Are you ready for another shift in the economy?
In 2020 and 2021, builders, manufacturers, and distributors scrambled to adapt their operations to the red-hot building industry. From placing strict caps on sales numbers to buyers forgoing home inspections for a more appealing offer—the most competitive housing and production market we’ve experienced in recent times is starting to cool. As we now try to understand the challenges this market shift will present, business leaders should: Prepare their team and operations, get back to basics, and control what they can.
Housing is the Crystal Ball for the Build Environment Economy
Over the past two years, the building and construction industry and those who support it have adjusted operations and expectations in response to material and labor shortages. However, thanks to mounting local and global economic factors, the industry is now faced with more pressure to address housing affordability, backlog issues, inflation, and rising interest rates.
The home building industry is specifically making headlines and serving as the “crystal ball” for the weakening market. Jerry Konter, chairman of the NAHB and a home builder and developer from Savannah, GA, reports, “Single-family home building is slowing as the impacts of rising interest rates reduce housing affordability. Moreover, construction costs continue to rise, with residential construction materials up 19% from a year ago.” Housing is a vital indicator of a healthy economy, affecting related markets such as mortgages, land sales, raw materials, and employment. The ingredients for an economic headwind are here. It’s time to prepare for our business to adapt again.
RevOps can handle an economic headwind
French chemist and vaccine developer Louis Pasteur’s quote, “fortune favors the prepared,” seems fitting for today’s times. How prepared are your procedures and operations? How can you build time-saving automation and reduce manual and redundant processes so when things get “sporty,” you can adapt quickly and get accurate feedback on your operation? It’s time to take practical steps to increase growth and decrease friction- a business transformation known as RevOps.
Self-critique and change can be intimidating, but as fortune also favors the brave, every scenario and challenge in uncertainty creates opportunity. Those companies brave enough to critique their antiquated systems and implement transforming automation processes will navigate any market shift smoothly.
Take Illumine8’s case study on Kenwood Management Company. The Kenwood team spent too much time on projects and operational tasks. Due to siloed systems and numerous spreadsheets, they were missing opportunities to engage with their customers and attract new business. The team at Illumine8 was able to implement a digital transformation that streamlined their operations and replaced legacy systems. What started with a phone call and technology audit is now a company more prepared for market fluctuations or bumps in the economy. The Kenwood team’s ongoing digital transformation allows them to invest in brand loyalty and lower the company’s risk of missing opportunities. Read more about Kenwood’s success story here.
Back to Basics
When uncertainty rises, and roadblocks appear, it is best to double down on the basics. Focus on what matters above the noise. Ravi Saligram, the CEO at Newell Brands, told Business Insider, “It's got to be about consumers, collaborating with customers, and taking care of your people.” Knowing that you solve a problem for your customers and create value should be your north star. Illumine8’s inbound marketing strategy highlights that now is the time to learn and evolve. Listen to your customers, engage with them, and learn from their feedback. This feedback can help you improve your products and services, grow your company, and face a market shift.
By staying hyper-focused on what matters and leaning into your strengths instead of being sidetracked by your vulnerabilities or the market fluctuations, your team will feel empowered, customers will feel heard, and your competitors will be left behind. Consider implementing a Net Promoter Score (or NPS) survey that gauges brand perceptions and customer satisfaction levels, which provides actionable insights into what your business does well, and could improve on. Surveys are a great way to gauge if your product or service is appropriately adding value to your customers and measure their loyalty to your brand.
Control what you can
Supply chain, inflation, geopolitics, gas prices. Things we can not control.
According to NAHB’s Director of Tax and Trade Policy Analysis, David Logan, building materials prices are up 19.2% and have increased 35.6% since the start of the pandemic. National home prices grew at an unsustainable pace in the first quarter, reaching an all-time high resulting in an imbalanced market with strong demand and low inventory. In addition, higher fuel prices are creating lower margins for those in the construction industry. The list of factors outside a specific company’s control goes on and on - making it hard to compare and plan. What can you control when outside factors work against a business in this industry?
You can control your perspective and the message you communicate to your team. A market shift is an excellent opportunity to develop a deeper connection with your employees. Helping them navigate the challenges and teaching them how to succeed in a crisis will leave a lasting impression. As Illumine8 illustrates in our RevOps Manifesto, your employees are your first customer and stakeholders. Remind each team member to “act like an owner” in their actions and response – invest where they can, cut back where they should.
We view this potential economic shift as an economic correction. This mantra could be helpful to remind your sales team when they feel out of control or discouraged- especially if they’ve never been through a downturn in the industry. Specifically, companies can be obsessed with month-to-month numbers and data in the built environment. While that is exciting when sales are high, it can become very stressful when the market shifts and expectations aren’t realistic. Focusing on the micro; the month, the quarter, and even the year – can be misleading. Instead, step back for a long-term view. This perspective can be helpful and comforting in volatile times. The pace of growth the built environment has contended with during the pandemic is unsustainable. The building industry is coming off record years, both in positive and negative ways - so keeping your team informed and in a “marathon mentality” will prevent burnout and discouragement.
A shift of any kind often shows a company’s true colors and presents the perfect opportunity to explore ways to increase productivity and efficiency. Your competitors will also be feeling the pressure of a market shift, so being flexible and focused will leave you coming out stronger. A downturn never lasts forever, and opportunities will show themselves on the way up again. Times of disruption and uncertainty is when your customers need you the most. Be the company that leans into the challenge and takes the opportunity to build relationships that last long term.
Stay the course, stay focused, and remain resilient. Challenging conditions can also bear fruit. Your organization can thrive in an economic headwind by executing a solid internal process and marketing strategy aligned with external efforts. We’d love to learn more about your company and how we might be able to help get you there. Schedule a meeting to get started.