DOUBLING IN SIZE AND REVENUE three times in just six years has meant more than the usual growing pains for Orlando-based Park Square Homes. The new-home construction market in greater Orlando during that period has been red-hot with expansion—increasing from 15,000 permits a year to almost 30,000. Faced with regional manpower shortages and increasing stresses on employees, Park Square had little choice but to assign younger superintendents with less training and experience to help oversee the builder's work load.
The added manpower certainly helped: Park Square, which closed 180 homes in 1998 and 600 homes in 2003, expects to deliver 1,100 this year. But the approach has taken its toll on customer satisfaction and ultimately, concedes president Steve O'Dowd, has proved to be flawed. “With less training in the field, and expanding markets, we suffered a decline in the quality of our finished product,” he says. And toward the end of last year, O'Dowd and his management team knew it was time to take action.
“We have always done closing table surveys and we thought we were doing a pretty good job on the [referral] level,” says O'Dowd. But when J.D. Power entered the marketplace in 2002 with the results from a 2001 survey, the company had an eye-opening experience. “We were at the bottom of the barrel,” O'Dowd recalls. “And we were there for two years.
“I had to figure out a way to keep the production going and still keep the buyer's best interests in mind,” says O'Dowd. “I realized we needed to put an advocate for the buyer on staff.”
Like a growing number of home builders across the country, O'Dowd also recognized that the path toward ensuring customer satisfaction also meant restructuring his company's operations to create a more customer-centric business and redefine a variety of processes in order to take customer satisfaction to the next level.
Creating Customer Centricity As a result, the company created a new structure designed to adjust the attitude of its managers and employees about working with customers. In the past year, Park Square has gone from a customer service department of three people—who were handling only warranty issues—to a department of 16 people (see “Corporate Shuffle,” page 68). Heading up the department is new hire Ellyn Goldstein, director of customer relations. Bringing 14 years of customer service experience from Arvida and 10 years with Bonded Builders, Goldstein adds a fresh perspective to Park Square's operations, according to O'Dowd. “She lives, eats, and breathes how to do things right,” he says.
As part of the newly formed customer relations department, a “customer liaison” position is currently under development in a quarter of the company's communities. Working as an advocate for the buyer, a liaison is assigned to each customer from the beginning—and has the responsibility to attend all customer meetings throughout the process of selling and building the home. “The liaisons understand what is going on in the mind of the buyer,” says O'Dowd, and their presence eliminates any confusion in the buyer's mind about who to contact at any stage of the process. “There becomes a great comfort level and trust factor between them over time.”
While the construction process remains the same, the addition of the liaison means another body must be coordinated in the orientation process. After a house is built, a construction manager still walks the house to check for snag items. But instead of presenting the house at that point to the buyer, the home is presented to the liaison. “The liaison is a highly trained individual that comes up with anything that they see wrong—or that could be wrong—and has those items corrected prior to the homeowner ever setting foot in the house for an orientation,” says O'Dowd.
For the superintendents in the field, it has been a bit of an adjustment to work toward the new standard. “You can't wait until the liaison walks the house to send your painter back in to punch it,” says O'Dowd. “You just don't want the liaison to find it. There are no hidden lists, no second lists, or any of the other tricks that sometimes occur out there. It's just a no bull---- situation to handing off that house.” To ensure that they work in harmony, both the builder and liaison are given incentives to deliver on several criteria, including a finished sign-off prior to closing. “If the liaison is slack and accepts that house with anything wrong, it becomes his problem to get it taken care of,” says O'Dowd. “There is a clean, 100 percent break between where the construction people end and where the customer relations department takes over.”
At the company's current volume, Park Square is structured to incorporate four liaisons divided by geographic territories with each handling close to 300 homes a year. An internal administrator is assigned to each liaison to handle any warranty claims that may come in under that territory. In addition, a field technician is assigned to each liaison. During the orientation process, the technician, who is a skilled handyman, is present to address issues of concern. “If they see an item in need of attention, there is a capable person with tools who jumps right on it, right there,” says O'Dowd. It looks great to the customer, but in reality, this method benefits everyone. “Due to the volume increase, we realize our subcontractors just aren't equipped anymore to have the people available to do it.”
Two field inspectors are also part of the department. They conduct random checks at various stages of construction to ensure the quality of the process. These people grade the inspection and work immediately with the builder to note anything that is flawed or that is recurring. They then report to the local head of construction on what they are seeing so that the trend can be broken. They come in at some critical points and some noncritical as well. “It's not a policing or adversarial situation,” says O'Dowd. “It's designed to be a field mentor who is coming in to help decide if problems may be materials, subcontractors, or supervisory. Then we can look internally at trends to see where we might need to attack these issues from a management side.”
Today, the company continues to use the services of industry experts to ensure continuous improvement. Carol Smith, from Colorado-based Home Address, is employed as an inside consultant to council, train, and reinforce customer focus at all levels of the company. And the survey firm NRS provides detailed feedback and assists management in applying the results. “We dissect all different facets of where we are doing great and where we are doing poorly,” says O'Dowd. “Now, we're really concentrating on the five to 10 items at the bottom of the NRS form saying that we need improvement.”
Although initial feedback is positive, will the changes make an obvious difference when J.D. Power publishes the next round of results? “It's really too soon to tell, but I expect great things,” says Smith. “It's a wonderful concept.”
Beazer's Technology Tune-Up At Atlanta-based Beazer Homes, increased corporate attention to customer care (previously called “warranty”) has led to an overhaul of the company's technology systems. “We didn't have a single company-wide system for company care, but we did for every other area of our business,” says senior vice president and CIO Jonathan Smoke. “We have been working with a collection of [software] applications that we obtained through our acquisitions.”
Driven by the need to examine issues in real time throughout the 40 markets in which Beazer builds, the new systems will enable the builder to track trends and indicators as they exist. “We use customer surveys, too,” says Smoke, “but those are more of a lagging indicator. We are very much paying attention to the process as it occurs.”
Working with Pivotal Corp., Beazer is now implementing Pivotal Home-builder Front Office to address its customer-care process on an enterprise scale. Users can access a comprehensive repository of customer information, review the home history, and manage the complete service cycle, including automatically dispatching contractors, tracking service requests, monitoring service quality, and tracking contractor and supplier charge-backs. And by integrating with other corporate systems, users can easily access all the relevant information on the homeowner and the home, including selected home options, original contractor and supplier, and homeownership history. Beazer will also integrate the new systems with its Web site.
The first part of the rollout will continue throughout 2004 and will pertain to customer-care functions. The company also plans to replace its existing systems for the sales function to better track up-front customer interactions, deal with leads, and implement best of breed tools. “This is not going to be as big of an implementation up front [as the customer-care systems], but it will ensure that we have a total life-cycle view of our customers,” says Smoke.
Overhaul At New Urban West Coming to New Urban West in 2001, Dale Meredith, now vice president of operations, brought more than 20 years of operating experience. But it was the illustrious ranking he helped attain in the early 1990s at California Pacific Homes that was the lynchpin in his hiring. Coming from a highly customer-driven organization, Meredith helped California Pacific achieve the ranking of “No. 1 among all builders” by Eliant for two years running. “New Urban West made it clear they were looking for improvement in customer satisfaction,” says Meredith. “They seemed impressed with the success I had had in the past.”
Before Meredith came on board, the company consistently fell in the lower third of all builders in Eliant's move-in survey. But Meredith successfully integrated a new philosophy at New Urban West. “Today, they are consistently ranked in the top 10,” says Bob Mirman, CEO of Eliant, a provider of home buyer satisfaction solutions. “Dale [Meredith] is a customer-service junkie.”
Upon joining New Urban West, Meredith found that the company was committed to making changes, had sound policies and procedures, and was committed to spending the money necessary to build a good house. “At a basic level, the key is to deliver a finished house on time,” says Meredith. “They had the resources to do that, the will to do that, but not necessarily the right people to do that.” In addition, Meredith found there wasn't a strong focus at the field level. “I saw a great potential to take the resources that were given and make it happen,” he says.
Making people care was the first step in the implementation. “When everyone in the company understands that our goal is to have a high level of customer satisfaction and that we'll do everything we can to achieve it, the right kind of thinking falls in place,” says Meredith. After identifying the four departments heavily involved in customer satisfaction, he gave each some challenges to meet:
Recognizing individuals and teams that responded nobly or that received excellent customer satisfaction scores has helped support the attitude adjustments at New Urban West. Recently, Eliant ranked the company's construction superintendents No. 1 in the nation for construction personnel. “They don't think of themselves as front-line customer satisfaction achievers,” says Meredith. “They have a lot on their plate and it's a big responsibility. When they achieved [the No. 1 ranking], we made a big deal out of it and they were very proud. That's what gives us strong leverage going forward,” he says. “Then they realized they are an important key in achieving customer satisfaction.”
David Weekley's Dallas Dilemma Of all the markets J.D. Power surveys, Dallas has ranked lowest for David Weekley Homes. “Last year, we had our best customer satisfaction ratings in the history of the company, but we are coming in sixth, seventh, or eighth in Dallas,” says Mike Humphrey, vice president of operations. “Frankly, we've been a little surprised by that.” So when charged with the task of improving ratings, the division's management team implemented a plan to enhance its processes in several key areas.
Striving to improve communications, improve expectations, and involve the customer, the division implanted several new practices. The first was to offer an online communications class for employees. “We know 70 [percent] to 80 percent of the day is spent communicating; 50 percent is spent listening, and we know that the average person only listens at 25 percent efficiency,” says Humphrey. “We want to do better than that.”
The philosophy shift didn't require that the company employ new hires with different skill sets. Humphrey, who conducted the training sessions himself, worked with each project team on site in a model home in Dallas. “We basically took what we fundamentally do and changed how we deliver it.”
Other changes were instilled in the meetings that take place with worksheets and agendas. During these meetings, there are now two sets of paperwork and two clipboards—one for the builder and one for the customer. The customer is asked to help by reading out items for review and discussion. Once an agenda item is covered, the customer checks it off. After everything on the sheet has been checked, the customer is asked to sign the sheet. “What that's really all about is giving the customers a job and getting them involved with a degree of control,” says Humphrey. “Our goal is to transfer as much of this knowledge as possible. We now control them, but in reverse, they now have a sense of control—and it seems to be working.”
A final strategic initiative was to embed third-party participation into the division's processes. Recognizing that more buyers were employing the services of third-party inspectors, the company found a unique way to support the trend. “We interviewed a variety of inspection firms in the area and chose five,” says Humphrey. “Now we tell our customers that if they decide to use the services of one of our preferred third-party inspectors, we'll pay for it.” The company still provides copies of all the reports and digital photos of its findings for the customer's permanent records. “It takes away the fear that we aren't going to deliver a great home for them.”
Initial indications are positive: Comparing numbers from the first quarter of 2003 to the first quarter of 2004, ratings have increased based on some of the processes that were put in place (see “Difference in Dallas,” below). And as the company's other markets have seen the successful implementation in Dallas, almost 90 percent are now incorporating some of these touch points. “I don't know what [Dallas] will score on J.D. Power,” says Humphrey. “It took six months to roll this out, so we won't get a full year's benefit from the surveys.”
1. Communication and Presentation Skills The person must understand what the buyers' needs are and be very clear in responding to those needs. Diplomacy and time-management skills are essential.
2. Construction Skills “They need to understand what they are looking at,” says O'Dowd. There is a technical need to be able to read blueprints and understand the nuances of contracts throughout the process.
3. Experience in Customer Service coupled with Command of Authority All of the attributes that someone in customer service needs should be rolled into this person's skill package, but it requires more. Because this position is on the front line with all levels of the process, stress tolerance is essential. The ability to deal with situations—both good and bad—is critical. And the liaison needs to exhibit authority in order to confront a senior-level manager to remedy a problem or have the leadership skills needed to take the authority to say “we aren't ready to close this house.”
|Difference In Dallas|
|After revamping its focus on customer satisfaction in the Dallas market, David Weekley Homes has seen an increase in satisfaction scores in what had been the company's lowest-ranking market.|
|Survey Period||Q1 2003 vs. Q1 2004*|
|“Would you definitely recommend a DWH?”||Up 5%|
|“Would you recommend a DWH?”||Up 8%|
|“Were all items complete at time of closing?”||Up 3%|
|“Did you receive excellent quality?”||Up 3%|
|“Would you definitely recommend a DWH?”||Up 7%|
|“Did you receive excellent warranty from DWH?”||Up 3%|
|* Based on third-party phone surveys|