Builder of the Year report: Toll Brothers - new guard, new era, more success
Arguably better than any of the Giant builders, Toll Brothers built a business that was ready to absorb and pivot from the historic downturn to a new market.
It’s All About the Brand
The central element of the development of a brand is consistency. Everything a company does and says needs to line up with the message it presents to the public. To maintain a brand position of “America’s Luxury Home Builder,” Toll Brothers has to be extraordinarily conscious of everything it does, from the location of the land it buys and its corporate sponsorships to its incentives and the move-in gifts for its new homeowners.
Toll Brothers Timeline
Toll Brothers is formed by brothers Robert and Bruce Toll in Horsham, Pa. Over time, they earn a reputation as the region’s dream-home builder.
The company expands in the central New Jersey upscale housing market. This marks the beginning of its regional expansion.
Toll Brothers opens in Delaware
Divisions open in Maryland and Massachusetts
The company enters the country club market with Blue Bell Country Club in Montgomery County, Pa. The community features an Arnold Palmer Signature Golf Course. This begins Toll Brothers’ affiliation with internationally known golf course designers. It now has golf communities in 12 states.
Divisions open in Virginia and Connecticut
The New York division opens. The company’s position as a luxury home builder in the Northeast and Mid-Atlantic is firmly established.
Company enters the Sun Belt second-home market “in a big way,” according to CMO Kira Sterling. It expands into North Carolina and California in 1994 and Arizona, Florida, and Texas in 1995.
Toll Brothers makes its first acquisition: Geoffrey H. Edmunds
& Associates, Inc., a luxury home builder in Scottsdale, Ariz.
Company website launched
Toll Brothers opens Riviera at Westlake in Jackson, N.J., its first active-adult community. This allows Toll Brothers to follow the baby boomer market, a key target buyer for the builder.
The company changes its logo and its positioning statement from “Toll Brothers, Quality Homes By Design” to “Toll Brothers, America’s Luxury Home Builder.” This officially differentiates the company as focusing on the luxury end of the production home-building business.
The company launches “Fly and Buy,” a program to fly prospective buyers to experience the lifestyle at second-home communities. This demonstrates the relative ease of reaching the destinations in a short amount of time to maximize use of the property.
Toll Brothers enters the urban, luxury high-rise market with the introduction of the City Living brand. This gives the company access to the luxury, high-rise tower market and status with wealthy urbanites.
Toll Brothers announces its first — and only — national sponsorship, the radio broadcast of the Saturday matinee of the Metropolitan Opera. This is the longest-running classical music program in the history of American broadcasting. The program is broadcast on the Toll Brothers-Metropolitan Opera International Radio Network over more than 300 stations in the U.S. It reaches 11 million people in 42 countries.
Toll Brothers opens its New York City division. This gives the company a high profile with Wall Street investors and analysts and helps diversify the company, providing stability as suburban locations start to falter.
The company’s Web team transitions from being under the control of Information Technology to reporting to CMO Kira Sterling. This recognizes the importance of Internet marketing to prospective home buyers and ensures that the company’s brand remains consistent from a buyer’s first introduction to the company to post-closing.
Toll Brothers formalizes its active-adult offerings as a brand with the launch of Toll Brothers Active Living.
Toll Brothers purchases CamWest in Seattle. This completes its position of having a presence in the 15 most-affluent markets in the country.
The last part has been fairly easy to accomplish. Nothing says luxury like a gift that arrives in the famed blue box from Tiffany’s. But it’s not a standardized item like a logo keychain for the house keys or a crystal vase filled with fresh flowers. Within a couple of weeks of moving in, the sales consultant hand delivers a Tiffany gift selected especially for them.
“The blue box does mean something,” says Sterling. “It doesn’t get ignored. The fact that we’re associating with that brand is important.”
The front end of the value proposition — location — has always been the most difficult to manage. No one’s making any more land. Toll Brothers defined its position unequivocally when it entered the Manhattan high-rise luxury tower market. Its latest offering is The Touraine, a condo project at 65th and Lexington Avenue, just blocks from Tiffany’s flagship store in Manhattan.
Toll Brothers has made a point of associating with well-known, highly respected brands as part of its sales and marketing strategy. Its website devotes a section to the brands it uses in its homes, including Kohler plumbing fixtures, Jenn-Air and Viking appliances, and Bose sound systems. The golf courses at its country club communities are designed by the top names in the business, including golf legends Arnold Palmer and Greg Norman.
“Having these celebrities appear at the courses doesn’t hurt either,” Sterling notes.
Getting into golf communities was just one of the strategic sales decisions made by the 2012 Professional Builder of the Year, but it’s one that exemplifies the brand. Toll Brothers not only builds the houses but also manages the courses and the amenities. Its golf and country club division runs 12 courses that include full-service clubhouses with swimming, tennis, and fitness centers.
“Golf is a luxury sport,” Sterling points out. “It speaks to the idea of having leisure time to play. So much business takes place on the golf course. Having the courses helps us create the lifestyle. It’s all about making the members happy because happy members bring other people to the club. It’s a brand assist. The opportunity to have a sales conversation with a prospective buyer at the clubhouse is very valuable.”
Just as some builders opt to target first-time or move-up buyers, Toll Brothers made the decision in the late 1970s to target luxury home buyers — baby boomers who were building their careers and their wealth or had benefited from the generational transfer of wealth from parents who grew up in the Depression and World War II.
Those buyers had sufficient funds for second homes in Sun Belt locations, including Arizona, Nevada, Florida, California, and the Carolinas. Toll Brothers took advantage of regular, reliable air travel and launched “Fly and Buy,” a promotion that gave prospective buyers a chance to sample the lifestyle. It showed buyers how easy it was to spend a weekend in the sunshine with family and friends.
As the baby boomers aged, Toll Brothers developed active-adult communities for them. It got into that market in 1999 with Riviera at Westlake in Jackson, N.J. The key was being able to offer a different experience than the minimalist, budget-minded senior citizen community of the past.
“We take a more luxury approach to active adult,” says Sterling, “not always with more space, but with features and amenities in the homes and clubs, with services supportive of that buyer.”
Telling the Right Story
Sponsorships are another key part of any corporate branding strategy. As part of establishing itself as a legitimate option for ultra-luxury, urban home buyers, Toll Brothers announced its sponsorship in 2005 of the Metropolitan Opera’s radio broadcast, the longest-running classical music program in the history of American broadcasting. Broadcast on the Toll Brothers-Metropolitan Opera International Radio Network over more than 300 stations in the U.S., it reaches 11 million people in 42 countries.
“It was an opportunity to align ourselves with the preeminent brand in the classical music universe,” Sterling says. “It gets the music out to people who would be the next generation of listeners as opera expands. We get letters from people all over the country and the world.”
To date, Toll Brothers hasn’t pulled the trigger on two brand strategies that might seem like a good fit. They haven’t aligned themselves with a well-known designer, such as KB Home’s collaboration with Martha Stewart, or a luxury car manufacturer.
“We floated the idea; it just never panned out,” Sterling says. “We wouldn’t rule it out, but nothing yet has made brand sense.”
Advertising and incentives also are a telling part of a builder’s brand position. During the housing bust, the majority of builders piled on incentives and ran ads touting massive discounts. Toll Brothers’ buyers weren’t impervious to the effects of the recession, but the company “tried not to ride the train in terms of the public messaging, the flight to the bottom of who can give away more,” Sterling says. “The potential brand damage from that is very difficult to recover from.”
Instead, Toll Brothers focused its advertising on the company’s stability and consistency. They offered incentives that didn’t dilute the value of the existing homeowners. Sales events have been tied to financing rates or upgrades at discounted prices. “It’s not that we would never cut a base price,” Sterling says, “but we prefer the idea of adding value when you need to by offering different upgrades at reduced prices to help hold value for those who have bought before.”
Unlike many builders, Toll Brothers has an in-house marketing and advertising, Web, and graphics team. Recent ads have included a red carpet theme, mini-profiles of homeowners who exemplify the buyer profile, and an “I Wish I Had” campaign that spoke to the experiences that would be lost by postponing a purchase.
“We do work with some outside companies, but we’re really like an in-house agency,” Sterling says. “Copywriting, Web design, traffic, client services — those are all internal. It’s a special opportunity to have messaging that’s organically relevant. We’re listening to our salespeople day-in and day-out and are learning about what they’re hearing and seeing.”
More than anything else, the message has been consistent.
“If you are vanilla this month, chocolate next month, and strawberry the next, people get confused about who you are,” Sterling says. “The fact that we have been steady and consistent with our messaging — we’re not trying to be all things to all people; we’re not going to be fad-oriented — to me that is fundamental.”
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