If you've spent any time remotely near Los Angeles over the past half-century there's a good chance you've heard of Cal Worthington and his chain of car dealerships. In his 10-gallon hat and continental suit, Cal often promised consumers he would “stand on his head” if that's what it took to get them behind the wheel. For decades he was a commercial icon and the archetypal salesman, and his wheeling and dealing had few if any rivals.
Few rivals, that is, until this summer, when new-home inventories in California stretched out to multi-year highs, price growth shrank to multi-year lows, and production builders couldn't find a soul to visit their model homes, much less sign on the dotted line. Buyer-challenged production builders and individual sellers began taking a page from old Cal's sales manual. But forget doing head-stands; these guys have been offering first-class European vacations, bottles of vintage wine, swimming pools, plasma televisions, and new Italian sports cars, according to “A Maserati—as Bait,” a Los Angeles Times article published Sept. 24.
Even sellers of so-called “green” homes with environmentally friendly features are resorting to sweepstakes tactics. The Times article also noted that Palo Alto–based Clarum Homes, which incorporates solar panels and water conservation features into many of its units, was giving away Toyota Prius hybrids to the buyers of five units that Clarum was still trying to unload in Watsonville, Calif.
In Alexandria, Va., executives at Smitty's Building Supply also see a softening market and builder promotions. “But the freebies are in the way of construction upgrades and options, like a finished basement, a trim package, or a free deck,” says Al Mao, Smitty's vice president of sales.
Mao adds that contractors are beginning to exert pressure on suppliers, and some competitors are giving in. “Most prominently we're seeing a lot of [price-driven] dealers do what they typically do in a softening market: They drop pricing to retain market share,” Mao says. Like many companies that have built a strong business model around value-added services, Smitty's loathes entering the low-balling arena, and Mao suggests that similar dealers join ranks in staying the course. “We are emphasizing the value side of the business every day,” he says. “As pro dealers, if we can't distinguish what we offer in terms of services, in terms of inventory, in terms of knowledge and expertise, we'll all just become big boxes.”
Besides, even Cal Worthington wasn't just a price-slasher. Beneath the cowboy shtick beat the heart of a shrewd businessman who invested heavily not just in deal making but also in service. For example, Worthington Ford in Carlsbad, Calif., is a Ford Blue Oval Certified Dealer, a moniker bestowed on select dealers for commitment to the automaker's highest standards of customer satisfaction.
Smitty's is equally committed to satisfying its customers, regardless of the current swing in the construction economy. “When the slowdown is over, we want our customers to look back and value their relationships with us just as much as they did when times were good, if not more,” Mao says.
Wild-animal marketing gimmicks notwithstanding, selling below invoice only gets one so far. The companies that are willing—in good times and bad—to “stand on their head” for customer satisfaction are the ones that are giving the best deal of all, and the ones that are ultimately still going to be upright at the end of the day.