Trendy Incentive Plans

Home builders throughout the country are employing various selling and discounting strategies to move their inventories.

Florida-based Mercedes Homes, which builds mid-range/move-up homes in Florida, Texas, North Carolina and South Carolina, introduced several promotional sale activities including its "You've Got the Power" inventory sale in July. This "Let's Make a Deal" type promotion encouraged buyers to go to sales centers and make their best offer while taking advantage of Mercedes Homes' financing programs, closing cost assistance, below-market interest rates and free upgrades.

The outcome of the promotion was less than what company heads had expected; however, Mercedes Homes did learn a few lessons in the process:

"Give consumers a particular price," says Scott Buescher, chief operating officer of Mercedes Homes. When you allow them to set the price they are not sure that they are getting the best deal. People need a more definite number, he says.

Allow enough time between sales promotions. Conducting sales back-to-back can potentially water down the responses you receive from home buyers. The impact of the "You've Got the Power" promotion was weakened, Buescher says, because it followed too closely on the heels of Mercedes' 96-hour sale, which was held in June.

Frame your promotions within short periods of time. Mercedes Homes held three promotional events: a 96-hour sale; a two-week, Sneak Peak promotion; and a nine-day Savings Spectacular. With such rapid-fire promotions, potential buyers were given a small window of opportunity to buy — and a smaller opportunity to delay purchasing.