FOR MANAGERS: Companies to Watch
NewHomes: Success redux
Newhomes.com, Clearwater, Fla.
www.newhomes.com
Why eye it: We told you in the October 1998 issue that NewHomes.com, then called New Homes Advisory, was worth keeping an eye on. In three years, the Clearwater, Fla., company’s sales volume has exploded by 500 percent. The company is closing almost $1 million a day.
What they did: Father and son Don and Rick Davis thought they could make it big by focusing on three business arenas: the Internet, builders, and buyer representation. The Internet brought in buyers by the bushel and kept overhead low; builders loved to affiliate with them because they got free advertising in the company’s Web site; and representing buyers exclusively gave them access to like-minded independent contractors working in virtual offices from coast to coast.
Background: Rick, president and CEO, and Don, head of marketing, started their company nine years ago and printed their new homes magazine for distribution to news racks around the Tampa Bay area. It was expensive, says Rick. When the Internet came of age in 1994, the Davises adopted it as their primary marketing platform. “Then we discovered we had the infrastructure to expand greatly without a vast increase in cost,” says Rick.
Result: A sales boom. In our 1998 “Companies to Watch” feature, the company said it would have key Florida markets covered by the end of the year, and then expand nationally. NewHomes is now in 60 markets in 15 states from Washington and Arizona to New Jersey, the Carolinas, and the District of Columbia. The sales staff has grown from 10 sales associates to more than 200; offerings have gone from 500 model homes of Florida builders on the Web site to more than 50,000; leads have jumped from 300 a month to 10,000. Sales shot up from $50 million in 1998 to $300 million in 2001. In 2000, NewHomes also started carrying existing homes, which now make up about 20 percent of its listing inventory.
How it works: The Davises developed an interactive questionnaire to provide sales staff with information about prospects’ buying criteria, such as time to purchase, price range, and location. “We’re the marketing and accounting arm, and, in some offices, the broker,” Rick points out. “We furnish our salespeople with prospects; they can also get leads on the Web sites and by e-mail.” NewHomes has 20 full-time employees to handle the corporate administrative work.
Bottom line: “With the Internet, our cost per lead acquisition has dropped dramatically, even though we feature more model homes,” says Rick. “There’s no comparison between printing costs and electronic costs. Technology has streamlined our work and, in most cases, has eliminated the costs of traditional brick-and-mortar real estate offices.”
Sales staff: Davis says he recruits from among salespeople who have established track records. “They have to be entrepreneurial, want their own business, and be independent.” They also must have their own PC with Internet access, fax, copy machine, alpha pager, and cell phone. “We provide them with an individual Web page that serves as an electronic business card.” Compensation is on commission basis only.
Brokers: “We employ brokers in each state we operate in. They’re responsible for development of their market and recruitment of reps.” They’re compensated through a combination of base salary and sales commission overrides.
What’s next: “Our goal is to establish NewHomes.com as a leading national company that consumers look to when they’re interested in buying a new home,” says Rick.
