Last year, Brandywine Homes in California generated half of its sales from referrals. Over the past four years, Brookfield Homes’ Los Angeles division has quadrupled its sales from referrals to 36% in 2011.
At a time when locating home buyers is still a challenge, builders around the country are placing more emphasis on turning their existing customers into advocates for their products and communities. Referrals also reflect their customers’ satisfaction with the overall purchasing experience, say builders whose companies rely heavily on referrals for growth.
“We take the time to focus on each buyer at each step of the process,” says Joyce Mason, vice president of marketing for San Diego-based Pardee Homes, which builds in California and Nevada. That “process” starts at the sale and extends through the house’s construction, escrow and closing, and post-sale attention to any problems.
Pardee attributed 44.8% of its sales to referrals last year, placing it just behind Brandywine on an annual ranking based on customer surveys conducted by Eliant, the San Clemente, Calif.-based research company that tracks customer satisfaction with builders.
Out of 128 builders in North America that qualified for this competition last year, Arizona-based Rosewood Homes won the Best Overall Purchase and Ownership Experience award for a single-division builder. This was the third consecutive year that Rosewood took this honor. The Olson Cos. received this award for multi-division builders.
“Every Rosewood team member and all of our trade partners understand that we have very high expectations,” says David Kitnick, Rosewood’s president. “We meet regularly to convey these and we do not do anything that conflicts with our core principles, which are stated on the back of our business cards: Our mission is to provide industry leading customer satisfaction, quality, and design in a few exclusive neighborhoods each year.”
Kitnick points out that his company publishes all of its home buyer satisfaction surveys, good or bad, and makes them available at each of its sales offices for prospective buyers and Realtors to review. Doing this, Kitnick says, “sends a powerful message to every Rosewood associate because they understand that sharing 'the good, the bad, and the ugly’ with prospective buyers and Realtors [will] either help us or hurt us depending on how we performed.”
He also attributes his company’s consistently high customer satisfaction scores to personalizing the buying experience, being flexible to accommodate buyers’ needs (such as fine-tuning the closing date), and using a series of evaluations and inspections to make sure that the house is as flaw-free as possible when it’s handed off to the customer.
Rosewood and Olson are two prime examples of the strong correlation between customer satisfaction and referral sales, says Eliant’s CEO Bob Mirman. He adds that more builders are getting away from what he calls a “moat mentality,” where the sale was the be-all and end-all, and are remolding their businesses to stay in contact with buyers at every touch point.
In Southeast Florida, where it’s been building for 40 years, Minto Communities generated more than 41% of its sales from referrals last year. “Home buyers trust us, because we’re an established company and we’ve performed in the past,” says Glen Trotta, Minto’s vice president of marketing.
The “Minto experience,” says Trotta, revolves around the builder’s communications with buyers, which includes its “Meet Your Builder” program, where customers are educated about how homes are built and what their ownership responsibilities will be in terms of maintenance. Like other builders, Minto surveys its customers when they move in to their new homes, as well as six months and one year later. Community events also keep Minto in contact with new owners.
If it is meeting its customers’ expectations, then Minto “has the right to ask owners to recommend us to their friends and families,” says Trotta. The company’s website includes a pulldown tab that allows customers to refer other buyers. Trotta says, too, that many of Minto’s referrals come from Realtors who are working closely with its title and mortgage companies. “The closing experience is a big part of this,” he says.
(Indeed, Mirman notes that Eliant recently was retained by Chicago Title Company to train all of its escrow personnel, which he suggests should improve the buyer experience and reflect well on the builder.)
Mason of Pardee Homes says her company has established an “active relationship” via social media with several home buyers in California’s Inland Empire, some of whom have offered testimonials about the company on YouTube videos. Pardee’s referral program also offers fees for referrals where they are allowed, but these account for only a small percentage of the total referrals it gets. The rest are unsolicited from buyers to friends and family, “and that’s been gratifying,” says Mason.
John Caulfield is senior editor for Builder magazine.