By Bob Mirman and Wyatt Kash. Builders have come a long way in recognizing their reputation often has less to do with the quality of the homes they build than the quality of care they devote to their customers.

A decade ago, few builders bothered to measure the customer-service side of their business. Fewer still seemed to acknowledge how their customers' service expectations were increasingly being defined by a new era of consumer-focused companies like Nordstrom, Marriott, and Disney. Today, most major builders not only measure customer service satisfaction but have well-established programs in place to continually improve upon it.

However, recent research suggests that unless the customer service component of satisfaction is measured within the right time frame, the resulting scores may be misleading. As a result, builders, who are making big investments to improve satisfaction and referral scores, in many instances may be pulling the wrong service levers or the right service levers at the wrong time.

The reason stems from the recent discovery that the metamorphosis of a home buyer into a homeowner has a greater impact on how customers respond to satisfaction surveys than has been commonly appreciated. That conclusion is one of a number of findings to emerge from a study on improving home buyer customer satisfaction prepared for Big Builder magazine by Eliant (formerly National Survey Systems, in Irvine, Calif.)

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Until several years ago, builder satisfaction studies conducted by Eliant traditionally analyzed surveys administered 60 to 90 days after move-in. That timing was purposely selected to allow adequate opportunity for home buyers to experience the customer service process. Eliant analysts discovered they failed to fully appreciate that by 60 to 90 days after move-in, home buyers had already been transformed into homeowners whose priorities had also transformed. The early assumption was that satisfaction with the customer care process contributed as much to referrals from new home buyers as it did from homeowners.

We now know that this is not the case based on deeper examination, according to Eliant CEO, Bob Mirman.

While the customer care experience controls more than 41 percent of the homeowner's decision to refer a friend to the builder, only seven percent of the new home buyer's referral decision is based on the buyer's perception of customer care.

Homeowners traditionally have been considered those living in their new homes 10 to 12 months after move-in. However, it is increasingly clear that the transformation from home buyer to homeowner occurs almost immediately after the buyer has moved into the new home. As a result, builders need to be conscious of the key customer care "drivers" that significantly impact overall home buyer satisfaction and referral potential; and distinguish those issues that play a greater role during the move-in phase from those that play a greater role after move-in.

Although Eliant's survey asks buyers to evaluate 10 factors in their initial customer care experience, three of these factors contribute 72 percent of the buyer's overall satisfaction with customer care:

Quality of repairs. Clearly, getting it right the first time when it comes to repairs is crucial. This one factor contributes almost 40 percent to the buyer's overall perception of initial customer care. Yet, it is the lowest rated issue in the customer care category, placing it deep into the "Action Required" or "Red Zone" on Eliant's targeted opportunities and priorities chart (See Figure 7-1).

Of 102 total discrete questions on Eliant's "Move-In Survey," which served as the basis for consumer analysis, "Quality of repairs" was rated by buyers as having the sixth strongest impact, among all fineline-factors, on their overall referral decision.

Builder's Action Plan
...For improving initial customer care satisfaction.
Referral 'Accelerators':
  • Complete punch-list before move-in.
  • After move-in, complete punch-list within promised time frame.
  • Make phone calls giving status of service request, back-order, etc.
Referral 'Killers':
  • Multiple visits to complete a repair.
  • Don't return buyer's repeated calls for assistance.
  • Open punch-list items 30-days post move-in.

Builders who responded to a separate survey were asked to select the three "customer care" issues (out of 10 listed) which "have the strongest impact on buyers' willingness to refer a friend." Of these 803 builders, only half (51 percent) selected "Quality of Repairs" as one of the three most influential issues on buyers' referral potential, ranking it third (See Figure 7-2), suggesting many builders underestimate its importance. While a strong performance on this issue yields higher satisfaction scores, a poor performance severely hurts the likelihood builders will satisfy a buyer by performing well in other areas. Eliant's statistics show that the chances are almost 2:1 that a buyer dissatisfied with repair quality will not refer a friend, regardless of his satisfaction with other aspects of the purchase process.

Is it possible for builders to quickly impact this area of performance? The answer is clearly "Yes." An analysis of satisfaction studies across Eliant's base of 150 builder clients indicates builders have made meaningful gains in their ratings on "Quality of repairs" during the past year, improving the average score from 75.2 percent in 2001 to 78.0 percent in 2002.

Consistent cleanup. The second biggest satisfaction driver is how well service personnel clean up during and after completing repairs. It accounts for 20 percent of the buyer's satisfaction with customer care (See Figure 7-1). However, few builders registered the same level of concern, ranking it sixth in importance and believing "Timely Response" was much more important (See Figure 7-2).

The good news: Buyers' satisfaction with cleanup is relatively high, and has been improving; from 80.8 percent in 2001 to 83.3 percent in 2002 across all of Eliant builders. And this key buyer issue is arguably the easiest customer care process to fix.

Punch-list items fixed on time. The third key factor contributing to buyer satisfaction with the customer care category is how well the builder did in correcting punch-list items within the promised time frame. This issue accounts for 12 percent of the buyer's perception of initial customer care, and is the third most important issue in this category (See Figure 7-2).

While considerably less important in driving referrals than "Quality of repairs," "Items fixed on time" nevertheless falls deep in the "Red Zone" (See Figure 7-1) as an issue requiring action by builders because of the lower relative satisfaction scores.

Builders are clearly on top of this issue: builders selected this as a top customer care issue contributing to satisfaction and referrals. That awareness is paying off as well. Scores from buyers of Eliant's client builders have risen significantly, from 73.1 percent in 2001 to 77.3 percent in 2002.

Eliant's analysis of client builders indicates that while builders set different expectations for their buyers, there seems to be little relationship between the number of days promised and buyers' satisfaction ratings. That is, builders are just as likely to achieve high satisfaction ratings by promising to complete the punch-list in three days as by promising three weeks. It's not the promise, but how often builders beat the promise that counts.

Best practices: What builders are doing to...

...Improve the quality of repairs and customer service after move-in.
  • Reduced service time; set completion goals (e.g. 24-hours)
  • Closer supervision of trades to monitor work/quality
  • Tie customer satisfaction results to bonuses
  • Computer tracking of repair cycles/calls
  • Home is not closed until 100 percent complete
  • Web site/email for customer service
  • Follow-up calls after each service complete
  • Alliances with trade partners

Standard Pacific Homes, Director of Customer Service:

Customer service implemented in-house goal of 15 minute response time.

D.R. Horton, Vice President of Operations:

Instituted a policy that every warranty request will be responded to by a D.R. Horton employee that day, even if only to acknowledge the request and convey it may take a day or two for the responsible party to contact them to begin the warranty process.

Richmond American Homes, Customer Care Manager:

Customer service representatives required to respond to all homeowner calls within 15 minutes, notify homeowner of receipt of claim within 24 hours, inspect claim within 72 hours, all subs necessary notified within 24 hours of inspection.

US Home, Customer Care Manager:

We have a strict protocol in place to back-charge the subcontractor $300 if the job site is left in a state of disrepair.

Arvida, President:

Went to a dispatching system focused on getting as many service items done as possible within 24 hours (about 50 percent); that left a smaller group to manage and we focused on completing within seven days. Our overall average is now about three days, down from 30 days four years ago.

John Laing Homes, Vice President:

Hired customer care representatives that can complete most repairs rather than being schedulers to bring trades back in to do the work.

Kimball Hill Homes, Area President:

Initiated telephone follow-up survey after every warranty call is completed.

Ryland Homes, Marketing Director:

Introduced "Meet and Greet" program where warranty representatives call the homeowner a couple weeks after move-in to introduce themselves and see if all is OK.

D.R. Horton, Division President:

Our focus over the past few years is on providing a home with no defects at that time rather than focusing on how to fix the problems after the homeowner lives in the new home.

Ryland Group, Division President:

Initiated follow-up call system that verifies satisfaction after repair work has been completed.

Beazer Homes, Division COO:

Scheduled warranty inspection/orientation onsite 30 days following closing. Try to schedule single work day to complete all items possible, six days following the orientation or at owner's convenience

Hovnanian/Forecast Homes, Area President:

All warranty items and customer service issues will be resolved within three working days. Given every field employee new company shirts, jackets, and hats. Also provide clean company T-shirts for our subcontractors if needed.

Lennar Homes/Greystone, Division President:

Instituted system to call our homeowners to initiate the customer care process. We are not waiting for them to contact us; we take the lead. This has enabled us to expedite any necessary repairs and reduce customer frustration.

Ryland Homes, Purchasing Agent:

Ryland Homes in Chicago has a new warranty tracking system for each contractor at each subdivision. We compare the number of homes each contractor completed with Ryland and the number of service tickets year over year. If the relative number of service tickets increased dramatically, we call the principals in, try to figure what the problem is. If it is a manufacturers issue and we can't get it solved with the manufacturer, we ask contractors for their recommendation for a new product. If the increase in warranty issues is due to poor woanship, we may choose to remove that contractor from our bidders list.

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.

For more information, contact:

18 Technology Drive, Suite 200 Irvine, CA 92618
949-753-1077 ext. 10; 800-814-9595

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