By Bob Mirman and Wyatt Kash. Price. Location. Size of the home. Number of bedrooms. Lot size. Distinctive design. Reputation. Marketing. These are the things that bring potential buyers to a builder's doorstep. These are also the things that turn shoppers into buyers. But what sells a buyer on signing a contract -- or on considering that builder for his or her next home -- begins and often ends with the experience buyers have with a builder's sales representative.

Buyers' ratings and comments on satisfaction surveys repeatedly confirm that buyers perceive a world of difference between a good sales person and a great sales person.

A new industry study, however, suggests that what builders believe even great sales people should focus on is often out of alignment with what buyers say is most important to them -- and in fact, what drives their decision to make a referral.

The study goes on to suggest that two out of 11 issues and skills associated with the relationship between home buyers and home sellers contribute more than 50 percent to the buyer's consideration to refer that builder. The two issues are:

1. Did the sales person look out for the buyer's interests, as well as the builder's interests?

2. Did the sales person keep the buyer informed of construction progress without the buyer having to ask?

The study, which examined buyers' experiences and builders' perceptions -- from the point of sale through construction to the first year of ownership -- evaluated which factors have the greatest payoff in improving buyer referrals, or buyer loyalty. It also identified what new practices builders are establishing to refine those activities that buyers say are most important to them. The study, conducted for BIG BUILDER magazine, was produced by Irvine, Calif.-based Eliant, formerly National Survey Systems, the nation's largest researcher specializing in home buyer satisfaction solutions for the building industry.

In exploring the dynamics between buyers and sales representatives, Eliant asked industry executives in general management and sales and marketing positions across the country to select the top five of 11 sales issues they believe have the strongest impact on buyers' willingness to refer a friend (See Figure 1-1). Several key differences emerged between the buyers' and builders' views of reality:

  • While an analysis of buyers' survey responses clearly points to "Looking out for the buyer's interests" as the most important issue, only 19 percent of the builders selected this issue as one of the top five.
  • "Proactive communication," the second most important issue to buyers and the driving force behind "Looked out for my interests," was ranked fifth in importance by builders.
  • Builders ranked the "Explanation of the warranty program" as the least important issue, with only one in 30 builders placing this issue in the top five referral drivers. Buyers, on the other hand, ranked this as third on the list of important sales behaviors, 91 percent more important than the average sales issue.

Getting to Great If looking out for the buyer's interests is paramount to the sales person's development of buyer loyalty, how does the great sales person do it? What should we be teaching our sales people to do?

Further statistical analysis reveals that there is one sales behavior responsible for the perception that the sales person is looking out for the buyer's interests, and this is the same behavior that defines the difference between the good and great sales person.

Both good and great sales people respond quickly to their buyers' requests and questions. However, the distinguishing characteristic is that great sales people also frequently communicate proactively with buyers: They keep the buyer updated on construction progress, delays, and cut-off dates without the buyer having to call and inquire.

Builder's Action Plan
...For improving the sales representative experience.
Referral 'Accelerators':

1. Require "Pro-Active Communication" (PAC) as a part of each sales person's daily routine.

  • Five quick calls per day, during the day; leave messages. If there is a hostess or sales partner, this doubles the coverage.
  • Aim to cover every buyer each two weeks.
  • Have the sales person track performance on this objective. ("You get what you inspect, not expect.")
  • To maintain this performance, provide frequent feedback to each sales person on the buyer's rating of his/her PAC behavior.

2. Bring sales people together with options, design center, construction, and service personnel to develop a script that sales people will follow when discussing each of these disciplines with buyers. Sales people should be setting realistic expectations for each of these areas in order to achieve high satisfaction scores.

Referral 'Killers':
  • Allow sales people to communicate only when the buyer calls or stops by the office (i.e. reactive communication).
  • Require "Pro-Active Communication" (PAC) but do not track each sales person's PAC performance.

Eliant's ongoing builder satisfaction surveys provide monthly ratings for each builder's sales person by name. It is not surprising that sales people with the strongest "Pro-Active Communication" (PAC) ratings also have the best overall satisfaction ratings. This practice allows buyers to relax because they can trust that the sales person is looking out for them. By definition, consumers who feel the need to call and inquire about their home's status have reached a level of anxiety that prompts such a call. Once this anxiety threshold has been exceeded, the buyers are predisposed to being dissatisfied.

Sales people can reduce such anxiety-based calls and the resulting potential for dissatisfaction by increasing the frequency of PAC calls to buyers. The recommendation: Each buyer should be contacted in this manner at least once every two weeks.

Such a suggestion is likely to draw disdain from many sales representatives: "Many of us have about 100 open escrows. We cannot possibility initiate an extra conversation with each of these buyers every two weeks," explained a sales representative for one of Eliant's home builder clients.

The key lesson, based on Eliant's observations among its best-run clients, is realizing that PAC does not require a conversation, only communication. Eliant's additional recommendation: Sales people should make these calls during the day when it is likely that they will simply leave a very brief message on an answering machine. If done in this manner, it is estimated that 80 percent to 90 percent of the PAC calls will result in a 15- to 20-second message.

In 15 minutes each day, the sales person can complete four to five PAC calls, and significantly impact buyers' referral potential. At the same time, this PAC performance positively impacts the buyer's perception that the sales person is looking out for the buyer's interest.

Another major advantage of strong PAC performance: Builders with high satisfaction scores on "Home complete on scheduled date" almost always have high PAC scores. Apparently, when sales people are aggressively feeding buyers information about changes in the closing date or move-in status, buyers adjust the move-in date in their minds and are less likely to hold the builder accountable for making the originally promised move-in date. (The opposite is also true with sales teams having low PAC scores.)

Buyer loyalty cannot be bought, it must be earned by acting in a manner which exceeds the buyer's expectations. Since buyers expect sales people to respond quickly to their queries and requests, no points are earned for performing as expected. The PAC process ensures that the sales person will be perceived as going above and beyond and that he is looking out for the buyer's best interests.

Turning Problem to Opportunity

Hold up a mirror to how builder sales representatives perform on this single measure and it would appear they are earning at least satisfactory grades as a group. Buyers rate their experience with "Proactive status on construction" to be slightly above average compared to all other elements contributing to the sales experience. However, this rating can vary significantly from builder to builder and even project to project. A drop in this score, given its importance, would quickly have a noticeably negative impact on buyers' satisfaction with the sales experience.

One element that is significantly under par, however, is the issue that has the third strongest impact on the buyer's willingness to refer: "The salesperson adequately explained the warranty process." Again, ironically, this issue has the second lowest satisfaction rating in the sales category (81 percent).

Both of these issues, however, can be improved with a measure of discipline and training without incurring significant costs. And compared to other activities sales people are expected to perform, focusing on these two would provide the biggest opportunity for increasing buyers' overall satisfaction scores -- on the sales representative portion of the home buying experience.

Finally, the new study affirms that the individuals who sell for a builder play a significant part in a builder's long-term success and viability. Their role goes beyond converting prospects into buyers or achieving targeted absorption rates. The impression sales personnel make on buyers and prospects -- and the people they talk to -- has a significant and long-lasting impact on the perception consumers have about the home building firm with which they are dealing.

The study's authors suggest there are two ways in which sales people can, often unknowingly, seriously affect the long-term success of the builder's franchise.

Shaping the sales experience: The manner in which the great sales person provides an extraordinary sales experience to each buyer. Sales people who go above and beyond for their buyers are more likely to develop customers who say they will "Absolutely be willing to refer a friend" to their builder. These great sales people have a measurable impact on their customers by providing:

  • More control over the deal, which yields a lower cancellation or kick-out rate;
  • A higher proportion of buyers saying they "Would buy again from this builder," are "Willing to refer" a friend or relative; or "Have already made a positive referral."

While it takes an above-and-beyond performance from a builder's entire team to produce "evangelical" buyers, sales people are instrumental in starting the foundation for the referral impression.
Managing expectations: The other impact is the manner in which the sales person sets the buyer's expectations for the purchase, closing, and service phases of the process. Home buyer satisfaction can be defined as the gap between the buyer's expectations and the builder's performance. Even with no change in performance, lowered (or more realistic) expectations will, therefore, yield higher levels of home buyer satisfaction even if the builder's performance has not changed.

Promises made by the sales person, whether overt or inferred, invariably affect the buyer's expectations. Walking a fine line, the sales person needs to sell the buyer on the builder's quality and service without being unrealistic. The "under-sell, over-deliver" philosophy works well here. Honesty is the best policy; customer service personnel often complain that they were set up for failure by a sales person who mistakenly thought he needed to exaggerate the quality and responsiveness of customer service personnel in order to make the sale.

Significantly, the buyer's evaluation of his experience at each subsequent phase of the buying process including the service provided by escrow/title, options, design center, lender, and customer care personnel is often a direct reflection of the expectations crafted, knowingly or unknowingly, by the sales person.

Best practices: What builders are doing to...

...Look out for buyers? interests.
  • Training sales representatives
  • Weekly calls to buyers
  • Customer satisfaction surveys
  • Increased points of buyer contact

Beazer Homes USA, Vice President of Sales and Marketing:

We pre-test, hire, train, and retain individuals who care about people. This year we put into place a training program for nearly 500 sales professionals that is consultative and needs-based versus presentation-based.

Shea Homes, Vice President of Sales and Marketing:

Our sales counselors ask their customers how often they would like to be contacted through the purchase process, i.e., once per week, and then our counselors follow through accordingly.

Portrait Homes, Director of Sales and Marketing:

Training representatives how to solve problems for our prospects/buyers; how to generate referrals; how to establish rapport and trust; and on warranty issues. Demonstrate personal commitment to follow through on any customer issues: to always thank customers who contact us with concerns/complaints and to invite them to call me if problems are not resolved to their satisfaction. And weekly involvement in our warranty/service request system.

Standard Pacific Homes, Vice President of Sales and Marketing:Increase points of contact with buyer, leading to improved communication. Ask buyers how frequently they expect to hear from their sales representative. Send periodic notes with photos of home in its various stages of construction. Invite buyer to tour home during construction.

William Lyon Homes, Sales Manager:

We have empowered our sales representatives to run their sales offices as if it was their store, allowing them to make the necessary decisions to benefit their customer as well as the builder.

D.R. Horton, Director of Sales:

Honesty and integrity is what builds a solid relationship between buyer and sales representative. Since these characteristics are difficult, or impossible to train, I look for these traits over other qualifications when hiring new sales agents.

David Weekley Homes, Project Manager:

Providing assistance/advice on how they can sell their current home more quickly so they can then close on the home they have under contract with us.

Greystone Homes/Lennar, Vice President of Sales and Marketing:

As an everything included builder, the most important thing our sales representatives do is to present our program to the individual consumers and allow them to decide if what we do works for them. If it doesn?t, we refer buyers to a different Greystone or Lennar community or in some cases to another builder altogether.

Holiday Builders, Marketing Director:

Emphasis is placed on referral business, and sales people understand that they will not receive referrals unless the experience is a positive one. Our Mission Statement (memorized by each employee-owner) clearly defines our commitment to a pleasurable building experience for our customers and our pledge to uphold the highest ethical and moral standards in all we do.

John Laing Homes, Vice President of Sales and Marketing:

We created the TLC Program designed to educate the customer during the home construction process. It revolves around a "Home Album" we give the customer at the point of sale and includes: Welcome and homeowner information?Pictures of the model they purchased, standard features, and option list; Your Home in Progress?photos of construction progress; community information; checklist for move-in and moving tips; a document holder; and referral advantage information.

Medallion Homes, Sales and Marketing Manager:

We make sure our change order process is easy for buyers and that the buyers? vision and our interpretation of their requests match. Our change orders are very specific and require attaching dimensions, sizes, and renderings that can be understood by all. We have an Architectural Review Board that reviews every change order to ensure the buyers? wants are clearly expressed, and if not, changes are made or questions are asked.

Pardee Homes, Area Sales Manager:

We discuss the purchase/closing process with a step-by-step list at the time of contract. We let buyers know we are there for them every step of the way. We also introduce our company's commitment to customer service and our third-party survey system; that we strive for outstanding service and therefore, if at any time we fail in any of these areas, to let us know immediately. We have a "get to know Pardee" gathering two weeks after a release and another party 30 days before closing. Buyers meet each individual they will be working with on their new home. They can get answers about construction and its progress, loans, options and standards, flooring, and escrow.

Western Pacific Housing, Vice President of Sales and Marketing:

Disclose, disclose, and disclose. If you wonder whether a customer should know, I think he should. Tell him early and often. Let him know that the timing is subject to change. Don't use more credit during the escrow, since it could impact your financial options?or even ability?regarding the home purchase.

Best practices: What builders are doing to...

...Keep buyers informed of construction progress.
  • Weekly phone calls to buyers
  • Postcards/letters/email to buyers with updates/digital photos
  • Specialized Web sites with construction progress updates, photos
  • Multiple walk-throughs with buyers

John Laing Homes, Sales Manager:

Weekly calls for construction status to review what is scheduled to occur in the coming week. Bite-sized promises that can be kept 100 percent of the time.

Beazer Homes USA, Vice President of Sales and Marketing:

Sales professionals call buyers weekly with progress updates and to prompt them on upcoming appointments. Sales professionals are sending digital pictures of the home, which is particularly helpful to those relocating who can't visit the home regularly. We also provide individualized use of to our buyers. This site allows them to track the progress of their home in areas of construction, mortgage, option selection, and moving. After buyers close on their home, this site becomes their online home record and includes suggested maintenance tips, warranty details, and access to customer services.

John Laing Homes, Vice President of Sales and Marketing:

Our "TLC" program involves having our home counselors keep buyers informed of the progress of their home during the construction process. Photos/letters are sent: 1) With family in front of their home site; 2) Foundation completion date. Note advises to make design choices; 3) Framing started/status; letter congratulates them on loan approval; 4) Framing complete; note advises on construction status; 5) Finishing touches; letter advising them to make sure their paperwork is completed. Construction completion is confirmed; 6) Our New Home n The customer will also be able to view the status of their home on their own Web page called My Home 24/7. We also have meetings with buyer to review status/issues.

Medallion Homes, Sales and Marketing Manager:We have a series of five walk-throughs with our superintendents that review each stage of construction of the home. From lot walk to the new homeowner orientation, our construction team educates the buyers about what is going on in their home, reviews change orders, and handles any questions or concerns.

Greystone Homes/Lennar, Vice President of Sales and Marketing:

My assistant or I randomly interview one buyer from each community on a monthly basis and ask: 1) How would you rate your experience so far on a 1 to 10 scale? 2) Is your salesperson in contact with you on a weekly basis? 3) What could we do differently to make your experience better?

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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