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Secret Shopper – Some Builders Ignoring Prospective Buyers

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RISMEDIA, April 10, 2008-Two Denver-area marketing services companies released the results of a study of Colorado Front Range new home builders that reveals builders are spending millions of dollars luring prospective customers to their model communities only to ignore them after they visit.

The study was conducted in late 2007 by database marketing and lead generation company Qgenisys, Inc., and research and marketing services company Red Tree Marketing Resultants. Using secret shoppers sent to visit 50 model home communities in the Greater Denver area, the companies investigated how builders interact and follow up with potential new home buyers. The study’s purpose is to help builders understand what they must do to succeed in a down housing market.

The study found that potential buyers were allowed to walk out the door, often ungreeted and with little follow up. According to the study, only 14% of on-site agents followed up with potential buyers with relevant information while 64% did not follow up at all.

“What we learned shocked us,” said Qgenisys President Peter Kowalchuk. “With falling home sales and a nationwide decline in new home prices amidst high inventories, we thought home builders would become more aggressive marketers. However, we found that builders are failing to take the simple steps necessary to follow up with prospects, even after identifying themselves as qualified buyers ready to purchase a home.”

The study also showed that only 57% of shoppers were asked to complete a registration card and of those, only 46% received follow up of any kind after their visit. For the shoppers who did receive follow up contact, only 23% received follow up that made any reference to the preferences the shoppers discussed at length with the builder’s representative. In several instances, the shoppers received postcard mailings that were completely blank, except for the card’s mailing label.

According to Kowalchuk, the ideal process would have seen builder representatives asking questions to learn the prospects’ preferences in the type of community and model homes they would want to live in as well as to learn about their personal likes and dislikes. They would have asked each prospect to complete a registration card and requested permission to follow up with the prospect via e-mail and phone. Then builder representatives would have followed up with a note and/or phone call to thank the prospect for visiting. Finally, they would have made some small offer to get them to return in order to move the sale forward.

“The result of our 18-page study is that Colorado home builders are losing millions on their advertising investments and in lost sales,” said Bob Mazerov, Red Tree marketing researcher and business strategist. “Essentially, the builders are diminishing the number of qualified leads and reducing their ability to close a sale. This is certainly not an ideal process given the current state of the housing market.”

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