56 Using AI & Data to Nurture the Home Buyer Journey - John Hiscox Apr 14 2021

[00:00:00] Greg Bray: Hello everybody and welcome to today's episode of the Home Builder Digital Marketing Podcast. 

I'm Greg Bray with Blue Tangerine 

Kevin Weitzel: and I'm Kevin Weitzel with Outhouse. 

Greg Bray: And we are excited today to welcome to the show, John Hiscox the co-founder and CRO of OpenHouse.ai. Welcome John. Thanks for joining us.

John Hiscox: Well, it's truly an honor to be here. Thank you to both you, Greg and Kevin for inviting me. 

Greg Bray: We again, appreciate your time and we're glad to have you. For those John who haven't had a chance to meet you yet, why don't you give us that quick introduction that helps us get to know you a little better.

John Hiscox: Well, thank you. I'm a newcomer to the home building industry, and so I I've been learning a lot from people like yourselves, but I've spent 26 years in the software industry, and most recently, because having worked for large companies through my life companies like SAP, et cetera. I had this burning desire to work for a smaller company with a higher purpose.

And that led me through some of my advisory work that I do to OpenHouse. And I work there now and I'm thrilled and happy to be doing that. 

[00:01:00] Kevin Weitzel: Now John, I was reading through your bio and I saw that you went to McGill University, but please give me just a five second commercial on what neurobiology is, because you just blew away this hillbilly, 

John Hiscox: you know, there's a lot on there that probably will surprise you.

But yeah, one of the things that surprises people about me is that I'm a scientist that. In training and neurobiology was what I did my degree in. And what is it? It was a long time ago. Certainly. It's certainly good in cocktail situations, but yeah, it was a pretty complicated technology technical degree.

Greg Bray: Okay. Has that field changed a lot? I'm just going to guess, over the last little while. 

John Hiscox:  I don't follow it very much, but, you know, I like to think that the foray into artificial intelligence is sort of a springboard from my neurobiology background. You know, honestly, I did the degree because I felt it was interesting and I wanted to learn about it.

It wasn't because I wanted to become a brain surgeon. 

Kevin Weitzel: What brought you [00:02:00] from brain surgery neurobiology to the home building industries? 

John Hiscox: You know, I was less fussed about the industry. What I think about is companies that I can work with that have both a very focused product and both a very simple to explain use of that product.

And so for me, it wasn't home building that brought me, it was that OpenHouse brought me to home building and it was for those two specific reasons why I was drawn to the platform. But to be honest, the home building is a lovely place to work. I mean, it's super family oriented. It's got a very personal feel.

Everybody knows each other, and it's small and it's been nice to work in an industry that has a personality and a soul, to be honest with you. 

Greg Bray: So John, before we dive in a little bit more into OpenHouse and kind of what you guys do, we need some little personal nugget.

We always look for some little personal nugget and something [00:03:00] that most people don't know about John. 

John Hiscox: Well, I mean, Kevin already blew it out of the water, but I guess what also, might surprise people is that I have six working skateboards and I skateboard regularly. The crashes hurt more than they used to, but that tends to surprise some folks about me.

Kevin Weitzel: So are we talking about like just grabbing skateboard and cruising down to a coffee shop or are we talking about, you're getting the half pipes and peoples empty pools? 

John Hiscox: Half pipes. Yep. That's a surprise. So there you go. Do you want anything else? 

Greg Bray: No, I'm just sitting here thinking about what would happen to me in a half pipe and the medical bills that would result from that kind of experience.

John Hiscox: So, well, I'm not Tony Hawk, but, there you go.

Greg Bray: Well, John, give us a little more background introduction into OpenHouse and the services you provide and kind of the technology you guys are working on. 

John Hiscox: Well OpenHouse, was company founded in [00:04:00] 2018. It's surprising, but you know, we're mostly data scientists and software engineers.

The product that we have built is offered as a plugin to existing home builders websites, and it leverages AI and machine learning. To help builders understand their customers and the surrounding market that they're trying to operate in. It's really a two-fold solution. One is we have the front end personalization technology, and I think we should probably talk about personalization because there's a couple of different definitions of that.

But our personalization technology takes the information that the home buyer is displaying or the behavior that is they're displaying on your website. And the AI is creating customized recommendations on properties or floor plans, et cetera, that are best suited to them. And then dynamically alters what they're seeing.

So they're only seeing the things that we've determined they're interested in. Of course the second part of the platform is really the marketing or the [00:05:00] land planning or the sales part where it's the business intelligence that's displayed in real time through a dashboard that says all the various interesting pieces of information about who has been coming to the website.

So that's fundamentally what it is. 

Greg Bray: So let's drill down. You mentioned different definitions of personalization, so how do you define it and how is that different? I guess for me, personalization can be as simple as a Hi Greg, welcome back. Right? I mean, now it's personalized. Right? I don't think that's what we're talking about.

Um, but let's get your definition when you say personalization. 

John Hiscox: Well, there's personalized content, personalization in the industry has traditionally meant colors of things and blinds and personalizing a home personalization in the industry of online commerce refers to a one-to-one experience on the website versus a one to many experience.

So typically websites are built in [00:06:00] one way. It's the same site that person A and person B would see. So for us, where we're going with personalization is providing every browser with the opportunity to only see the things that are interesting to them. And then we're going to go farther into it where, we're going to provide them with personalized wording to describe a property 30 year olds talk differently than me, 50. And so we should talk to them in a language that they are able to relate to. And so it's personalized experience right now. We're going to take a deeper into personalized content. Why show them Brown floor if they don't like Brown, and that sort of thing.

So we're going to go deep, but that's what personalization means to us. 

 Kevin Weitzel: let me just make sure I get this. This is not necessarily dumbing down the language to throw in a bunch of likes. For the younger generation and  I saw you were like looking at like this plan. It's not that it's more along the lines of, sorry, [00:07:00] what did you do?

John Hiscox: Hold on, wait, I gotta jump it. Right?

Greg Bray: Okay. Let's not offend half our audience. 

Kevin Weitzel: I mean, it's not, but is it, or is it more along the lines of not to dumb it down this much, but you're looking at the Alicia plan and we feel that you might like the Karl plan as well. 

John Hiscox: Yes, yes, it is.

So there's a bunch of different dimensions to it. The best way I can describe it is, think about Netflix. Think about Amazon, by the way, those companies are the ones who are driving the expectations of home buyers. And I mean, it's not just because Open House has come up with this great technology.

We want everybody to use it. It's got nothing to do with us. It's about the buyer. Like they have specific expectations, but it's driven by the big companies. They have inordinate amounts of money. We all know, I mean, this is part of our ethos is really to democratize access to this very complicated technology [00:08:00] for smaller organizations.

But when you look at their websites, let's say you look at a movie on Netflix, it's going to show you a bunch of things that says, well, look you like this, why don't you check this out? Our platform would simply say, or personalization would say, you like the Montague floor plan, by the way, did you know that it's available in these three other communities as well?

And so it's really about tailoring a website journey that's super efficient, but also is always of interest, right? Don't show townhomes. You know the person is interested in a place with whatever where I'm going with that. But that's what it is. 

Kevin Weitzel: So how much data are you actually tracking on buyer?

Are you just looking at just the interactions in that website or because of their IP address, you can know where they're shopping and you know, what kind of car they drive blah-blah-blah 

John Hiscox: So you opened a big box, so let's just unpack this one. Okay. So first of all, the platform, so we all know what's happening with [00:09:00] third-party cookies.

And third-party cookies is where we get the, Hey, this person likes to go to Walmart, our platform, first of all, doesn't use any third-party cookies. Secondly, it's only pulling information from the home builder website. Okay. Which in itself is first party data because when people enter a website, you consent to have information gathered about you.

It's important to know that we don't collect any personal information. We don't know their name, we don't know where they're from, but the information that we create and that's a key word is created through artificial intelligence based on their behavior. Okay. And it's cross-referenced with now we have 600,000 different profiles of people who have gone through different journeys.

That informs the algorithm about the most likely things. And when you get matches in behavior, it speeds up that process. Now I use the [00:10:00] word behavior. It's got nothing to do with whether you click on this or click on that, because that's really what you can figure out quite easily. Or Greg, I mean, that's easy, right?

You can track the clicks and you can create a traditional filter if you want. What this is doing is why did Kevin click on that first? Why did Kevin not click on this? Why did Kevin go to the mortgage calculator on his second click? You know, why did Kevin favorite that one and not the other? So it's really about what you didn't do.

And it's the behavior that helps us create a profile of a person. Again, it's a prediction with extremely high accuracy. But it's important to note that there's no PII involved in what we do. It's we don't know their name, none of that. So from a privacy standpoint, that's something we feel very strongly about.

I mean, privacy,  people have been taken advantage of by big companies, Facebook, et cetera. And, that's just not something people want anymore. 

Greg Bray: So, [00:11:00]  John, just trying to think about people who are hearing this kind of for the first time, it sounds a little overwhelming, honestly, you know, a little complicated and, when I get overwhelmed with complexity, then I suddenly think it also sounds expensive.

 I'm not sure, this is, for me, it sounds like it's something for big top 10 builders or whatever. So I don't know if there's a question there, but can you unpack some of those concerns and tell us how you would respond some of that? 

John Hiscox: Well, yeah, I have very little interest in helping the big top 10 builders.

I mean, they do just fine. I have interest in helping the others. The thing I, want to say, first of all, despite my degree, I'm not somebody who deep digs deep into the technology. It's actually reasonably simple. If you really start to think about it is quite mindblowing. One of the things I say is we can't be [00:12:00] afraid of this kind of technology because it's everywhere.

And the difference is. people are using it in their daily life to procure things. They're just when they're businesses, they think about it more when they're trying to sell things. I would just simply say, you can't be afraid of it. It's everywhere. It's all around us. And the buyers are expecting it.

The other thing is, it's very simple to implement. It really provides a lot of great value in it's sort of a trade-off Greg, what do you do? But, I would suggest to people that they don't try to sort of figure out how it works and whatnot, but I think the privacy concept of making sure that that what you're doing is, is not going to annoy people and do things that's unethical, but as far as how it works, You can spend years getting a degree in it.

I don't suggest they do. 

Greg Bray: All right. So, there's a little bit of a black box, a trust piece that goes along with it. There's a recognition that, [00:13:00] what we see around us. I mean, you use the Netflix example, right? That there's actually a lot of complexity going into why Netflix decided that you might like to watch this other show.

John Hiscox: It's not just some random, so although sometimes I wonder like why in the world did you recommend that to me? You know, what did I do wrong? 

That's fascinating. And whether this is something you keep for your listeners, Netflix. I always thought it was sort of like, if you like action movies, we're going to show you action movies.

But for example, if Kevin was watching, Breaking Away, which I think it was a cycling movie, and he paused that movie on a picture of a guy on a bike. The algorithm is going to start to present Kevin with movies, with bikes in it. And so it's the behavior. You display a Netflix on your movies, where you pause, why all that stuff that drives the catalog change.

And that's mind blowing. So we do the same thing, right? That's what we do. It's just, unless you really want to get under the covers, you'd sort of not [00:14:00] You'd not try to figure that out, but you're driving it toward just the home buyer experience. Not toward everything else. Like, just holding a phone in your hand, walking around.

And if I just say Bose speakers, Bose speakers, Bose speakers, that three or four times throughout the day, I'm going to see Bose speaker ads in every feed that I do. All my video games are going to have both speakers and Facebook. I'm going to see those, but that's invasive. You're saying that open house, the AI platform does not have that invasive factor to it.

There's a couple of things I want to say there. Number one, if you could visualize a sales associate sitting beside a buyer, silently invisibly for the whole part of their journey and telling them, Hey, have you looked at this? Have you looked at that? You know, that guiding is what the AI is doing.

 And so, you have to imagine a sales person just being there and helping out the whole way. That's one thing they do and the other thing is the algorithm is not accessible by the builder. So the algorithms purpose [00:15:00] isn't to sell or direct them to a home that perhaps the builder wants them to buy.

It's got nothing to do with that. It's all about keeping the buyer engaged, because if you think about it, You know, there, some builders have extremely complicated catalogs, lots of floor plans, lots of different communities, and it's a real chore to get to the right thing. And so there are points of disengagement all over the place.

Let's forget about the fact that we're all struggling to provide focused attention all the time. You know what I mean? Like look at you, Kevin squirrel, right? Like you get on a website and it asks you for your login or to set up an account right away. I bet you money.  

Kevin Weitzel: I do.

I am that guy. You asked me to come out. I'm bouncing. What?

John Hiscox: So why would a home builder ask that information just to simply favorite a property like they leave? So there's a couple of things I wanted to say here is, and it's along the route of Greg's question about [00:16:00] fear. I fear bad investments more than I fear technology.

And the most difficult thing a home builder has to do is it's the actual distribution of dollar spent on marketing to outcome and I call it the dark part of the customer journey. And the dark part of the customer journey is the thing that we all acknowledge exists, but we haven't figured out how to know what it means.

And so buyers become known to a builder when they convert, when they go into chat, when they go into an OSC, right. What happened to all the part before that? Right. That that's important. And so many people leave and we don't know anything about them. So, with the changes in technology, around advertising platforms, we need to focus our time on the first party content creation during the part of the buying journey that we don't know anything about.

And that is the minute they enter your website to the minute they leave [00:17:00] or they declare who they are. And so that's really what, what is going to be important. And that allows builders to take control of their asset. Right? We think about Uber eats restaurants don't own customers anymore, right.

They don't know who they deliver to it's Uber that does. And home builders have to think about that example because they own these people. It's their information. They should be able to market with it and they just need to be able to get that information. That's part of what the platform does with that journey of behavior.

Kevin Weitzel: So, what you're seeing is you're providing a report once somebody is declared who they are so that they build it. Doesn't have to go through that discovery phase all over again with the client. 

John Hiscox: So the connection of the person to their journey has a whole set of privacy things that we've got to pay attention to.

Right? Because they're no longer anonymous, they're now known, but yes, we track that journeys and make it available into CRM. And so, [00:18:00] it's not like this person is this person. We it's that this person we believe is this person. Now, one of the things I wanted to say about the data that's created, and this is on the marketing side and our marketers find, listen, homebuilders saved money with this platform, their conversion rates go up.

Our customers are enjoying now about 80% increases in conversions. Their marketing costs go down because they know who their customers are, blah, blah, blah. There's a whole bunch of things that, you know, proof points. But this industry is one that has relied on gut instinct for a long time, right?

People who have been in the business for a long, long time. They know that this neighborhood is X, Y, and Z. What we've been noticing in the data with our builders is either their gut instinct is validated or the changes in the world have shown that there's a different answer. So we're seeing a lot of things where the benchmark information that we provide and the real-time information that we've created in that moment is [00:19:00] showing that this floor plan is actually more popular than these three others.

And if you think about that home builders spend millions of dollars. You know, to create show homes, to create the floor plans that they're going to market, blah, blah, blah. In some cases, they're the wrong things. Right? And so what we try to do is say, look, you know, you built the show home of the, I don't know what house name you're gonna call it.

Oh, but you built this show home. And in fact in this area, the data says that this model over here is, or this floor plan over here is the most popular. Right. And it's funny you say that there's a lot there. 

Kevin Weitzel: It's funny you say that because we did an interview with Michelle Smallwood and she opened her kimono a little bit to let us know about a project they hadn't and Holiday Builders is a highly successful builder down the Florida market.

John Hiscox:  a Blue Tangerine website. I might add.

Kevin Weitzel: That is absolutely correct. We did an interview with her and she let us know, that she had it. They [00:20:00] had a whole community that they developed and correct me if I'm wrong, Greg, but I think it was geared toward.

Millennials. And then they found a finding was that the act of adult, the baby boomers were the ones that were actually gravitating toward the product. So they had to do a quick change on their marketing scheme to accommodate the reach that they were of the audience that was not even intended to go to the first place.

Yeah. 

John Hiscox: And, so they usually, so first of all, salespeople are terrible at providing feedback to marketing. So, you know, the marketers have to go to the sales office and say, Hey, who's this appealing to, like who's walking in the door like that. There's always a bit of a disconnect there.

The second thing is that's really, it's the people that have left the process before that, before they knew that is really the loss. Right. And we talked about that before. It's if you're speaking in a certain way to one person, or to a cohort of people, and then you have other people that are interested in, you're gonna lose that valuable investment in [00:21:00] marketing.

Greg Bray: So, John, you mentioned a couple of things that people learned to validate it. Has there been any, just big surprise. That's come out of some of the data that you've learned that nobody was expecting, along the lines, what kind of jumped out as a wow we never thought of that?

John Hiscox: Well, I mean, a couple of things, number one is just sort of higher level stuff is that the real-time data disproves, possibly the gut.

And so that's been really interesting is being able to make decisions like Kevin just gave that example of, to pivot a strategy based on what's happening in real time. That's really important. And so, while we knew that that was probably the outcome, the fact that it did prove was big for us.

We've seen in our customers an increase in sales velocity, we built this platform for buyers and we built this platform for marketers. We didn't build it for sales leaders, but what we're noticing is the applicability to them. And [00:22:00] so, we've seen about a 15% shortening of the period from either website entry to, firm, or from the period of conversion to firm one builder, went from 70 days for the whole process down to 50 55.

Another builder went down from 15 days from conversion to 13, to from now what that means is, and we didn't think about this, but what that means is that the buyers are much more quote, unquote, nurtured. They have clear ideas of what they want when they go into a show home and they get down to business.

They're there because they're qualified, they're there because they're committed and they have a connection to that home. They just want to get the deal done. And so you don't get the folks walking in that just kind of want to get a free coffee and a donut. You get people who are serious about your product.

And that to us was a surprise. 

Greg Bray: So John, you talked a little bit a minute ago about kind of the helping narrow in when a builder's got a [00:23:00] lot of choices out there as far as number of plans, communities and such, what's kind of the minimum size can, you know, a builder with a single community in five plans.

I'm not sure that there's a lot there to push them to when they can see it all at once. Right? So you kind of see that line of where this starts to really become effective.

John Hiscox: It's an excellent question. I feel like I should almost say, you know, before we listen, this stuff is not an affordable for home builders is actually quite, quite inexpensive.

When you think about the types of things that they're selling. So algorithms need two things fundamentally because algorithms learn, right. The whole purpose of them is they get better and better and better over time. Now. They get better based on information that it receives. And the information comes to it in two forms.

One is traffic and two is catalog. So, by catalog, I mean, choice. So what you need is you can have a few [00:24:00] communities, but a whole ton of floor plans. But the thing is it needs choice. It needs a large catalog for it to kind of sort its way through you're right. Few floor plans, one community, probably not going to help you much.

The second thing is, is traffic and flow. And so if you think about a pipe with a sort of a paddle wheel on it, right, you know that you need a lot of traffic because it needs to train. And the downside to less traffic versus more is simply. You know, the speed of learning is longer. So, number one thing is, I mean we have builders with three communities that are getting tremendous results from it sometimes builders with fewer communities, because we replace in one of the forms of our deployments.

We replace the catalog portion of a home builder website. Greg close your ears for a second, if somebody is thinking about a website overhaul, the most expensive part of what a website overhaul is visualization of the catalog. Well, it comes with [00:25:00] our platform. The front end is just packaged. It's part of it.

So you can take a big website rebuild and you can get it from us for not a lot of money, but Blue Tangerine, I'll tell you folks is fantastic. They are great.

Greg Bray: Thanks. Thanks, John. We really appreciate it.

John Hiscox:  We also have a way we also have a partner approach where we actually deliver this technology in partnership with some trusted website agencies as well.

So that's a different company. 

Greg Bray: Well, John, we do appreciate your time and insights. So kind of want to aim towards the end here a little bit, but just a few more questions before we do that. So do you have any issues with you talked about the Netflix example earlier, and I know that when my teenage daughter started watching Netflix under the same profile or whatever, all of a sudden my recommendations were no longer things that I was particularly interested in.

So when you look at [00:26:00] what is there for the same, you've got a husband and wife, both shopping kind of from the same computer at home or whatnot. Does that get in the way of some of this or is it not enough difference? Because they're both looking for the same size house and some of those kinds of things.

John Hiscox: I mean maybe if their needs are drastically different, they should probably be thinking about buying two houses.

Kevin Weitzel: If you'd like this home, your wife will like that home. 

John Hiscox: Yeah, exactly. Exactly. I think you should buy a less expensive home because you will need to buy two. so you're right.

So our visitors can come back and continue the journey exactly where they left off, but it's driven by IP, right. It's driven by the device. So if you're using the same computer, then yeah, that's an issue. Again, people display, what you're just going to get is you're going to [00:27:00] get a broader selection of things to look at because you've got two people and frankly, whether you're madly in love or not, you have different personalities and you'll show different behaviors.

So, my joke about the two homes was in jest, but yeah, 

Greg Bray: I loved it there's days, right. That every relationship could use that. I'm sure.

John Hiscox: I know what you're talking about, Greg, 

Greg Bray: I mean, my wife doesn't listen to this, hopefully. 

Kevin Weitzel:  It's all a question of happiness there Greg. You know, I snore, so I sleep in a different bedroom than my girlfriend and that has saved our relationship. I haven't ever tabled the idea of a whole separate house. 

John Hiscox: The movie Old School, you should probably watch it. 

Greg Bray: Well, John, just from your experience of what you're seeing out there in the industry, and again, coming a little bit from an outsider viewpoint, if not being in it for that long, what kinds of mistakes are you seeing builders making or opportunities you think they're missing out on [00:28:00]  that you've noticed. 

John Hiscox: Yeah, I think one of the interesting things that I've noticed about this industry is, you know, it's funny, I would say almost all home builder websites or how they market has done the exact same way. Right. You know, they call their communities, the websites, generally speaking look pretty similar.

They all have the same type of thing, you know? Everybody's doing floor plans and you know, this and that, I mean, the reality is I was surprised about, I used the word fast followers, so it takes a while for builders to sort of go, you know this is what we should be doing. And they let a few of their colleagues take the leap into the jump into the deep end first, you know, we've gone from three to 18 customers in seven months.

And so, that part about we spend a lot of our time educating, not about open house, but about the importance of the buyer journey and the importance of personalization. And just simply saying, it's not because of us, it's [00:29:00] because of everybody else is doing it to you. And that takes a lot of effort.

And so that education part, that stuff. Because it's coming and it's here and we need to respond otherwise, you know, we ended up like blockbuster.That's the one thing that I think about, is there is a apprehension to do new things in the industry. And I think it's because of the fact that these are precious companies to the owners, right?

It's been their livelihood for a very long time. And you know, I just want people to kind of think about this in a way that is something that they need to address. And it's purely because their buyers expect it and the industry is shifting and they need to shift with it quickly because time is an advantage in this situation because personalization takes a long time to do.

If you're following the rest, then you're going to be six months behind when you choose to follow. So. [00:30:00] that's one thing that I think about.

Greg Bray: Any last pieces of advice that you'd like to leave with folks today that we didn't get a chance to touch on. 

John Hiscox: Just remember this iOS fourteen is coming, people get to opt out.

Third-party cookies are going away. We can't control that. How you place ads is changing. Ad platforms are going to be different than they are today. And the buyers expect a different experience than they're getting today. The answer to all that stuff, isn't difficult, it isn't expensive, but it's complex, but you don't need to worry about that stuff someone else can.

Make sure that you keep the end user at the heart of everything you do. And shine a bright light on the dark parts of the buyer journey because it's important to you as your business, I'd be happy to talk to anybody about this, whether it's about the concept of personalization or whether it's about buying stuff.

 I don't know if you're going to put up my address, but my phone number, and call me directly or [00:31:00] jhiscox@openhouse.ai. Check out our blog to amazing, amazing content, not bias. It's just content about the industry 

Greg Bray: We'll definitely put some links there in the show notes as well John, so folks can find that. And for those of you who heard John's mentioned about third-party cookies, we did do an episode on that a few months back. If you want to go take a look. If you're not quite sure what that references is about, we do have a little more info out there on that as well.

Cause that's an important piece of that. Yeah. With Eric Martinez from Blue Tangerine. 

John Hiscox: I was just going to say there's so many consequential things happening to the industry right now, it's kind of hard to track, but we all just got to help each other kind of get through it and understand it.

Greg Bray: Absolutely. Well, John, thank you again so much for your time today. It was, it was great to learn a little bit more about this and peel back a few layers and get to understand it a little better. And we're really appreciative of your time. 

John Hiscox: It's my pleasure. 

Greg Bray: And thank you everybody for listening to the Home Builder Digital Marketing Podcast.

I'm Greg [00:32:00] Bray with Blue Tangerine 

Kevin Weitzel: and I'm Kevin Weitzel with Outhouse. Thank you.