By Charles Wardell. It goes without saying that if your people keep your customers happy, those customers will be more apt to recommend your company to their friends. Centex Homes has found that the best way to get employees focused on customer satisfaction is to give them a direct financial stake.

Walker Information, an Indianapolis research firm, has been surveying recent Centex buyers since the early 1990s. It asks everything from buyers' willingness to recommend Centex to how they rate their homes' materials and workmanship, as well as the builder's salespeople, managers, and subcontractors. Most questions ask buyers to choose a number from one to five (representing, for example, from "not likely" to recommend to "extremely likely").

In 1998, customer satisfaction scores "were eroding," recalls David Sasina, Centex's senior vice president of strategic planning and marketing. To try to reverse the trend, Centex decided to tie 25 percent of employee bonuses to survey scores in the local market. Sasina won't detail the method Centex uses to do this, saying only that dollar amounts go up and down with scores.

Employees' first response to the plan was guarded. "They wanted to know that the measurement tool was as fair as possible," says Sasina. So the company assembled a steering committee that meets once a year to scrutinize the survey and recommend improvements. "Early on, we changed a bunch of things about what and how we were asking. Since then, we've changed less and less." With fairness addressed, Sasina says that employees have focused squarely on execution, increasing customer satisfaction scores by 20 percent. High-scoring divisions not only have seen more referrals but have been able to charge a price premium. The company is now focused on finding best practices and putting them in place across all divisions. "If we see that a division has a high level of customer service, we try to understand how they do it."