For Payne & Payne, Custom-Home Building is a Family Affair

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Payne & Payne Builders [1] was founded in 1993, in the middle of a recession — not the most auspicious time to start a custom-home building company, unless you're F. Michael Payne. With 35 years of experience as a remodeler, general contractor and large-volume production builder, Payne was well-equipped to weather the down market. His brother, David S. Payne, who had worked with him nearly 10 years earlier, joined him as partner in the Chardon, Ohio, firm. It wasn't long before word got around about the company's smart business practices, quality work and dedication to customer satisfaction.

Mike Payne Sr. retired five years ago. His sons, Michael Payne Jr., David C., Eric and (most recently) Brian, run the company with their uncle Dave. While no longer active on a day-to-day basis, Mike Sr. still acts as mentor and consultant. Mike Jr., David and Eric comprise a board of directors that holds weekly strategy meetings. Mike Jr. is responsible for operations, David handles sales and Eric is in charge of administration. “The collaboration, synergy and debate of this board has enabled us to make good decisions, no doubt helping us navigate the recession,” says Mike Jr. “Our strengths and weaknesses complement each other well.”

The Paynes' commitment to teamwork, family values and creating an exceptional client experience has served them well in Geauga County, where construction is down 85 percent. “The custom market that was our sweet spot is probably down even more,” says David. “But we saw that coming a couple of years ago and decided to diversify into semi-custom homes and expand our price points. We also started taking on remodeling projects, which enabled us to keep our staff intact and touch more clients and families.”

The new line of semi-custom homes, called the Neighborhood Collection, has been a success “right out of the gate,” Mike Jr. says. “It looks like we're going to do twice as much in 2010 as we did in 2009, and there's a good chance it will be our second strongest year ever, next to 2008.”

In order to remain competitive in Cleveland's eastern suburbs, Payne & Payne stays focused on these core competencies:

Green leadership

Payne & Payne was applying sustainable principles before most of its competitors. In the 1990s, the company started working with building-science experts Paul Rimelspach and Nathan Yost. Rimelspach owns Energy Designed Homes [2] in Granville, Ohio, and still does Energy Star testing for Payne & Payne. Yost, a medical doctor and home builder, is a former principal of Building Science Corp. in Boston.

“When we joined the Energy Star program in 2002, we were the first builder in the area and one of the first in the state to embrace that,” says Mike Jr.

The Paynes were instrumental in developing the Northeast Ohio Green Building Initiative [3] (NEOGBI), a voluntary certification program affiliated with the NAHB green-building program. Mike Jr. was named NEOGBI chairman in 2009. They also built the only custom home on the HBA of Greater Cleveland's [4] 2009 Green Home Tour. Eric emphasizes that the green technology wasn't over the top. Features of the 4,350-square-foot home include geothermal heating and cooling, reclaimed materials and passive solar design.

“Certainly it's helped differentiate us,” says David. “We're branded locally as green builders and we've got clients that seek us out just because of that. By the same token, I believe in not trying to sell anything [the customer] doesn't want. For most clients, energy efficiency is important, and they're becoming more concerned about indoor air quality. But there's no one-size-fits-all approach.”

Superior design capabilities

Believing that all good homes start with good architecture, Payne & Payne works with as many as half a dozen outside architects in a given year, complementing its in-house design staff. The company has relationships with architecture firms as far away as California. “We do videoconferencing with the out-of-town architects,” says Eric. “Clients really seem to like that.” David adds, “Our business is made up primarily of [clients] who come to us first, not the architect.”

Payne & Payne is well-versed in a wide range of styles including French Country, Tudor, Craftsman and contemporary, and strives for maximum curb appeal with every custom home. “We can almost predetermine the best marriage of the client's goals and wishes and the architectural design,” says Mike Sr.

In 2001, the company opened a 2,000-square-foot design center to give clients a comfortable place to meet with architects, browse through plans and photos, and select products, materials and details. Almost all selections can be handled in house, says Mike Sr.

Trade relations

Payne & Payne nourishes long-term relationships with its trade contractors, some of whom have been working with the family for decades. “We pay them weekly — we don't make them wait,” says Mike Jr. “We work with them to learn how they price jobs and incorporate it into our estimating system. With their input, we value-engineer our designs.”

Good communication is as essential to Payne & Payne's relationships with contractors as it is with clients. The Paynes meet with trade partners on both an individual and group basis to explore ways they can work together more effectively. And extra effort is rewarded: through the “Company Stories” program, any employee, trade partner or supplier who goes out of their way to please a customer is recognized with a notice posted in the office and at job sites. The stories are updated monthly.

Networking and brand recognition

“In terms of marketing, we've found that the most successful method is networking — pressing flesh,” says David. The Paynes have belonged to Leadership Geauga County, a local leadership development group, since 1999, and stay on top of market trends through regular contact with local realtors and architects.

David frequently does presentations on green building for local municipalities, Rotary Clubs and other area professionals. As the new chairman of NEOGBI, Mike Jr. has been spreading the green gospel to consumers and peers.

“A couple of years ago we didn't even need to advertise; it was all just word of mouth,” says David. “Now we do some advertising to drive traffic to our model home. We also have a great Web site, a monthly e-newsletter and good site signage.”

Where other builders see headaches, Payne & Payne sees opportunities that help achieve its brand-building goals. If a problem arises with a Payne-built home, they'll take care of it, “even if it's five, six, seven, eight years later and there's a new family living in it,” Mike Jr. says. “People can't believe that even though we didn't build the home for them, we'll come back and fix it. They absolutely rant and rave to all their friends and family.”

The way the Paynes see it, being named Custom Home Builder of the Year validates their adherence to Mike Sr.'s long-held principles of honesty, integrity and mutual respect. But at the end of the day, moving forward is what they're all about.