DECIPHER™ Case Study 20:
KB Home
Emergency Third-Party Audit
Synopsis
Improved sales rates 25% above business plan objectives while enhancing gross revenue by approximately $2,400,000.
Background
KB Home is one of the largest and most recognized homebuilding companies in the United States. Since its founding in 1957, the company has built more than half a million quality homes. KB Home’s unique homebuilding approach lets each buyer customize their new home from lot location to floor plan and design features. As a leader in utilizing state-of-the-art sustainable building practices, all KB homes are highly energy efficient and meet strict ENERGY STAR® guidelines. This helps to lower monthly utility costs for homeowners, which the company demonstrates with its proprietary KB Home Energy Performance Guide® (EPG®). KB Home has been named an ENERGY STAR Partner of the Year Sustained Excellence Award winner for four straight years and a WaterSense® Partner of the Year for four consecutive years. A FORTUNE 1,000 company, Los Angeles-based KB Home was the first homebuilder listed on the New York Stock Exchange, and trades under the ticker symbol “KBH.” For more information about KB Home’s new home communities, call 888-KB-HOMES or visit www.kbhome.com.
Challenge
A regional homebuilder was opening a high-profile coastal community within 3 days and the Division President, VP of Marketing, and VP of Acquisitions had very little confidence in the base pricing and lot premiums that were about to be published on the price sheets and brochures. The community offered over 200 homes. They asked if CA could assist in some way. We did.
Solution
Within the first 12 hours, CA conducted a quick abbreviated audit of the third party consultant report, reverse-engineered the report and proved the consultant had not used their own data to even support their own conclusions. Furthermore, CA identified over a dozen erroneous competitive price points that significantly affected any accurate reflection of the submarket. Subsequent to notifying the client that the due diligence they had contracted was misleading, CA completed an abbreviated base price and lot premium analysis that increased the base price by approximately $80,000 and lot premiums by approximately $40,000. CA also completed a one-day property and submarket investigation that included in-depth analysis of selected primary competitors and secondary competitors.
Results
Improved sales rates 25% above business plan objectives while enhancing gross revenue by approximately $2,400,000. This was achieved by CA’s models identifying a gross base revenue opportunity of ~$1,600,000 and gross lot premium revenue of ~$800,000.
Return on Analytics
>2,800%
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