The following is an article recently written by our good friend and colleague Dan Levitan.
The larger homebuilders are now strongly targeting the first time buyers. They are, whether they realize it or not, therefore attempting to sell to the “Millennial Generation”. But the question that must be asked is whether they are doing it correctly and, for the smaller homebuilders, why aren’t they in the game.
In the United States the Millennial Generation, also known as the “Echo Boom” (the children of the Baby Boomers) and “Generation Y”, is generally considered to consist of those born between 1982 and somewhere from 1995 to 2001, a thirteen to nineteen year span depending on which demographers and sociologists you choose to believe, and consisting of approximately 75 to 80 million people, a market second in number to or possibly even exceeding the Baby Boomers. But the Millennials comprise a market with entirely different philosophies, expectations, practices, perceptions and procedures than their predecessors regarding life and, as it relates to the homebuilding business, marketing and purchasing.
They are perhaps best identified by an increased use and familiarity with communications, media, and digital technologies made possible by the advent of instant communication – email, texting, and IM (instant messaging) and the social media outlets such as YouTube, Facebook, MySpace, and Twitter. But they are far more than just technologically proficient.
This group has been aggressively studied and well documented, perhaps best known in the 2000 book by William Strauss and Neil Howe, Millennials Rising: The Next Great Generation, a follow-up to their 1991 book Generations: The History of America’s Future. They were reported on in Morley Safer’s television special on the new generation of American workers, “The Millennials Are Coming”, originally broadcast on Nov. 11, 2007, which dealt with the significant changes in the workplace needed to accommodate this new generation.
One of the more interesting papers that I have read on the subject of the Millennials is “Millennial Behaviors & Demographics” by Richard Sweeney, New Jersey Institute of Technology, (December 22, 2006) (http://bit.ly/9WmaGS). Although written primarily to address this generation’s attitudes and behaviors compared to previous generations as they impact education, several of the conclusions have far-reaching impact on the homebuilding industry:
Sweeny suggests:
• that Millennials have far more choices and are far more selective; that they expect a much greater variety and array of products and services yet they are far less brand sensitive;
• That they are experiential and exploratory learners; they prefer to learn by doing and they seldom read directions;
• They expect flexibility and convenience; they want what they want when and where they are ready;
• They expect as much personalization and customization as possible;
• They are intolerant of delays, expecting their services instantly;
• They are the ultimate multi-taskers;
• They embrace a “nomadic” style of communication; they communicate more frequently using IM (instant messaging), text messaging and cell phones and do whatever they need to do regardless of distance;
• As a group they have different personalities and behaviors than their predecessors – they are direct and more confident; they are more outgoing; they are more adaptive and mature; they are more adventuresome yet also more self-doubting; they are more open to change and more self disciplined.
Another very useful source of information on the Millennials comes from Scott Keeter and Paul Taylor of the Pew Research Center (http://people-press.org/). They suggest that this generation, like individual people, has a distinctive “personality”:
■Millennials are the most ethnically and racially diverse cohort of youth in the nation’s history – 18.5% are Hispanic; 14.2% are Black; 4.3% are Asian; 3.2% are mixed race or other; only 59.8%, a record low, are white.
■They are the most politically progressive age group in modern history; in 2008 they voted two for one for Barack Obama over John McCain while adults ages 30 and over split their votes almost evenly.
■They are the first generation in human history which regards behaviors like tweeting and texting, along with websites like Facebook, YouTube, Google and Wikipedia as common and integral parts of their lives.
■They are the least religiously observant youth group since survey research began charting religious behavior.
If you wish to test yourself on “How Millennial Are You”? – Take the simple 14 question quiz on their website – http://pewresearch.org/millennials/quiz/. I thought that I was fairly “in tune” but scored only 46 out of the potential 100 (perhaps in part because I do not text).
The fact is that many of us in the homebuilding industry, especially, the principals and department heads of the major building companies, and the established consultants and service professionals, are far older than the Millennials. Many of us have been slow to embrace new technologies. We interpret multi-tasking as not paying attention. The vast majority of us are white and non-Hispanic. We are far more conservative and may well have voted for McCain. So there may well be little commonality between us and our potential customers.
Unless and until we understand and appreciate who these new buyers are, how they live and, most importantly, how they purchase, we will fail to maximize our sales and our market share.
From a marketing standpoint, the following questions related to this new technology and lifestyle orientation need to be answered:
• If all purchasers (not just the Millennials) buy individual communities as opposed to a corporate brand when selecting a new home, why have most builders including the “nationals” failed to provide individual Facebook, Twitter and YouTube pages for each of their communities and why is every new home salesperson not blogging regularly about his or her community?
A recent E-Marketer story reports that marketers in all industries are planning to allocate a major portion of their budgets towards social marketing, with respondents to the budgeting questions reporting that they would devote almost one-fifth of their marketing budgets to social media over the next five years.
• If Millennials (as well as the other markets also who are “tech savvy”) believe in instant communication, why is it that only one of the largest homebuilders and almost none of the smaller builders provide web concierge services?
Failure to respond to a potential customer within the customer’s time frame for expectation of a response takes you out of consideration.
• If the homebuilding industry now concentrates a substantial portion of its media budgets on web-based marketing, why are homebuilders not constantly updating SEO (search engine optimization) for their websites? Why are we not tracking and analyzing all web visitors in real time to determine number of visits, page preference, time on site, etc? Why are we not obtaining real-time analysis of visitor traffic source to optimize cost and placement of click-throughs, banner ads and other purchased space?
All other Internet-based industries utilize these services and they are pros at knowing who is on their site, where the visitor came from, what have they looked at or purchased in the past, and all the other information necessary to guide a purchase. The fact is that homebuilding must be an Internet-based industry if we are to properly service not only the Millennials but all our other target markets as well. And if nothing else, you can provide the basics yourself through Google Analytics (free at http://www.google.com/analytics/) and several of the other programs available on-line.
The fact is that Millennials are very careful and thorough shoppers. When they walk into your sales office they have been on your web site several times and you need to know how many times, what web pages they visited, what homes they have browsed. They are also busy and do not wish to waste their time so you need to be prepared or you could lose the sale.
In fact, it is not just the Millennials who are on the web. Baby boomers are avid Internet users. They make up 32.5% of the US adult population and 36% of the adult online population, according to the Pew Internet & American Life Project. And according to Met Life’s Mature Market Institute, a 2009 study reported that individuals age 65 and over lead all other generational groups in online shopping with 77% reporting that they do so.
SEO should be provided by your advertising agency or whoever designed and monitors your web site and updated regularly. If they will not provide you with the data you need there are several suppliers available who can do this and more at reasonable cost.
And on an even more basic level, have we made the significant operational changes necessary to accommodate this market:
• Have we included ethnic and cultural diversity in the sales offices and provided for a bi or multi-lingual sales staff?
• Have we adjusted our sales process, procedures and presentations to reflect how the Millennials learn, make decisions and purchase?
• Have we adjusted our hours of operation at the sales offices to reflect their lifestyles?
• Have we adjusted our designs and standard and available features to reflect this target market’s expectations of far more choices, personalization and customization, even at the affordable price points?
• Have we adjusted our marketing thrust to sell the individual community as this group is not brand sensitive?
• Have we instituted a procedure for timely information flow to the customer on an ongoing basis and established valid production processes and schedules so that all target dates are achieved?
And that is only the tip of the iceberg. To truly accommodate the Millennial market we need to consider their impact on every aspect of our operation. Millennials consider themselves as cash strapped and quite probably have incurred substantial educational loans and credit card debt – have we added a credit repair function to our mortgage approval process? They are socially responsible – are we “green” and do we visibly and actively support worthwhile causes? They are experiential in nature – have we created the appropriate community entry, drive to the models and sales office experience? The list is almost endless.
There are 40+ million homes to be sold to the Millennials in the next several years and that’s just their first home purchase. Let’s make every certain that we make every possible sale.
Daniel R. Levitan, MIRM, IRM Fellow, CMP, CSP, CAASH, RAM is President of Levitan & Associates, a Florida-based firm providing marketing and strategic consulting to builders, developers and lenders. He has been involved with properties throughout the United States, Canada and the Caribbean which have included well over 145,000 housing units in more than 950 communities representing in excess of $45 Billion in sales. Levitan has served as president and multi-term trustee of the Institute of Residential Marketing, Chair and multi-term trustee of the National Sales and Marketing Council and is the winner of the Bill Molster, John P. Hall, Trina Ripley Excellence in Education and IRM’s President’s awards and in 2010 was honored as the first “MIRM of the Year” designee. He can be contacted by email at dlevitan@bellsouth.net, you can visit his website at www.levitanassociates.net and his housing industry blog at www.residentialmarketingblog.com/.