Doug Fulton: Importance of Marketing

Sitting in a comfortable leather chair by the baggage claim area inside the terminal at Phoenix-Mesa Gateway Airport, in the lounge that recreates one of his company’s designs, homebuilder Doug Fulton is talking to a Canadian couple who has just arrived from Toronto. The CEO of Tempe-based Fulton Homes informs the couple the life-sized living room they are lounging in is part of his marketing blueprint to encourage Canadians to buy homes in the Phoenix area. The unique L-shaped living room, unveiled in October, measures 40 feet long and eight feet wide, features several soft leather chairs and love seats made by Creative Leather in Chandler, along with tables and carpeting with the Fulton Homes logo. Photos offer faux views of the picturesque Arizona landscape, visible behind curtains draped over mock windows.

“I know of no other homebuilder who has done something like this,” Fulton says. “We like to color outside the lines. We’ll try most anything once.” The unique living room cost about $20,000 to create and install, along with $4,000 in rent for the space. An interactive feature allows visitors to use cell phones to view video testimonials from Canadians who have purchased Fulton Homes. “I had a lot of naysayers,” Fulton says of his Canadian focus. “They asked why would I spend a half million dollars in advertising from Victoria to Quebec. But it’s paid off. From 85 to 95 percent of Canadian homebuyers pay with cash.”

The importance of business marketing was instilled at the age of 13 when Fulton began working in Los Angeles for Eagleson’s Big and Tall men’s clothier, where his father, Fulton Homes founder Ira A. Fulton, worked as a consultant. “Whether it’s selling navy blue blazers or a 2,400-square-foot, four-bedroom house, it’s all about marketing and delivering a quality product to your customer,” Fulton says.

Fulton’s marketing savvy comes at a time when the homebuilding industry continues its slow crawl out of what he calls a “four-year hangover” due to the economic free fall. In better times, the local homebuilding industry was delivering 60,000 new homes a year. This year, the industry will be hard pressed to deliver 13,000 homes. Industry-wide, last year just over 8,000 were built.

The housing market collapse severely affected Fulton Homes. Due to sharply declining home and land values, banks revalued property owned by the company, called in the 80-percent loan-to-value, and threatened to sign deeds of trust and liquidate the homebuilder if they could not collect $163 million in outstanding debt. After trying to cut a deal with lenders, Fulton filed for a Chapter 11 in 2009 to protect the company’s name and inventory. The company and lenders came to a settlement in July 2011. Now with the episode behind him, Fulton says it was a learning process — and certainly an experience not to repeat.

“It’s something you really don’t want to get good at,” Fulton says. “After two-and-a-half years and $11 million in attorney’s fees, we were at a point where we were able to stand up and tell them we can pay you back everything we owe you, plus interest. And I paid for all of their [banks’] fees, their attorneys’ fees, all of their expert witnesses. We paid them back everything we owed them, plus interest.

“I learned through the process not to overextend as a business. When you sense market conditions changing, you must react. We saw the storm coming, so we immediately sold about 6,000 lots, which were still farm fields. We shed all that was not necessary for business,” says Fulton, observing, “When things are going well, you think it won’t end. But it’s a cyclical industry. I learned to set aside for a rainy day because it’s going to eventually rain on you.”

During the lean times the company went from 300 employees to 64. More than 20 have been rehired. “Those are the happiest phone calls to make,” says Fulton. “We are a family-owned business, so our employees are like family. We don’t have executives in their mahogany playpens in their corner office; we don’t have secretaries taking care of people.”

As Fulton is about to leave the airport lounge, he stops to chat with a TSA agent who happens to own a Fulton Home. Out of his line of sight, a weary Canadian traveler relaxes on a leather chair, sneaking a nap while she waits for her luggage to arrive.

Building Up

• Doug Fulton was named Fulton Homes CEO in August 2007. His focus is to vigorously market Fulton Homes to create instant name recognition.
• Before becoming CEO, Doug Fulton was president of Fulton Homes Sales Corp.
• The company was founded in 1975 by his father, Ira A. Fulton.
• The number of homes sold in 2004 was 2,900; in 2007, that dropped to 800. Since then, the numbers have been as low as 400 and as high as 900, and are now trending upward from 400 in 2010 to 528 in 2011 and 600 in the first eight months of 2012.
• Doug Fulton contributes to the community as a special deputy for the Maricopa County Sheriff’s Office, flying a helicopter for search and rescue missions.
• After Hurricane Katrina, he helped to deliver emergency medical supplies to the disaster area.