Some two years ago, K. Hovnanian's CEO, Ara Hovnanian, appeared at the front of the room during a bi-annual president's meeting with a stack of letters in hand. His mood was somber as he walked up to the podium, where he paused for a moment to gaze out at the audience of senior managers. Then he read:

Dear Mr. Hovnanian;:

I bought a home from your company because of your family's reputation for quality and excellence in customer relationships. I need you to know that I'm disappointed in my decision. I wish I hadn't chosen your name, your family, your company to build my home and I wouldn't do it again.

Silence weighed heavily on the room, as Hovnanian flipped through nearly a dozen other letters, continuing to read excerpts until his voice became so thick with emotion that he was forced to stop. Only then did he directly address the key members of the team that had gathered there.

“This is my father's company,” he said. “This is his name. This is my name. As difficult as it is to pronounce, we kept our family name in front of this company because we wanted to take pride in what we're doing and we wanted people to love our homes. Too many people don't, and I'm tired of it. This will not stand.”

Today, any builder intent on growth and success would do well to heed Hovnanian's words. In fact, no builder in the industry can afford to ignore the impact of customer dissatisfaction. Gone are the days when closing on a home means your relationship with the buyer is finished. In fact, in many ways, it's just beginning. And the relationships and experiences you cultivate along the way have a domino effect with implications much greater and far-reaching than ever before.


As Mark Hodges, executive vice president at Hovnanian, will readily admit, the evolution to becoming a customer-centric company is not an easy one.

“We grapple with it every day,” he says. “But Ara is relentless in his determination that [K. Hovnanian] rule the industry in customer satisfaction. We don't today, but we're much better. We recognize that it is a very long road.”

What the company officials also recognized is that, in order to thrive, this is a rite of passage that's not voluntary, but imperative.


As the art of entertainment spills into all major industries, consumers expect different experiences than they have had in the past. In fact, according to Michael Wolf in his book, The Entertainment Economy, the lines continue to blur between business and entertainment, with the latter becoming a major force in today's economy.

In some ways, consumers now consider “fun” to be an entitlement, a dimension that should be part of every purchase. And, especially as consumers consider the biggest purchase of their lives, builders would do well to understand that the “experience” has become the new paradigm for a truly satisfied customer. In other words, there's no business without show business.

According to Bob Mirman, president of Irvine, Calif.-based customer satisfaction consultancy Eliant, many of today's service-oriented companies (Enterprise Car Rental) and online retailers ( are truly focused on the unique experiences they create. “They are spoiling their customers, and that raises the bar for everyone else.”


The reality, the economics, and the future of home building lie in the fact that there are ever fewer large players dominating the market. Lower interest rates and creative financing options are bringing a flood of new and younger buyers to the threshold of homeownership. And as the biggest builders expand across the country and develop a broad range of product offerings within their markets, the opportunity to accommodate repeat buyers escalates. In the age of the Internet, today's buyers are more educated and involved in the process than five years ago. They are also more connected to family and friends, where their referrals carry a lot of weight.

Arlington, Texas-based Choice Homes, for instance, benefited from just such referrals. Just South of Dallas, Richard Bazaldua and his wife, Grace, bought from Choice Homes in 1997 because they wanted to live in an affordable area with good schools for their four children. Later that year, Richard was so thrilled with his experience that he convinced his retired mother, Estela, to buy a Choice Home as well. She also became a Choice fan—and that sense of loyalty paid off for Choice yet again this year when her grandson, Joe Rodriguez, and his wife, Heather, decided to buy their first home.

Despite the fact that eight years had passed, the significance wasn't lost on Choice executives, who were flattered that three generations of one family—each at different life stages—would buy homes from the same builder. According to Steve Wall, who was president and CEO when the multi-generational sales occurred (Wall has since left Choice to form his own company, Wall Homes), it's a testament to the power a satisfied customer can command.

Learn more about markets featured in this article: Los Angeles, CA.