By David Holzel. Customer service ... is your last, longest, and best opportunity to leave an impression with your customers. It's when you can make up for any mistakes in the past -- or blow successes ... ."
This tidy summation appeared in Builder magazine in 1995. It sounds so simple, yet today, many builders still don't seem to have gotten the hang of it. And those that have and are making marked progress still struggle to get all the parts of the customer service mechanism to work.
What has made the going so rough? What's kept home builders "10 years behind the auto industry," in the words of one executive. Why, when builders have practically perfected the craft of building homes, do so many stumble when it comes to making the customer's experience ultimately a satisfying one?
The answer, in part, may have to do with the nature of home building. It certainly has to do with the depth of a builder's commitment to customer service. And it may reflect the frustrating fact that to delight customers whose expectations are continually rising is like trying to hit a moving target.
Another thing: Builders may not be catching up with producers of other big-ticket items because of their own goals. "Think about the mindset every builder has," says Jim Lesinski, vice president of marketing at Pulte Homes and a former auto executive, "that there are issues that will need to be corrected in the post-close environment. Our goal [as builders] is to limit major defects. Now look at the auto industry -- nowadays you don't expect anything to be wrong with your new car."
Granted, the two industries are vastly different. Car buyers don't stand around watching workers building their vehicle, raising questions every time a bolt is tightened. "We work in a much less controlled environment," Lesinski says. "It's very labor intensive. Every job is a little bit different."
And the process is so long, says Buz Hoffman, president of Lakewood Homes, in Hoffman Estates, Ill. "The more chances you have to fail, the higher your chances of disappointing the customer."
But that's even more of a reason to emphasize customer service and establish what Hoffman and others call a "seamless process." A customer doesn't distinguish between sales and design staff and doesn't recognize independent contractors. All he or she knows is they work for the builder. That's where the buck stops. So the builder has to have a customer service system that takes this buyer perception into consideration.
Ken Peterson sees this arrangement as a variation of the virtual organization. "Everybody has to be focused on the customer," says Peterson, vice president of sales and marketing for Shea Homes, in San Diego. "If the plumber messes up, the buyer doesn't go to the plumber. He or she goes to Shea Homes."
Conversely, builders have to approach buyers as distinct individuals, he says. "In the past you treated every customer the same. Today, the customer tells you, 'I want this information, and this is how I need it.' So builders are trying to find out how to meet the needs of the customers. That was the shift for us as an organization -- bringing it down to the level of the individual."
This won't hurt a bit
Peterson and others say the job includes learning to manage the customer's expectations. Say you need to visit the dentist, Peterson says by way of analogy. The work will require him to stick a needle in you. One dentist tells you, "You won't feel a thing," while another says, "I'll be as careful as I can, but this is going to hurt." What's your reaction going to be when the needle goes in and you feel that sting?
In the first dentist's chair you might be shocked and angry that the dentist didn't prepare you. The second dentist doesn't hurt you any less, but you're liable to think, "That wasn't as bad as I expected." Now which dentist would you refer to a friend?
"I think that's truly the key to customer satisfaction," Peterson says. "To help set the expectations after you've listened to the needs of the customer." And then once you've set the expectations, beat them.
E-mails, Web sites, letters, personalized videos, meetings with prepared customer materials, follow-up phone calls -- these are a builder's tools for managing customer expectations. In a word: communication.
"It's communication and a fundamental appreciation that [buyers] are giving you a lot of money, and you need to give them a lot of attention," says Carol Smith, a customer service trainer and publisher of the newsletter Home Address.
Smith, who is based in Monument, Colo., says she charts the interest in customer service by the increasing demand for her seminars and the heightened sophistication of her students. Firms that conduct customer surveys are hearing from more and more builders who realize that high customer satisfaction is key to referrals -- and want to act on it.
Keith O'Brien, a consultant in Minnesota, counsels clients to develop systems to increase customer satisfaction. O'Brien is vice president of Woodland, O'Brien and Associates, a St. Paul firm that works with 65 builders nationally. At its most fundamental, he says, such a system includes four elements: setting expectations; delivering on them; measuring responses; and fine-tuning the system.
Technology is helpful, says O'Brien, "but the real issue is developing a methodology to deliver a consistent message at key points during the transaction, so the customer can feel the system."
O'Brien admits that raising referral rates is a tough job. "Big builders build homes close to consumers' expectations, but it takes an incredible amount of focus to provide service that makes the customer want to put a friend through the same experience," he says.
But it can be done. John Laing Homes raised its referral rate from 12 percent in 1990 to 38 percent today. Dick Bryan, the company's customer-care vice president, says Laing tripled its scores chiefly with a single technique. When a customer calls, the policy is to "call back or be at his or her front door within 15 minutes. It shows the buyer we're really trying."
"Speed is the critical issue," agrees Bob Mirman, CEO of National Survey Systems, which tracks home buyers for 90 builders across the country, including Laing.
"It's not so much that you fix the problem [right then]," Bryan says, "it's just that you respond so quickly. It just amazes people."
Adds Mirman: "It's almost better to have a problem and solve it quickly, than to have no problem and not let them see how good your customer service is." "I speak with a lot of builders," Bryan says. "They all ask me the same thing: 'How do you do it?' I tell them. They walk out the door, and they don't do it."
Hold the anchovies
"You can have all the systems in the world," says Hoffman, whose company is J.D. Power and Associates' highest-rated builder in Chicagoland. "But if all the people from top to bottom don't feel it, you can throw the systems out the window."
O'Brien agrees. "Management gets from employees and the company what they focus on. I have yet to see a company that, if they truly focus on customer service, can't achieve relatively high customer satisfaction."
J.D. Power's recent findings -- that customer service and home readiness are buyers' most important considerations -- have raised the stakes. "Timeliness with response to warranty -- that's a third of it," says Paula Sonkin, Power's director of real estate industries. "Time is like the commodity of the new millennium. Number two is cleanliness, which buyers equate with security. If the workers leave pizza boxes laying around and don't care how the house looks, what else don't they care about?"
So if sweeping up the anchovies can deliver a happy homeowner, why isn't everyone doing it? It comes down to priorities, Sonkin says. "Builders are running a business, and you have to make decisions every day on what you want to focus on." For some, customer service won't measurably affect the bottom line.
Service for profit
That's why many in the industry hope that customer service evolves into a profit center, not merely, among the cynical view, as an expedient to ward off lawsuits. That's Bill Rigsby's dream, to provide the convenience of one-stop shopping. "We'd provide, for a fee, service to a customer that they're getting [from many sources]," says Rigsby, vice president of Whitemark Homes in Orlando, Fla. "But we're not there yet."
Lesinski -- whose company took top customer service honors in three of the 10 markets J.D. Power surveyed -- sees the profit center model coming down the road, too. But the customer service landscape won't change radically until the industry hits its next milestone, he says.
"Changes will come when one to three builders break out of the pack. When one of them has a 10 percent market share -- enough scale so that not only referrals will drive the business, but repeat business. Then there will be enough motivation to make service central."
Ultimately, though, how good can a builder be? How high a customer approval rating can a company get? "We look at that all the time," Peterson says. "We haven't come up with an answer yet."
--David Holzel is based in Montgomery Village, Md.
Published in BIG BUILDER Magazine, July 2002