Episode 49: Design And Build Vs Quoting Plans With Erik Cofield

In episode 49 of the Professional Builders Secrets podcast, we’re joined by Erik Cofield, an Executive Business Coach with APB. Throughout this episode, Erik identifies the key differences between a design and build model vs simply quoting plans as they come your way.

 

Inside episode 49 you will discover

• Which model will increase your profit margins
• The differences between the two models
• The similarities between the two models
• Finding the target audience for your model
• The drawbacks of quoting plans
• And much, much more.

Listen to the full episode to uncover how a design and build model can impact your bottom line.

 

Erik Cofield - Executive Coach at APB 

 

Erik Cofield is a Certified Graduate Associate with the National Association of Home Builders (NAHB) and a senior-level business strategist, manager and revenue generator. He has provided management consulting services for custom home builders and remodelers of all sizes throughout his career.

Connect with Erik

 

Timeline

1:34 What custom building looks like: two main models

2:40 Defining the two models

3:30 Similarities between a design-build model and quoting plans

5:22 Differences between the two models

7:05 The worst factor in quoting plans

8:32 Target audiences for the different models

9:51 Why don’t all builders switch to the design-build model?

11:56 How plan-quoting impacts the bottom line

14:31 The pros and cons of a design-build model

17:26 Myths about these two business types

19:08 Common blind spots

20:27 Transitioning from quoting plans to a design-build model

26:22 Erik’s idea of the future of custom building

30:30 Should builders do more?

34:24 Building and maintaining a relationship with customers

 

Links, Resources & More

APB Website

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APB on YouTube

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Erik Cofield:

Every custom home is made up of three main components, right? It's labour, material and profit. 

Erik Cofield:

But they may not even have a clue as to what the home is going to cost. 

Erik Cofield:

But the truth is, it's actually much harder to convert someone who's shopping you, compared to someone coming in fresh looking for advice. 

Erik Cofield:

The most common blind spot is really not understanding who you're going after. 

Erik Cofield:

When the consumer is confused, a confused mind doesn't buy. 

Erik Cofield:

One of the worst things a home builder can do is think of themselves as a construction company.

Bosco Anthony:

Hello, and welcome to the Professional Builders Secrets podcast, a podcast by the Association of Professional Builders (APB) for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales processes to financials, operations and marketing. We have another exciting episode from the Professional Builders Secrets podcast. I'm joined today by Erik Cofield, Executive Business Coach with APB. Erik, lovely to have you back again. How have you been?

Erik Cofield:

Hey, Bosco. Good. Great to be here, man.

Bosco Anthony:

Well, let's get into the business model for a custom builder, shall we? Tell me a little bit about what you think that looks like.

Erik Cofield:

Well, that's my favourite subject, custom builders. There are really two main business models. For a custom builder, consumers are talking to someone who wants to either design or design and build, or maybe build a home that is unlike a home that they could just buy from a production builder. So, they're looking for something unique, right? 

Erik Cofield:

The two main models are where either a custom builder is quoting plans; the consumer comes to them with some architectural plans and says, "Hey, how much does it cost to build this house?" Or a custom builder is really getting into the relationship earlier than that. As a design-build company, they're talking to people who might want to build a home. So in that case, it's different to just quoting plans because you're really helping the consumer even figure out what those plans would look like in the first place. So there are two different business models: quoting plans or a design-build company.

Bosco Anthony:

Okay. So we have these two models. How would you define each of those two business models?

Erik Cofield:

Well, the builder who's quoting plans is working with someone who is coming to them and they already want to build a house. That customer comes to the table with a set of plans that they want the builder to look at and then quote them to build. So they're asking for a quote. Whereas the builder who does design-build work is working with a customer who thinks they want to design a home and then build the home. So this customer is really asking for design guidance and help at this point. They don't really know how much their budget is or what their house is going to look like, and so the builder has a much better opportunity to build that relationship early on, as opposed to the builder who's just being asked for a quote.

Bosco Anthony:

So, let's talk a little bit about the similarities and the differences between a custom builder who quotes plans versus a custom builder who is a design-build company. I'd love to dive deeper into this topic. What do you think would be the similarities and the differences?

Erik Cofield:

Yeah, for sure. The main similarities are that they both end up building a custom home eventually. They're both paying for marketing. They both have some overheads that are fixed expenses, such as the light bill and salaries, whether they have any active jobs or not. They both may be working with a customer who has land or who needs land. The customers in both cases may or may not be going to a bank for financing. They may be paying the builder directly. Then there's another interesting similarity. Many builders are doing a combination of both custom homes with either model, quoting plans and true design-build, as well as their own spec units. So, spec units meaning units that they're going to build on speculation that they can sell to somebody.

Erik Cofield:

In both cases, those two types of builders could be doing a hybrid of those three things: quoting plans, design-build and specs. Some of these builders have vacant lots that they can sell to the same customer who's walking in and wanting to design a home or get a quote, but it's more likely that the quoting-plans builder, if you want to call him that, is working with someone who has land. So, if people are coming to you and saying, "I want to build this house and here are my plans," they probably already have land. Whereas the builder doing design-build has a better opportunity to not only sell one of their own lots in that same transaction, but maybe even help the people find land in the first place.

Bosco Anthony:

Okay. What about those differences? I think I just want to home in on this, and in my head I'm thinking in many ways a custom builder who is quoting on plans is meeting a consumer probably at a time when there's a demand for it too. That's the one thing that I'm getting out of this. Whereas, in the opportunity for someone who's designing, this could actually be meeting them at a creative stage when they're not really in that demand stage. Would that be a good assumption?

Erik Cofield:

Yeah. That's absolutely a fair assumption, but it goes a little bit deeper than that, and I know what you mean. The builder quoting plans says, "Hey, they're coming in, they're wanting something, why don't I just quote plans and get their money and move on?" But for the builder quoting plans, the customer comes to them with a completed set of plans and is asking for a quote. That sounds good, but the customer's almost assuredly speaking to other builders. So eventually, what they're really doing is shopping builders. That's a problem because every custom home is made up of three main components, right? It's labour, material and profit.

Erik Cofield:

Now the builders get their labour from, more or less, the same metropolitan area. They get their materials and their supplies from, more or less, the same industry providers. So, for labour and material, apples to apples, there's not really a significant difference in the builder's cost that would sway that final quote. That leaves profit. If the builder is getting shopped and is in a competitive situation, the main way they can close the deal is to lower their profit. But that of course is a downward spiral and is not even the worst factor, actually. So, it's not as advantageous as it sounds because they end up having to quote a lot of quotes before they get one to say yes.

Bosco Anthony:

You just said it's not the worst factor. What is the worst factor in your opinion?

Erik Cofield:

Well, there are several. That was just the first problem, but if you dig deeper, the customer may have a budget in mind and expect the builder to be in the ballpark, or they may not even have a budget to build a home, but they may not even have a clue as to what the home is going to cost because the person who's creating the plans, typically the architect, doesn't design to a budget. They design to the customer's vision and stated scope of structure. So, if the customer says, "I want two turrets and a moat," the architect says, "Great, no problem."

Erik Cofield:

They're not getting deep into the functionality, the liveability yes, but certainly not the budget. And architects aren't even trained in, nor does their business model support, creating a qualified estimate or budget. Think of all the moving parts, the changes, the price for lumber, windows, lighting fixtures, then multiply that by literally thousands of options in many categories of finishes and selections. So, the horrible set-up is the customer's asking for a quote from a builder on something they don't really have any idea if they can afford, and there's more beyond that. You want more?

Bosco Anthony:

Well, let's focus on the advantages option. I think I have an idea which one you're going to tell me you prefer, but looking at the differences, it sounds like there's one option that actually would be more beneficial for the builders out there.

Erik Cofield:

So, we'll skip some of those other pitfalls. If we compare the specifics beyond the similarities and issues, the differences really start with marketing. The design-build builder is looking for a different audience from the very beginning. When those people come in, they're looking for guidance to craft their dream into reality. The builder has to continue proving their value, but they're in a much better position because they're speaking with people who are starting the process. That means the builder can control the message, build the relationship, align with the customer, as well as be the liaison between the consumer and the architect or their own in-house design staff. All of this places them in a position of authority, which supports their upfront fees.

Erik Cofield:

Now, we didn't get into the upfront fees, but that's just the catalyst to the huge differences. So now, this design-build model allows the builder to charge for their work upfront, regardless of whether that home ever gets built. And they're almost assuredly not going to have to deal with as many customers before a full design-build agreement is signed, like that quoting-plans builder has to do. So, they end up with more upfront fees, more closed deals, more projects and ultimately more profit. And the trajectory in one year is significant, but over the long term it's enormous.

Bosco Anthony:

Where would you say the impact is? It sounds like the profit margins are going to be cut in many ways if they go with the quote model because they're being shopped around, and obviously at that point it looks like they've got to cut into their profit margins. Is there something worse than cutting your profit margins out there?

Erik Cofield:

Well, yes. If you're cutting your profit margins and you still don't get the job, then you've done all that work, and ultimately you haven't been paid for it. Let's say you do cut your margins and you do quote several plans for several customers. If you look at the job that you do close and you sign and you say, "Okay, I closed this deal," that deal has not priced in all of the work that you've been doing to throw quotes out there to customers who didn't even know if they could afford a house. So, not only is it bad to cut your margin to get a deal, but it's even worse if you've done a lot of work on other quotes that you didn’t get paid for either.

Bosco Anthony:

This is getting really bad for the builder. What's the next pitfall or challenge? You talked about having a few out there.

Erik Cofield:

So, why don't all builders switch to the design-build model?

Bosco Anthony:

Yeah.

Erik Cofield:

Well, there are some myths, right? Many of the myths of the quoting-plans builders, I think they just believe things are a little different than they actually are. They tend to think that the process and the path to revenue is faster because the customer's coming right to them with a set of plans. After all, they're asking for a quote. That's great, but that's a myth because, like I said, they have to go through many quoting exercises before they close a deal. So, they're actually using much more time per project, not making any upfront money on that. 

Erik Cofield:

The reality is that a design-build model allows them to pull in that signed full-price agreement more easily, and once they build up the pipeline and have multiple prospects going through each stage of a sales cycle, the signed deals come in more regularly. So unfortunately, it's a little bit of a myth that quoting plans is a faster way to revenue. That's one myth, anyway.

Bosco Anthony:

So let's compare the specifics for the builder that has a design-build company. You've given me the picture from the other side and the disadvantages. I'd love to know what the advantages and the specifics are with that design-build company. How can it impact the bottom line for the custom builder?

Erik Cofield:

Let’s say you are a builder and you are able to build that relationship and charge for that work. Let's just say you were working with five customers and for four of them, you charged them for the work and you gave them a concept agreement or a preliminary building agreement, and they didn’t go through with it. But you've been paid for that work and preferably even marked up your labour for that. If that preliminary work took you 40 hours, you've been paid for those 40 hours plus a markup. So, that's good. 

Erik Cofield:

Now, when you do get a job, a full-price project, you're not having to absorb all that extra unpaid work from many proposals before that. Then also, there’s a little bit of a hidden situation. When you're building the relationship with the consumer and you're working with them upfront, you give them, say, a concept agreement, they sign that small deliverable sum, that small dollar amount – great. Then you give them maybe a preliminary building agreement with a few more deliverables, a little bit more money, they sign that – great. 

Erik Cofield:

By the time you're handing them the pen for the full price agreement, they've already bonded with you. It's just another signature, right? So, you are actually able to charge a reasonable profit margin, what we would call a ‘market-related’ gross profit margin, which in our case for custom design-build builders, is 25% gross profit margin, which is 33.33% markup on cost. That's actually quite attainable because you've built up the relationship. They're not looking for other builders, they just want you to do their home.

Erik Cofield:

So, it's a little bit hidden, but with that upfront work, not only are you charging for it, but you're building the relationship so you can charge more for it in the full price agreement. And they typically say yes, because typically, for consumers who have the money for a custom home – even if that's a $400,000 or $500,000 custom home in some markets, or $1 million or more in other markets – for those consumers, they typically want what they want and they get what they want. And when they want you as the builder, they're not shopping you anymore. So, that's a big advantage that the design-build custom builder has.

Bosco Anthony:

Well, that seems like a much better model. Why don't all builders switch to that model or better yet, why aren't builders moving to that model in the first place?

Erik Cofield:

There are pros and cons. Some builders don't go down the path of design-build because they simply don't understand how to charge for that work. They may have even heard about it or read about it, but they don't know how to do that. So, they look at it as a lot of unpaid upfront work, but that's also a myth. The reality is they just don't know how to structure their business model to charge for that upfront work, let alone profit from it. 

Erik Cofield:

Sometimes, the builder thinks he's paid marketing dollars simply to refer the customer to an architect to get the plans created. But as I mentioned earlier, that's also a myth because that design-build builder is not just tossing the consumer to an architect. They're really staying engaged and involved and as the liaison between the consumer and the architect.

Erik Cofield:

So, they're really maintaining the control in the relationship and doing a service and a benefit for the consumer at the same time. Some builders just don't know how to maintain and control and drive their relationship like the design-builder is doing. I think that’s sad for the industry and for the builder and really the consumer because it's super easy once the builder knows how to move the customer from lead to prospect to a true design-build customer with a signed agreement. 

Erik Cofield:

The customer's getting the home they want at a budget they can afford, and they're not just out there throwing money to an architect to get plans that five builders say, "Well, you're crazy. I can never build this house for that amount of money." It's a much better fit for the industry and the consumer alike with the design-build model. It's just not every builder knows how to get their company to that level.

Bosco Anthony:

It sounds like also builders need to give themselves permission to succeed because it's almost like they're hesitant to do this, more importantly.

Erik Cofield:

I think one of the most critical things for a design-build company, because they're demonstrating value early on, is that they're taking the customer out of looking for other builders, and once that customer is bonded with them, really a small difference in markup or gross profit margin is not going to be as much of an issue, if at all. So, not only are they converting more, but at higher margins. And also, the business model allows for the adherence to sort of a logical sales system with a workflow that's proven for the business model, which converts that customer journey into multiple smaller steps. 

Erik Cofield:

A design-build model where the builder follows a sales process that walks the consumer sequentially through a process that demonstrates value, that's better for the builder and it's better for the consumer, ultimately. So, that builder gets to demonstrate the fact that they know what they're talking about, and I don't want to say ‘be friends’ with the consumer, but to an extent really a lot of them end up being friends because they're building a relationship, not just a home.

Bosco Anthony:

You talked a little bit earlier about myths. Are there any other myths when it comes to these two types of business models?

Erik Cofield:

Well, it's not so much a myth, but maybe sort of a false assumption. I have frequently seen that the quoting-plans builder thinks that they're not very good at sales, and this model is easier for them. But the truth is, it's actually much harder to convert someone who's shopping you, compared to someone coming in fresh looking for advice. So, that's kind of sad because the builder, whether he's articulating that to himself or not, he's going down this path because he thinks it's easier because he doesn't really like the sales aspect of it. But unfortunately, that quoting-plans builder who doesn't think they're great at sales is actually making their work to get the sale even more difficult, which probably perpetuates their feelings and misgivings about sales. So, that's a problem.

Bosco Anthony:

Interesting.

Erik Cofield:

That happens frequently, actually.

Bosco Anthony:

Well, what are the other pros and cons to either model that builders should be aware about too?

Erik Cofield:

In both cases, it's about marketing. You really need to know who you're going after and create your marketing to go after that exact type of customer. The other quoting-plans builder might say it takes longer if they were going to be a design-builder, because they’ve got to do the marketing. Then they’ve got to talk to people who don't have plans yet. So yes, it is true that getting your company going, that pipeline full, with a lot of leads coming in at the top of the funnel, it probably takes a little bit longer for a design-build company to actually realise revenue. But, once they do start realising revenue, they're going to start realising more revenue and have higher profit margins.

Bosco Anthony:

Are there some other salient facts about either model that builders might miss? What are some of the more common blind spots?

Erik Cofield:

The most common blind spot is really not understanding who you're going after. The second one is trying to do everything. So I see some builders say, "Oh yeah, we're a design-build company, and we build specs, and we do remodelling, and we do some commercial remodelling, and we lift houses on the coast," and it just keeps going on and on and on. Actually, they're doing themselves a disservice because it's very difficult to be an expert at everything. 

Erik Cofield:

When the consumer comes to their website and sees that they do gutters and kitchens and whole house remodels and basements and whatever, that consumer doesn't really have a high level of confidence that they can do everything well. So, we try to help builders understand, don't shortcut or short-change the intelligence of the consumer. It's really hard to be an expert at everything, and when the consumer is confused, a confused mind doesn't buy. So, it's really better if the builder focuses on one or two types of projects that they can be the absolute best at, whether that's new design-build custom homes, whether that's remodelling or whatever it is.

Bosco Anthony:

How does the builder transition from quoting plans to a true design-build service model? Is it as easy as just changing systems and adding marketing to this? And if they were, vice versa, if they wanted to change it back or move back and forth, is it a system that's hard to do?

Erik Cofield:

Yeah, that's a great question. The first thing is planning, I would say. The builder has to have the resources to do the design-build work, either through relationships with a few key architects or external designers, draftsmen or an in-house staff person. Second, the marketing has to change. That starts with content. Long before any ad or fishing expedition is started, the builder has to position themselves by saying, “This is what my company does,” with content on their website, emails, videos, blogs, articles, frequently asked questions, guides – really, content that is specific to the type of work that they're doing. 

Erik Cofield:

And then, only then, when they've got that content, should they start marketing. Now, this is not a pasta competition where we see what sticks. They need to use the scientific approach like we do at APB, so that they know who they're going after specifically and exactly how to reach, engage and convert those eyeballs into leads, prospects and then profitable signed contracts.

Erik Cofield:

Now from there, it's all about talking about their vision and dream and your ability as the builder to match that or sometimes help them define or refine their vision and their dream and doing all of that with their budget in mind, providing value through the entire customer journey. That starts way before plans are ever created. So yes, you can easily switch. The first step is planning, second step would be marketing, and you've got to make sure that you can actually do the work as opposed to just quoting plans.

Bosco Anthony:

Now, is all that work insurmountable for a builder to switch or would that deter them from switching in this particular case?

Erik Cofield:

No, not at all. And see, that's the sad thing. I wish I could tell every builder in the country to do this. If I only had a microphone for every builder. Every journey needs to start, right? So, at some point they have to start, but they can easily learn what they need to do. Most builders are not genuinely held back because they don't know how to do something. They're held back because of mindset and not having the confidence to do what it takes to learn and then make the change. Learning is easy. The implementation takes a driver's personality.

Erik Cofield:

But wow, when you think about the benefits and the different points for the two example builders, not just in one year, but 10 years later, they’re life changing. It's amazing. I talk to builders all the time. I was at the International Builder Show and a lot of builders said, "Hey, we're making 10% profit, that's not so bad." I said, "Is that gross profit?" And they said, "Yes." I said, "Well, it would be better if you could make 10% net profit." So, they don't know how much money they're not making because they just don't know how to do it. It's sad for the industry, but I would say not hard, not insurmountable, you just have to start. Every journey has to start.

Bosco Anthony:

Erik, it sounds like builders are in far better position to switch to the design-build model. Would you be recommending that to a lot of builders, and at what stage do you recommend it to the builders who are members with APB?

Erik Cofield:

Yeah, that's it exactly. Absolutely, they should switch. If a builder really wants to be a professional builder who wants to either quickly get to or remain at profitability with a business model that produces more and higher revenue, which gives them a lot of opportunities, they should switch to a design-build model. Our role is really to be the wind in their sails and to guide them on how to do the things that they need to do to get the results that they want to achieve in their business. That is just very much more difficult if they're out there quoting plans all the time. We're not mandating what they do with their business, but if they're asking us how to get more profitable, how to systemise, how to do these things, that's absolutely going to be our suggestion – go to a design-build model.

Bosco Anthony:

Do you run into this exact scenario often in the coaching you do for custom builders, and how do you manage the resistance or the fears or hesitance to adopt to this model?

Erik Cofield:

Yeah, I do actually run into this often. Just the other day, I was talking to a builder about this. He's one of those builders doing everything. I said, "Which of the various project types that you do is your most profitable?" And he said, "Well, I don't really know." That tells me I’ve got to back up and ask different questions. So, we go down the path in a custom way with every builder. This is not a cookie cutter approach because even if two builders are already doing design-build and they want to systemise their businesses, the way they're going to have to get there differs because they're not in the same place. So, it's all customised to what they need.

Erik Cofield:

So yes, we run into it all the time. We have to focus their efforts on what's going to be either the easiest for them to succeed at or the most profitable or in some way what their right path is. Don't even get me started on another big one, which is very horrible in the industry, which is a whole-cost-plus pricing model. That's a whole other story. But sometimes, we're not only changing what kind of business they do, but some very fundamental things about how they price jobs. So, like I said, every journey has to start, but in our case, every journey is customised because we really want to ask the right questions so that we can guide them in the right way for them.

Bosco Anthony:

If you look into the future as well, in an industry that has changed and changing even more so now, and there's so much uncertainty out there and unpredictability as well, do you see a blended model, or do you see room for a future model that potentially builders should be aware of or prepare for?

Erik Cofield:

Well, I definitely see a blended model because a lot of builders are doing that. For some builders, when they start out as custom builders, it doesn't take a lot of capital because they’re not buying land, they’re not building a $500,000 house to sell it later to get money. It is harder and it's more expensive to start a company where you're going to go out and buy land, and you're going to build spec homes and so forth. 

Erik Cofield:

For the custom builders who we work with, a lot of them do a hybrid model. They will build the spec unit. Some of them will flip houses on their own. Some of them will do remodelling, but those cannot all be their main focus. So, their main focus might be, let's say new construction. I have a customer in a province in Canada. Because they build in the Canadian shield at certain times a year, they have to build at certain times a year in that area because of ice and road conditions, and they build smaller cottages there.

Erik Cofield:

Whereas down in the big city where their headquarters are, they build larger custom homes. So, that's an example of a blended model. Other examples are where the builder will buy a lot or two and still do custom homes. What I also see coming into play is more builders using systems and components. So, this is instead of a site with a house being 100 percent site built, where all of the framing is done on site, where the foundation is poured on site, and just everything's done on site. 

Erik Cofield:

What I see happening is that a lot of our builders are using various components. That could be roof trusses, it could be insulated concrete forms, structurally insulated panel systems, floor cassettes, really components or pieces or parts that are built offsite somewhere. They're getting them from a factory or manufacturer and then bringing them to the site and they're putting the house together – I don't want to say like LEGO because that's a little bit juvenile – but more in pieces and parts.

Erik Cofield:

And I see that expanding quite a bit, especially for custom builders. It changes based on geography, but sometimes they'll save a lot of money on labour, but the pieces and components may cost a little bit more. Sometimes, they can build more houses more quickly. So, you might be the custom builder doing 10 homes a year, all site built, then I'm the custom builder who can build 12 homes a year because I'm using systems and can build them faster. Then I've got two homes where the profit's gravy. 

Erik Cofield:

So, I do see the industry changing, and I encourage builders to not just avoid change, not be afraid of change, but actually to go look for it and then profit from it. I think that's the way of the future. We will definitely be changing how we build homes. It may not happen overnight, but it is definitely changing.

Bosco Anthony:

It's interesting, Erik, because a few months ago I walked into a few display homes in Australia and fell in love with a few different designs. I was probably in that idea stage, right? There were two homes that really stuck with me. I remember walking out of the display area and the builder greeted us and thanked us and that was it. There was no follow up call, there was no initiative to check in on us. There was no, "Hey, did you have any questions?" I walked out of there thinking, "I have so many questions." I wanted to know a little bit about the land. I wanted to know how long the process took and the costings, and I potentially am the consumer because that thought of designing my own home someday is still with me.

Bosco Anthony:

It's six months now, I would say, since my visits and the thought of that home is still there, but the thought of the company or the display unit that I went to isn't there anymore because there's no touchpoint. So, my question to you is, should builders do more in that scenario? Would lead magnets be a really good way to catch a consumer in that idea stage? Things like Seven things you need to know before designing your dream home or Talk to us about what goes into building your dream home. Should builders take that approach?

Erik Cofield:

Yeah, absolutely. First of all, if you need a good builder in Australia, I know several. Any city. You just pick the city in Australia, and I've got a builder for you.

Bosco Anthony:

Absolutely.

Erik Cofield:

But you're right because I alluded to the fact that not only with the quoting-plans builder and design-build builders, they really want a logical sales system in place with a workflow that allows the salesperson to know what to do with every lead because every prospect's buyer's journey is different. Working with a logical sales system that has a structured workflow with discipline and routine and step by step instructions, that's critical. 

Erik Cofield:

So what happens is, first of all, it sounds like you went to some builder who's probably just selling based on them building the homes and people can drive by and see them. They're not great marketing experts. But when you have a lead magnet like Seven things you should know before designing your new home or whatever that lead magnet would be called for a builder. When you bounce around on the internet and you see that, you're going to gravitate towards that because that idea has never left your head, the builder has left your head, but the idea behind it has never left your head.

Erik Cofield:

Those lead magnets really work to pull the customer in; it's just an appetiser that pulls them in. And then when you start talking to them and get more deeply involved in the conversation, you move them through a logical sales process. Ultimately, they get a house that they love, they get it built for an amount in line with their budget and they’re not renting. So financially, they’re better off as a consumer. As the builder, you’re better off, the industry's better off and it's all around a win-win. Well, except for the people collecting rent.

Bosco Anthony:

Well, it sounds like that there's a lot of takeaways from this interesting conversation, but I think the big takeaway is also tapping into the ideas and questions that your consumer has. This is a wonderful opportunity to do this through this model because let's face it, we all have questions, we all have ideas, and sometimes we need a sounding board or sometimes we need an authority to talk us through those ideas to really tell us and validate what those pitfalls may be. So, this could even be a really strong relationship builder as well for those builders.

Erik Cofield:

Absolutely. One of the worst things a home builder can do is think of themselves as a construction company because while they are a construction company, they are much more than that. They're an educator, they're a resource, they're a champion, they're an ally, and they’re a guide. They really need to be positioning themselves as the consumer's friend, and that requires a mindset shift. But we absolutely believe that builders are the consumer's friend. It's not at all an adversarial relationship, and it shouldn't be. 

Bosco Anthony:

It also sounds that if consumers go down this route and they're happy with their home or the builder has really left their mark answering those questions, it builds trust in the consumer. And again, coming a little bit from the consumer side here, I think this is also an opportunity for the consumer to speak highly of that builder or refer business to that builder as well if they've gone down the stage of working with them because at that point, the most common thing they'll say is, "You have any questions to do with design-building, go talk to this person."

Erik Cofield:

Yeah. And look, the marketing doesn't stop at handover. There's no reason a builder can't say, "How's it going, Mr and Mrs Jones?" and stay in touch with them. That referral is the highest form of flattery. If you're going to ask them, and it doesn't have to be hard sales or cheesy, you can just say, "Is there anyone else in your circle of friends or family who might like to talk about a future project?" That's pretty passive. And if they say, "No, I can't think of anybody," that's fine. But a lot of times they say, "Actually, my friend Brenda's sister is," and then they go off and they think about somebody, and then you get a referral. So, it doesn't hurt to ask. When they like you, there’s no harm in asking.

Bosco Anthony:

Well, Erik, we could chat for hours. I really appreciate your time and energy as well, and your great insights and, definitely, thank you for taking me through this particular process and walking me through the two different types of business models for builders. I'm sure our listeners out there would really appreciate it as well, and we hope to see you again in the future.

Erik Cofield:

Yeah. Thanks so much, Bosco. It’s always a pleasure to speak with you and congratulations on all your success as well. Take care, buddy.

Bosco Anthony:

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