KYLE DAVISON, PRESIDENT OF KB Home's Houston division, was braced for the latest survey results from J.D. Power and Associates. Of course, the builder conducts its own internal surveys, tracking customer satisfaction on a weekly basis. Those surveys told him that, “nearly 96 percent of our customers nationwide say they remain very satisfied” two years after closing their home. But the J.D. Power surveys did not always reflect that. Out of the 30 Houston builders included in the J.D. Power survey, “we were in 26th place three years ago and 12th place last year,” notes Davison.

This year in Houston, KB tiedwith David Powers and Perry Homes, finishing behind Pulte Homes, which has topped the charts there for the past two years. “We can say we're in the top three,” says Davison, who is pleased but still determined to improve next year by creating “ecstatic” customers. Davison's zeal reflects the intense pressure builders across the country continue to feel when the 800-pound gorilla of consumer satisfaction releases its annual results on new home buyer satisfaction each fall.

As KB's Houston divisions rise in the rankings proves, when it comes to pleasing customers, big builders' efforts have started to pay off.

The most recent J.D. Power customer satisfaction rankings show steady improvement nationwide. Satisfaction levels are up from an average of 109 points in 2003 to 112 points this year. The largest component of customer satisfaction, as measured by the consumer survey giant, is customer service, which counts for 23 percent of a builder's score. The national average has improved dramatically, rising from 102 in the 2001 study, to 111 in 2003, and to 114 this year.

The survey results released in mid-September were based on responses from 64,502 new home buyers who had been living in their homes from four to 18 months. The survey giant, based in Westlake Village, Calif., polled 25 markets, including five markets it canvassed for the first time this year: Detroit; Ft. Myers/Naples, Fla.; Jacksonville, Fla.; San Diego (which was broken out from Southern California for the first time); and Seattle/Tacoma, Wash. Fort Lauderdale was dropped from the study. There were no major changes to the survey questions from last year, according to Paula Sonkin, J.D. Power's senior director of real estate industries practice.

J.D. Power's findings showed that in highly competitive markets such as Las Vegas customer satisfaction scores skyrocketed from 106 in 2002, to 116 in 2003, and to 123 this year. In Houston, satisfaction index levels are up from 107 last year to 113 this year. Indeed, all markets improved except Philadelphia, whose overall score dropped by one point.

Clearly, builders are doing something right.

But there is still a lot of room for improvement. While the home building industry's satisfaction scores have accelerated quickly over the past few years, they have a lot of ground to make up. Home builders have not focused on customer service for as long as many other industries tracked by J.D. Power. “Home building is among the most improved industries we study,” observes Sonkin. “But [in] other industries, there has been a focus on customer satisfaction for a long time [for example, the auto industry has been focused on customer satisfaction for 25 plus years].” Customer expectations are also rising. Sonkin compared customer satisfaction scores to running times in the Olympics: What was a winning score last year might not finish in the top three this year.

TOP HONORS Competition, particular in booming first-time home buying markets such as Las Vegas, apparently is a good thing for consumers. “The Las Vegas market is highly competitive, and builders have to provide high levels of satisfaction,” notes Sonkin. “I know builders have increased their focus [on customer satisfaction]. They've put a lot of initiatives in place.” It is not enough to just do fine work and to maintain the status quo, Sonkin emphasizes. In a market like Las Vegas, that's a recipe for falling behind.

The key to topping the survey is succeeding in customer service, which is measured by 15 questions on the survey, she explains. The questions concern timeliness of problem resolution, the cleanliness of warranty work, and touch on a builder's honesty, follow-up, knowledge, and courtesy.

Learn more about markets featured in this article: Las Vegas, NV.