By Lisa Marquis Jackson. When Estate Homes LLC, in Colorado Springs, Colo., was acquired by John Laing Homes in 2001, the staff had heard a lot about the "Laing tradition" of taking care of customers. "We knew the expectations were high, so we tried to pick up that mindset right off the bat," said Ron Covington, division president.
A part of that tradition meant surveying all of Estate Homes' new customers on their satisfaction with their home and their home buying experience, just as all the John Laing divisions do on an ongoing basis. "As the survey results started to come in, we were holding our breath a little bit," says Covington. With good reason: "We weren't anywhere near what the expectation level was for John Laing Homes."
In fact, the Colorado Springs division found themselves ranked eighth out of John Laing's nine divisions by the end of 2001, with an overall customer satisfaction score of 81.2 percent.
But, by listening to their customers, identifying specific areas that needed to be improved, and implementing new policies, the division's overall score jumped to 91.4 percent in 2002. "We went from number eight in John Laing to number one in the entire country by the end of 2002," says Covington. How? "We built a team that really cares about people. I want to say our customers, but it's a broader scope than that."
With initial feedback in hand, and insights on what drives satisfaction from John Laing's customer satisfaction research vendor, Eliant (formerly National Survey Systems, based in Irvine, Calif.), John Laing customer care director Zane Wilkerson set up training sessions. Each employee was required to attend and learn about the issues that faced the division. "Early meetings were not fun," said Wilkerson. "I had to get Ron Covington to support me to get the folks to just show up." But this grassroots type of approach is key to creating change in overall philosophy.
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According to Ed Caldeira, president of Crofton, Md.-based Caldeira Quality, a consulting firm specializing in quality issues and customer satisfaction, and former director of quality at the NAHB Research Center, "everyone needs to understand that each person in a builder's firm has an affect on customer satisfaction." Although it's often painful, companies need to really listen to what customers are saying, says Paula Sonkin, senior director of real estate industries for J.D. Power and Associates.
"Our initial response was to become defensive and rationalize our results," Covington says. "We soon realized that how our customers were feeling was their reality, whether we liked it or not. We made the decision to look at our weaknesses and address them head-on; anything that was bad became our number one topic."
Putting Processes in Place
Once the problems were identified, John Laing began to develop new ways to have a positive impact on buyers. As a result, communication became a priority. "Now, we open those channels of communication right away and talk to our buyers a bunch through the process," says Covington. One example is the way the company builds a relationship between the superintendent and the buyer. "We think it's really important for a customer to know who is building their house," says Covington. "We have convinced our superintendents that if a buyer gives you a list of things that need to be corrected or addressed, they should call [the buyer] and thank them. Don't be offended. Our intentions are to do it right, so we don't have to be defensive."
According to Alan Laing, vice president of Pulte Homes, in Bloomfield Hills, Mich., developing best practices -- "those which are sustainable, teachable, and repeatable" -- and exporting good ideas quickly around the organization are key steps to achieving delighted customers.
Pulte Homes, which finished first in seven of the 16 markets surveyed by J.D. Power and Associates, was also recently honored with a Builder 100 customer satisfaction award. The builder was recognized as having the best record of customer satisfaction based on both empirical assessments and reputation within the marketplace by Builder magazine. "One of the reasons Pulte does so well in our study is because they have programs in place to address customer needs," observed Sonkin.
At John Laing Homes, the improvement process became addictive. "The better we did as a team, the more everyone wanted to be a part of the process and know what was going on -- to understand," said Wilkerson. "As the bar raised, the team worked harder. Scores that once made us happy were now below what we accepted. Everyone jumped to figure what we did wrong and fix that process."
Across the home building industry, the emphasis on customer satisfaction has been gaining momentum during the past decade. "Ninety [percent] to 95 percent of the home builders I know recognize that customer satisfaction is important to their business at some level," says Paul Cardis, president of National Research Systems, in Madison, Wis. "A few years ago, this issue wasn't on the radar screen."
There are several reasons why a satisfied customer has become an important acquisition. Laing estimates the cost of developing new customers averages between $8,000 and $10,000. "That's one reason why building satisfied customers and driving referrals is so important," says Cardis.
At Pulte, referral scores, indicating the willingness of buyers to refer Pulte to someone else, have increased from 16 percent in 1997 to 42 percent in 2002.
Some builders use the results to get an edge on their competitors. "We've found that in highly competitive industries, the product among competitors is going to be pretty similar, especially when you're talking about production homes," says Sonkin. "What builders are realizing is that the non-product-related things can help differentiate all the things that add up to customer satisfaction."
Most experts agree that the issue is here to stay. "I am really excited about what I have seen in the last five years," says Michael Dickens, CEO of BuildIQ, a construction quality and research firm based in Pittsburgh, Pa. "Consumers should demand satisfaction. The builder that listens and is willing to do these systematic surveys and analyze them and act on them will increase the quality of their home and their delivery. It's similar to what happened in the automotive industry when the Japanese came in. Everyone wins."
So, how does satisfaction in this industry stack up? According to Sonkin, customer satisfaction has been increasing over time. In 2002, only 10 percent to 15 percent of home buyers indicated that they are truly dissatisfied. "To give you the extremes, customer satisfaction is not as high in the home building industry as it is in automotive right now," says Sonkin. "But, as you might imagine, it is higher than in the airline industry."