Realtors can feel like the neglected stepchildren in the builder-buyer family. But reaching out to Realtors, building relationships, and rewarding them for their efforts clearly pays off, says Rochelle Barrow, the Realtor relations director for Royce Builders, and Royce has the numbers to prove it.

Royce, which expects to close 2,100 homes this year in Houston, Dallas, Phoenix, and Atlanta, has patiently courted Realtors for four years -- from encouraging real estate agents to show more Royce homes to awarding financial bonuses to Realtors who sell Royce homes. The Houston-based builder also has encouraged Realtors to enroll home buyers in a customer service program, which accompanies appliances purchased through Royce.

Part of Royce's efforts with Realtors involves a Realtor award program designed with American Express which has increased Realtor sales from 42 percent to more than 50 percent of their business.

Four years ago, marketers at Royce Builders approached American Express Incentive Services (AEIS), asking for help in designing an incentive program for 15,000 Realtors. The question was how to "reward the Realtors for selling a Royce Home over someone else's," recalls Bridget Westhoff, the public relations and marketing support services manager for AEIS in Fenton, Mo. "Incentives have been shown to be a great way to accomplish this, but they must be meaningful to the Realtors." A proper incentive would not only make the recipient feel more special, by providing more recognition, says Westhoff, but also provide a tangible reward.

The result was, "Go For the Gold," which drives Realtor behavior and tracks sales performance. American Express designed a personalized card emblazoned with Royce-designed artwork, stating, "Royce Family of Builders." After the first closing of a Royce Builders home, the Realtor who showed the home receives a stored-value card containing $500, which can be used in any establishment that accepts an American Express card -- mainly higher-level merchants, says Westhoff. After the second closing, the card's value increases to $1,000; the third, $1,500. Each additional closing of a Royce Builders home results in $1,500 more placed on the card; the amounts can be reloaded automatically.

At first, gift checks were used, but the stored-value card resembles a credit card, so it is more durable and displays the Royce brand every time it is used, so the checks were discontinued. Department store gift certificates limited the recipients' choices to one store and were also not as successful as the stored-value cards have been.

Royce now presents the cards personally at a rewards luncheon that recognizes excellent Realtors. "It creates a reward experience and announces Royce all over the [Realtor] community," explains Westhoff. "It also gives the Realtors and Royce more exposure to an audience of Realtors." The awards program is announced in e-mail and print ads that reach the real estate community, says Westhoff.

The Realtor luncheons, which began as annual events, are now held quarterly. Their popularity was cemented when Royce put the names of every broker who had sold a Royce home into a hat, and awarded thousands of dollars (the amount varies by market) to the person whose name was drawn out of the hat. You must be present to win, and for every Royce house you've sold, a card with your name on it is placed in the hat, so Realtors who have sold several Royce homes have an advantage over those who have sold just one.

The program has not stopped there. Brokers now receive $500 for every Royce Builders home one of their Realtors sells. And the pie grows still larger. "We're taking our top 10 Realtors and brokers on a cruise next year," says Royce's Barrow.

Results, Results

Expectations were modest at first. "At least the Realtors will take them to see a Royce home as part of the circulation," recalls Westhoff. But after two years, the program's popularity was apparent, as the number of repeat business from Realtors, in the form of second and third closings, climbed. "The reason it's so effective with our Realtors is that they don't have to pay taxes on it," speculates Royce's Barrow, although it's always a good idea to check with a tax accountant. In principle, "the face value is more, and Realtors don't have to split it with the broker in form of cash or the commission check, where the broker takes a percentage."

The program goes beyond a mere bonus to create a relationship to the broker which did not exist before, says Barrow. "If we get into a bind, we can call the brokers directly and immediately sit down with them," she says.

Once, she recalls, a closing was jeopardized because a Realtor did not feel comfortable on a personal level working with the buyer. The Realtor spoke with Royce, which called the broker, who saved the contract. Before the program, the Realtor would probably not have had any connection to the builder and might have hesitated to bring the matter to the broker's attention. There is now a relationship between broker and builder. "In the past, we couldn't get into their offices," says Barrow. "Most brokers' offices are very strict about who is able to come in and drop off flyers."

But after four or five thousand dollars was distributed, explains Barrow, Royce was not only able to enter the offices but also able to address sales meetings and training sessions with Realtors. "We know that 65 percent of our home sales come from Realtors," notes Barrow. "If you're not continually marketing to them, they'll forget about you. It's very easy to lose a Realtor."

Royce examines what happens over a month, and if there's a contract that doesn't materialize, and a Realtor was involved, Royce is now able to contact the Realtor and ask what happened, says Barrow.

"Maybe they couldn't keep the buyers motivated. Maybe there was buyer's remorse. Maybe there was a credit or finance issue...Realtors will come to us with the information," says Barrow, whereas before the program there was little relationship, and no incentive, to explain most problems to the builder. "Now, we are able to overcome the majority of obstacles. If a Realtor says, 'I need help with one of my buyers; all I get is an answering machine when I phone,' Royce can try to help." Realtors also bring small matters to the builders' attention, such as cans of soda left in the home by contractors.

Star System

The real estate outreach program, known as Real Star, has led to a related program launched early this year, called Home Star, which Barrow calls "the next generation of customer service."

Let's say it's Thanksgiving Day and you're cooking your turkey. Suddenly, the oven goes out. Most places are closed on the federal holiday, and most people might not know who to call. But Royce now staffs a call center 365 days a year, 24/7, to handle any service or warranty issue on appliances sold and installed through Royce. "Call the 800 number, and someone will get back to you within two hours," she explains. "If the problem can't be handled over the phone, then a certified professional will be at their property to handle the situation within 24 hours."

If a buyer enters the Home Star program they are buying a five-year warranty for appliances purchased through Royce; a one-year warranty on materials and workmanship; a two-year warranty on electrical and plumbing; and a 10-year structural warranty. The first year is free; the second, third, and fourth years cost two percent of the cost of the home. (Royce Homes vary from between $165,000 to $425,000.) The fifth year is also free. The program documents all scheduled maintenance on the house and takes charge of some of it. "A lot of our buyers are first-time home buyers who are not used to home maintenance. We'll send someone out to change the air filters," claims Barrow.

But Barrow knows who really sells the home and the Home Star program. "We tell the Realtors about this and it's a huge selling point," she says.