Deconstructing Generation X: log on, open up, and take the time to explain things.
The 48 million consumers who make up Generation X are one such catalyst. Though this generation is smaller than the baby boomers before it, it is a major emerging segment of the homeowner market (see "Better Than Boomers?" on page 92). Moreover, Gen Xers are entering their peak earning years with a sufficiently different of experiences and expectations that could rewrite the rules of remodeling relationships. As 31-year-old remodeler Michael Anschel neatly summarizes the situation, "The old-school contractor who got by on his limited knowledge of the world and whose word was gospel to his clients is now faced with an educated client who can go online and look up any subject in a matter of moments."
Here's why Gen Xers are critical to remodelers, how they're different from the generations of homeowners before them, and why their emergence as a powerful remodeling segment demands that you change--or at least reevaluate--how you work with them.
DOING THEIR HOMEWORK
What's different about Gen-X remodeling clients? Just about everything. They're younger than most homeowners you know: born roughly between 1965 and 1976, Gen Xers are primarily in their 30s. Highly educated--33% have a college degree, more than any previous generation--they tend to conduct due diligence on the companies they're evaluating. "We especially appreciate their knowledge," says Cory Hogan, CEO of Upscale Downstairs, Provo, Utah. "With so many Gen Xers using the Internet, we understand that our clients have often done hours of research before we even get the first phone call."
"This is a generation of 'doers,'" says Anschel, president of Otogawa-Anschel, Minneapolis. "They like to be involved in things. They live in a world of options and do not like to have choices limited. They have seen things, been places, have strong feelings about things, and want to see it reflected in the spaces they inhabit."
This could mean bold color schemes, travel-influenced design and decor, and ego-driven features that indulge their passion for sports, cooking, music, exotic fish, or anything else (see "Design Within Reach" on page 94).
Gen Xers' tendency to plunge into things extends throughout their remodeling projects. Jonathan Hodge, a design consultant with The Alexander Group, Kensington, Md., is doing a $285,000 addition for a married, 30-something couple who, he says, "certainly did their homework." Before their initial consultation with Hodge, the couple had interviewed friends who had remodeled, visited the NARI (National Association of the Remodeling Industry) Web site, researched the design/build process versus the architect-bid process, developed a budget, identified the materials and features they wanted, evaluated their current and future space needs, and studied up on the architectural style of their home, a 1940s brick Colonial.
"They asked a lot of questions," Hodge says, "and had a strong desire to learn about the process, the company, and how various issues would be addressed," such as who would be responsible for jobsite materials, and how the company's trade contractors were insured. They even pored over the small print of the contractual agreement.
Obnoxious control freaks? Young lawyers from hell? On the contrary, Hodge says. "They knew very well where their knowledge base went and where ours picked up." Thanks to the detailed specifications and thorough, upfront communication, Hodge was able to win their go-ahead with his very first design. He respected them, and vice versa. "The project has gone very well," he says. "It's been one of those bluebirds."
WANTING IT NOW
The first generation to grow up with computers, Gen Xers are extremely tech-savvy. The Internet is their "reference library, business directory, and information-gathering tool all rolled up into one," says Gary Pettis, a marketing consultant with Pettis Creative in Minneapolis. At a minimum, working with them successfully requires communicating at the speed to which they've become accustomed.
Anthony Cucciniello recently finished a $300,000 addition for a professional Gen-X couple who relied constantly on their BlackBerries, e-mail, and cell phones. This suited his company, 4V Construction & Management, New Rochelle, N.Y., because Cucciniello also loves his BlackBerry--as do his staff and his vendors. Questions and answers flew back and forth, decisions were made promptly, and schedules were seamlessly coordinated. "I found them easier to deal with than boomers," says Cucciniello, a 35-year-old Gen Xer himself. "I could say, 'Go to whatever-dot-com to see this product,'" he comments, whereas older clients tend to expect him to bring them samples in person.
Ron Mulick had a similar positive experience with a Gen-X couple doing a kitchen and master bathroom remodel. "The key, as always, was communication, which was actually easier since the couple used their e-mail regularly," says Mulick, president of Mulick Construction and Design, Agoura Hills, Calif. "I was also able to send documents, invoices, and change orders via e-mail, which was very convenient."
Feedback isn't all that Gen Xers expect quickly. "There's a sense of immediacy--of what's in it for me now," says Steve Kleber, who consults on consumer behavior through Kleber & Associates, Atlanta, and the Center for Kitchen and Bath Education and Research (www.ckber.org). That quest for instant gratification can play out in challenging ways, from Gen Xers choosing colors that strike you as next year's harvest gold, to expecting their project to wrap up in no time.
"The speed of construction, which has not kept pace with other sectors, is something that you need to sit down and explain very carefully to them," Anschel says. He suggests walking Gen Xers through the construction process before you get there, and creating a road map that helps them visualize the many pieces and what hinges on what." Updating schedules is also important, he adds, "as they will get tied to specific deadlines and due dates and expect you to meet them."
"We're almost an over-educated consumer," says Michael Moore, a 33-year-old licensed builder and owner of MR Moore & Co., Holland, Mich. He points out that, immersed in the Internet and "reality" home-makeovers, this generation "knows about the superficial stuff, but needs to be educated about the guts" of the remodeling process. "I think if you professionally develop the program and make sure the scope of work is thoroughly detailed," Moore says, "you can coach the client into realizing [that they don't know enough to do it without you]."
"They know the components they want," agrees Michael Tenhulzen, the 31-year-old general manager of Tenhulzen Inc., Redmond, Wash. "But they're not necessarily seeing the whole completed vision." He's all too familiar with Gen Xers' proclivity to research and price-compare, and to resent paying markups they don't consider justified. "They're doing more upfront interviewing with contractors," he notes approvingly. "But they don't necessarily know what attributes to look for, so they default to price."
Like Anschel, Tenhulzen sees education as a solution to this challenge. "We're going to be releasing a new Web site that will help them learn more about the industry and the process and the way they can best be served," he says. His company has also hired more Gen-X employees, in part to better relate with this customer base.
Yet Anschel has a different response to Gen Xers' supply-it-themselves approach. "It's to be expected," he observes. Rather than requiring clients to purchase materials through his company, he lets them make the call, with the understanding that he will not warranty items they have supplied.
"There are some things that we have no objections to their supplying," Anschel says, such as the kitchen sink and the light fixtures. "And others that we suggest that we supply," such as faucets, disposals, and shower valves. "Peers of mine grumble that this cuts into their profit. I look at it differently," Anschel explains. "I can either have a good project that I am proud of, as well as a good referral, or no project at all. If the client only has $80,000 to spend, and if you can get more mileage out of the project by having the homeowners supply certain item--or perform some sweat equity--then why not?"
Bombarded by advertising from an early age, Gen Xers dismiss traditional marketing in favor of straightforward approaches that let them evaluate objective information--just as online comparison-shopping does. Don't hide information or make unrealistic promises. Do demonstrate that you're on top of new products and trends. "They will place a great deal of trust in you if they think that you 'get it,'" Anschel says.
Pettis says that Gen Xers "will most likely he analytical or business-like during the remodeler selection process, yet creative when sharing and brainstorming ideas." It pays, he notes, to work with them in a consultative fashion based on establishing trust, building rapport, demonstrating credibility, and assessing the client's lifestyle and future needs.
"As a generation, we're just skeptical of everything," says Melissa Benson, the 29-year-old president of Hammer Head Remodeling, Nicholasville, Ky. She says that she feels Gen Xers "are not taken seriously as a consumer group," and she refuses to buy from businesses that don't show her respect and help her get value for her money.
One approach Benson takes with Gen-X clients is using a checklist to ask as many questions as possible about their project and how they plan to use the finished space. Then she takes the time to prepare more than one estimate, using a laptop and PowerPoint to highlight the features and benefits of each. Gen Xers work long hours, she says, so she does the legwork for them.
"We have to recognize their opinions," Hogan says. "I don't go into a job saying, 'We always do this. We always do that.' Instead, I often ask, 'What have you thought about? What are your suggestions?'" Gen Xers, he adds, "almost always have great ideas--a result of the available information."
Thankfully, they're open to other people's ideas as well--another contrast to older clients, who tend to be set in their ways. Tenhausen recently worked with Gen-X clients who wanted to give their traditional house a stylized, contemporary kitchen, influenced by a pile of magazine articles they had torn out to show him. "As their consultants," Tenhausen explains, "we said that probably wasn't best for their home. We compromised on it, by educating them on the process and getting them to think further"--beyond 'What's in it for me now?'
GEN XERS IN ACTION
Finally, an anecdote: A couple of Gen-X clients recently remodeled the kitchen of their 1920s bungalow. One well-known design/build firm was more expensive than other companies, but they chose it for two reasons that seem to typify the Gen-X remodeler-selection process.
First, "we thought it would be worth the extra expenses because of the warranty service and because we wouldn't be there to supervise," says the female half of the couple. "From that perspective, they were great--they did the job without our holding their hand."
The bigger reason that the couple chose this company was the saleswoman/designer. "She was articulate, thorough, detailed, and inventive," the client says. "She solved lots of space problems and did things to make the project work, even though the company would have lost out on the markup." She also "was great via e-mail--would send me links to samples of merchandise online so I could pick fixtures, etc.--and returned calls quickly."
In addition, the client says, the saleswoman/designer--who has since started her own business--provided them with detailed budgets and tried very hard to stretch their money by having them order direct for materials. That contrasted sharply with another division of the same company, whom the couple asked to replace their windows. "They refused to provide us with a detailed budget, and the cost was extraordinary," the client says. "We're getting them done soon for half the price"--from another company that they learned about through a neighbor.
Better Than Boomers?
Despite lingering perceptions of them as aimless slackers forever mooching off their parents' largesse, Gen Xers as a whole are deep-pocketed homeowners with clear visions of their remodeling goals.
In a presentation at last year's Remodeling Futures Conference, Amal Bendimerad, of the Joint Center for Housing Studies at Harvard University, identified Generation X as the group born between 1965 and 1974. To simplify her analysis, imagine a side-by-side comparison of the Gen Xers of 2003 with the "trail" baby boomers of 1995, when both groups were mostly in their 30s. You would see that Gen Xers' median income was nearly $65,000, compared with $52,000 for boomers. Gen Xers spent $2,200 per year on remodeling, compared with boomers' $1,800. And 71% of white, native-born Gen Xers owned homes, versus 65% of boomers.
Gen Xers are far more diverse than previous generations, and more likely to delay marriage and parenthood. Yet regardless of race, national origin, marital status, or family formation, they have higher homeownership rates, incomes, and remodeling budgets--and older homes.
Having accounted for 20% of home improvement spending in 2003, Gen Xers are poised to become the dominant remodeling segment. Remodeling activity typically peaks when people are 35 to 45 years old, before dropping off in their 50s and beyond.
Design Within Reach
As much as Gen Xers appreciate design and style, they aren't particularly loyal to brands or driven by status. One reason is economics, but more importantly, "this is a generation that understands high tech and low maintenance," marketing consultant Steve Kleber says. Whereas baby boomers seek "authentic" products, such as granite counters and cedar decking, Gen Xers are open to man-made materials that won't chip, warp, or end up in a landfill. Examples include engineered quartz, polyurethane molding, and composite decking.
Additional features of the Gen-X house:
* Wireless everything. Keyless entry, wireless Internet, lighting and music controls, as well as integrated systems that let homeowners manage functions such as security, HVAC, and cable TV remotely.
* Bold colors. Gen Xers are more interested in home as self-expression than long-term investment. Overheard in focus groups: "I want to paint every room in a different color that my mother will hate."
* Mood controls. Gen Xers like technology that reflects their mood, from controllable lighting and music to, eventually, wall-mounted plasma TV screens that display downloadable art.
* High-tech appliances. The Gen-X preference is for appliances that are professional-grade but energy-efficient.
* Health-promoting technologies. Whole-house water filtration systems; hands-free faucets, toilets, and eventually doors and lighting.
* Casual spaces. Gen Xers are "more into refrigerator access than a sit-down dinner and wine tasting," Kleber says. This means larger kitchens with eat-in breakfast bars instead of dining rooms, and informal accommodations for last-minute guests.
* Temperature-controlled outdoor living spaces.
* Multipurpose rooms--guest room, nursery, studio, home office--that can be "repurposed"' as needed.
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|Date:||Jan 1, 2006|
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