By Bob Mirman and Wyatt Kash. It's almost one-year after move-in. Do you know where your home buyers are? Are they now loyal homeowners ready and willing to refer their friends or did you lose them in the shuffle?
At this point, your home buyer has completed the metamorphosis from new home buyer to experienced homeowner. He knows his house, how it works ... and how it doesn't. He sees the strengths and weaknesses of his floor plan better than anyone because he lives in it every day. He has been dealing with -- and getting to know -- your customer care personnel and contractors, and has formed opinions about your procedures and effectiveness.
Armed with these opinions, tempered over the first year of ownership, your homeowner is either a loose cannon or a walking referral source. To the prospective buyer, no one has more credibility than a current homeowner. So, how does a builder increase the likelihood that their customers will actively refer friends?
The most important place to start is in appreciating how the buyer's perceptions change in the transformation from buyer to owner. While the perception of "initial quality" was the strongest contributor to the home buyer's referral decision, the clear path to homeowner satisfaction and referrals is paved with only one type of stone: customer care.
According to new analysis from Eliant, (formerly National Survey Systems) prepared for BIG BUILDER:
1. More than 41 percent of the homeowner's decision to refer a friend to their builder is based on the homeowner's satisfaction with the "customer care" experience during the first year. This compares to just a seven percent contribution to referral likelihood when new home buyers were asked the same question during the first month after move-in. (This shift is especially pronounced considering the satisfaction survey Eliant sends to home buyers 10 to 12 months after move-in: Though 90 percent of the questions cover product quality issues, six of the top 10 concerns that come back deal with customer care issues.)
Builder's Action Plan
...For improving homeowner satisfaction.
|Quality of repairs is critical. Always...
2. Builders appear to be on the same page with buyers about the importance of customer care, ranking it as the number one concern just as buyers did, although not to the same degree (See Figure 8-1). 3. Within the customer care category, the issue providing the overwhelming contribution (41 percent) to future referrals is "Quality of repairs." Buyers, however, give this below-average satisfaction marks (See Figure 8-3).
4. When it comes to customer care, one thing remains constant as the home buyer grows into a homeowner: The three most important concerns to home buyers right after move-in continue to be the three primary drivers of satisfaction for homeowners a year later: The quality of repairs (done right the first time); clean-up during and after repairs; and whether repairs were completed within the promised time frame.
Aging in Place
The longer term challenge to keeping customers satisfied lies in the fact homes, like people, inevitably age. The longer we live in our homes, the more likely it is that problems will arise, cracks will appear in the walls, and countertops will chip. Homeowners, therefore, are generally less satisfied than new home buyers. In fact, ratings of "overall quality" drop an average of 2.8 percentage points during the first 10 months of homeownership. Survey results also show the longer a buyer has been in his home, the less likely he or she is to refer the builder to a friend. Their willingness declines by almost three percentage points during the first 10 months of ownership. During the past three years, homeowner satisfaction with most product-related categories has declined. The most noticeable of these declines relate to HVAC systems, cabinetry, and overall quality. It is impossible to say whether this is an indication of weakening performance by builders or a reflection of increasing expectations by homeowners.
Although builders understand the importance of customer care to homeowners, builders' perceptions miss the mark on a variety of quality issues:
- Plumbing ranked as the third most influential category in "Home Quality" satisfaction to homeowners, (after customer care and framing/wall alignment). However, builders mistakenly rank it of far less concern.
- Two-thirds of builders felt that "Quality of community/neighborhood" is important to homeowners, ranking it as the second most influential factor within the category to homeowner satisfaction. However, homeowners indicate this issue actually has relatively weak impact on future referrals -- and far less than good customer care.
The overwhelming impact of customer care on homeowner satisfaction and loyalty makes it a relatively straight-forward process to develop the action plan for improving the builder's ratings and national rankings. While this is certainly easier to describe than to accomplish, the process is at least made easier by narrowing down the focus to some bite-sized essentials in addressing the most important concern homeowners have: the quality of the repair experience.
Top 10 Homeowner Showstoppers
Odds Against Referral *
|1||Poor repair quality on multiple visits||2.0:1|
|2||Poor wall alignment and framing||1.6:1|
|3||Cabinets: Poor quality materials||1.6:1|
|5||Discourteous service personnel||1.5:1|
|6||Insufficient kitchen storage||1.5:1|
|7||Service representatives did not address buyer's needs||1.4:1|
|8||Inconvenient method to communicate service needs||1.4:1|
|9||Poor quality of interior doors||1.4:1|
|10||Service representative knowledgeable about home/features||1.4:1|
|* The statistical odds against a referral from a homeowner dissatisfied with a given issue.|
|Referral Killers: Poor performance on "showstoppers" concerns will overcome all the other positive "satisfiers" earned to date.|
If a builder delivers on "repair quality," that builder can expect to earn points toward a stronger reputation. But, if the builder's performance is rated as "less than average," the statistical odds of a referral from this homeowner are 2:1 against getting a referral. Moreover, a homeowner that is dissatisfied is more likely to produce negative word-of-mouth in the community. Not only is "repair quality" the No. 1 driver of homeowner satisfaction, it is the No. 1 "showstopper" that will kill referrals as well (See Top 10 Homeowner Showstoppers chart). The bullet that kills: repeated failure to complete a repair in one visit.
The last impression makes the most lasting impression. That's why all the work that goes into selling a house, helping the buyer through the options and upgrades process, the effort paid to installation and workmanship, and the walk-through can be easily undone by the failure to pay proper attention to a service request a year after the home was delivered. Builders who recognize this have a powerful opportunity not only to make it a positive impression, but one that can leverage an entire team's efforts to improve satisfaction and referrals.
In the final analysis, referrals are the culmination of many moments of truth. Understanding which are most important, and how each relates to others, can make the difference in turning buyers into advocates.
This report represents the findings of two industry research efforts prepared by Eliant (formerly National Survey Systems, in Irvine, Calif.) for BIG BUILDER magazine:
"2003 Builder Perception Study"Primary objectives: Evaluate builders' perspectives on what they feel are the critical issues driving buyer satisfaction; compare this to buyers' actual priorities based on buyer satisfaction research; and identify the newest methods, policies, and processes that builders report are helping improve their buyers' satisfaction.
Process: Builders' perceptions were gathered in a survey conducted via the internet using links e-mailed by Eliant in the Spring of 2003 and targeted to top management at large production home builders in major markets throughout the United States. A total of 803 responses were submitted.
Wide variety of participants:
- The largest concentration of builder executives responded from the Pacific (31 percent), South Atlantic (25 percent), and Mountain (19 percent) regions.
- Almost 50 percent worked for companies that closed more than 500 homes in 2002, with 38 percent at companies closing more than 1,000 homes.
- About 50 percent had annual sales of more than $100 million; 32 percent had sales of more than $500 million.
- General management submitted 42 percent of responses, construction personnel 31 percent, and sales personnel 14 percent.
Eliant's "Home Buyer Satisfaction Survey Series" Primary Objectives: Evaluate home buyer/homeowner satisfaction with the builder's services and product quality; provide a basis for holding staff and contractors accountable for high-level performance; and provide a consistent system for benchmarking against past performance and competitors. Process: Data for this report were taken from mailed and e-mailed surveys conducted during 2002 by Eliant, which continually surveys the home buyers and homeowners of more than 150 major builders at three key points in the purchase/ownership cycle:
1. "Move-In Survey" -- 15 to 30 days post move-in (average return rate is 61 percent).
2. "Customer Service Audit" -- five months post move-in (average return rate is 55 percent).
3. "Home Quality Survey" -- 10 months post move-in (average return rate is 53 percent).
Since all of Eliant's builders use the same core survey questions, this report for Big Builder is able to use Eliant's national norms for the conclusions presented here based on responses from almost 43,000 home buyers and homeowners.
The "Percent Satisfaction scores were calculated by taking the total points awarded by buyers and dividing this by the potential points available. The "Percent Contribution" or "Importance" data were developed by Dr. James Bentley, professor of statistics at the University of Redlands (Calif.), using a variety of statistical procedures.
The articles in this special report were written by Bob Mirman, CEO of Eliant, and Wyatt Kash, editor of Big Builder magazine. Eliant (formerly National Survey Systems) provides customer satisfaction data and solutions to more than 150 of the nation's top home builders including D.R. Horton, John Laing Homes, Lennar Family of Builders, Shea Homes, and Standard Pacific Homes. The firm is considered the largest consumer research company in the country that caters exclusively to the building industry, conducting more than 200,000 home buyer surveys annually. Eliant is recognized for its use of sophisticated, high-tech consumer tracking tools and information management systems to provide builders with timely, actionable information and strategies to increase home buyer satisfaction and building industry rankings.
Headquartered in Irvine, Calif., Eliant was founded in 1984 by Bob Mirman. Mirman is a clinically-trained psychologist who translated the consumer perception tools he had developed while working at General Mills into a series of surveys designed to capture detailed information on the entire home buying experience, including satisfaction up to two years after move in. Builders use Eliant's tracking information to monitor, reward, and modify practices that directly impact home buyer loyalty.
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