At Shared Drive, our mission is to help home builders navigate the complex online customer journey—from initial contact to final sale. One question we frequently encounter is, “What are the industry standards for online sales conversions?”

The truth is, defining a universal standard is challenging due to the varying practices among builders. The good news is that analyzing conversion rates within your own operations can provide valuable insights, without needing an industry standard benchmark.

Here, we delve into the nuances of conversion rates for OSCs, showing you what key data and influencing factors you need to be aware of when working to optimize your conversion rates.

The Challenge of Defining Standards

Conversion rates in the home building industry can be complex and misunderstood. Builders often employ different methods to calculate these rates, leading to discrepancies. For instance, Builder A might count a lead visiting multiple communities as several appointments, whereas Builder B counts one lead as one appointment, regardless of the number of locations visited. Without understanding these variations, comparisons between builders can lead to unrealistic expectations and misjudged performance.

Establishing Your Baseline

Given the lack of an industry standard, it’s crucial for builders to establish a baseline of their own to work from. This involves ensuring your online sales team understands how to prospect and nurture leads, asking the right questions to gather critical data, engaging customers effectively, and being proficient in using a CRM. Once these fundamentals are in place, measure your conversion rates and strive for continuous improvement quarter over quarter and year over year.

Conversion Rates Analysis: Year One vs. Year Two

To understand the effectiveness and growth potential of OSCs in the home building industry, we analyzed conversion rates over two years. This analysis highlights the improvements that can be achieved with experience and refined strategies, and also underscores the value of OSCs in driving sales and enhancing customer engagement.

OSC Year One:

Lead to Appointment Conversion Rate:

• • Average: 20-30%
  • Experience Boost: 5-10%

Appointment to Sale Conversion Rate:

• Range: 10-20%

Sales Contribution:

• Initial 90 Days: Less than 10%
• 6-9 Months: 20-30%

OSC Year Two:

Lead to Appointment Conversion Rate:

• • Average: 30-60%
  • Notable Outliers: Beyond this range

Appointment to Sale Conversion Rate:

• Range: 20-40%

Sales Contribution:

• Varied widely by builder
• Range: 20-60%
• Notable Outliers: 70-80%

The data shows significant improvements from Year One to Year Two. The lead-to-appointment conversion rate increased from an average of 20-30% in the first year to 30-60% in the second, suggesting enhanced strategies or favorable market conditions. The appointment-to-sale conversion rate also saw an uplift, moving from 10-20% in the first year to 20-40% in the second year, indicating better quality appointments or improved sales processes.

Sales contributions were modest in Year One but saw a significant increase in Year Two, with some builders achieving as high as 70-80%. This variability demonstrates that specific strategies, market segments, and experience have a substantial impact on performance.

What Drives the Differences in Conversion Rates?

Understanding the factors that cause outliers in conversion rates is crucial for optimizing performance. Key factors include:

• Sales Adoption, Training, and Accountability: Effective training and a culture of accountability can significantly enhance conversion rates. Builders who invest in comprehensive and regular sales and OSC training see better adoption of best practices and more consistent performance.
• OSC’s Ability to Pivot and Value the Customer: The flexibility of OSCs to adapt their strategies based on customer feedback and market conditions plays a significant role in conversion success. OSCs who prioritize customer needs and are willing to adjust their approach build stronger relationships with leads, increasing the likelihood of conversion.
• Market Shifts and Company Goals: Economic factors, seasonal trends, and shifts in company objectives can greatly influence conversion rates. For instance, a booming real estate market usually leads to higher conversion rates, while an economic downturn has the opposite effect. Keeping this in mind and adjusting expectations accordingly is often necessary.
• Tools and Automation: Leveraging tools and automation can streamline processes and significantly improve efficiency and the customer experience. OSCs equipped with robust CRMs, automated follow-up processes, and data analytics tools can manage leads more effectively. These tools enable OSCs to track customer interactions, personalize communication, and identify high-potential leads, all of which contribute to higher conversion rates.
• Traffic Sources: Diverse traffic sources, such as organic search, paid ads, or social media, have different user behavior profiles that affect conversion rates. Testing these and understanding which work best in each market can boost conversion rates.
• Marketing Campaigns: The effectiveness of marketing campaigns, including timing, targeting, can vary widely, leading to spikes and drops in conversion rates. A well-timed campaign can drive high-quality leads, boosting conversion rates, while a poorly executed one can do the opposite.
• Customer Journey and Experience: The design and functionality of a builder’s website, including ease of navigation and mobile optimization, play a crucial role in conversions. A seamless online experience is expected and necessary to optimize conversion rates.
• Measurement Methods: Different methods of measuring conversions, such as counting multiple visits by the same lead as separate conversions, can lead to vastly different rates even if underlying performance is similar. Set your own internal measurement methods to create consistency within your own organization.

Maximizing Conversion Success for Home Builders

While establishing a universal standard for conversion rates in the home building industry is challenging, understanding and leveraging the factors that influence these rates can help builders optimize their online sales programs. By establishing a benchmark within your own organization, you can focus on optimizing conversion rates, which is ultimately what matters most, regardless of industry-wide metrics.

At Shared Drive, we work with builders to continuously improve their conversion rates. By focusing on internal baselines and striving for consistent improvement, builders can achieve greater success in their online sales efforts. If you need help implementing better systems or marketing campaigns from a company that knows the industry inside-out, book a call with us; we’d love to discuss how we can help boost your conversion rates.