built, a home buyer generally makes their decision in the first 90 seconds of the visit. In the case of a new home construction, 3D views are a good way to quickly get this wow effect from your client and significantly accelerate their decision making.
High quality, photorealistic 3D renderings provide an accurate representation of a future home. They highlight the project’s strengths and present it from the best angle.
With 3D renderings and even 3D floor plans, the homebuyer will be able to visualize their project as if they were there as well as understand the different layouts and available spaces more easily. In 2019 90% of homebuyers felt that pictures and 3D views are very useful in helping them to make a decision.
The discovery phase makes it possible to detect what is important to the homebuyer. By taking into account their wishes, tastes and way of life, it becomes easier to personalize their home project. Showing interior or exterior 3D renderings, personalized and in line with their needs, will reassure them. The client visualizes their project in its entirety, and any doubts or misunderstandings they may have about the plan are resolved, guaranteeing their serenity during commitment.
3D renderings are a powerful sales tool. They help home builders or any housing professionals get approval faster, while making sure homebuyers get the whole picture and understand the project in detail. Homebuyers make faster decisions, sales cycles are reduced, making room for new projects.
Which Tool Can Help You Improve Your Sales Velocity?
To accelerate home buyers’ decision making, improve conversion rates, and move on faster to new home construction projects, a sales enablement tool can definitely help. Cedreo is the 3D home design software that enables you to propose a complete home design project to your clients in less that 2 hours, including: 2D floor plans, 3D floor plans, and realistic 3D renderings. A free version of Cedreo is available which will allow you to see how fast you can impress your clients with photorealistic renderings and convert them quicker.