"Over the next five years, the home building industry will become known as a leader in overall customer experience," predicts Dave Prolo, senior vice president of John Laing Homes' South Coast division in Newport Beach, Calif.

In the past few decades, the U.S. economy has gradually shifted from an economy dependent upon brick-and-mortar manufacturing to an economy reliant on the service sector as the backbone of its economic future. In a quintessentially American spirit of competitiveness, the evolution has continued, as evidenced in the transformation of august brands into share-losing competitors as other companies that appear to “get” what consumers want achieve market dominance: Look at Jet Blue vs. American Airlines. How about Enterprise vs. Hertz? Nordstrom vs. Sears? Toyota vs. General Motors? FedEx vs. the U.S. Postal Service? Out-with-the-old, in-with-the-new; the list goes on.

YOUR NEW COMPETITORS

Credit the emergence of these firms as market powers not to some inherently higher level of product quality, but to an upward arc in their effort to maximize the consumer purchase experience. These companies have moved away from a single-minded focus on product to a multidimensional focus on the customer. As more organizations adopt customer-centric strategies, the entire competitive landscape and the expectations of your prospective buyers changes.

Enterprise didn't get to be the largest car rental company in the world by offering better cars, or even cheaper cars. It didn't earn customers' loyalty because its rental counters were conveniently placed next to the baggage areas in major airports. Fact is, it's a bus ride to most of Enterprise's rental sites. Loyalty came because of a unique service value: By offering to pick up customers and bring them home at the end of the rental period, Enterprise became more than a commodity. It became a nontraditional car rental company. Enterprise's goal was to earn a reputation as a service company—a service company that happens to rent cars.

And what about JetBlue? After just six years, it's no longer an upstart, but a trend-setter and market leader. JetBlue flies the same aircraft as other airlines. It takes Jet-Blue just as long as Delta to fly from Los Angeles to New York. JetBlue pilots don't hit their landings any better than the pilots at United. But JetBlue is one of the most profitable airlines because it pays attention to one of the most important success drivers: the customer's experience. It offers leather seats, excellent on-time performance, and TVs in every seat.

Although home building has lagged behind other industries in the transition to a solid foundation of customer-centricity, encouraging signs have emerged. Customer satisfaction scores of builders rated by Eliant continue to make up ground each year in the JD Power & Associates satisfaction ratings, improving 7 percent to 8 percent annually since 2003.

POINT OF DIFFERENTIATION

How do you differentiate your firm from the builders down the street? Well, it used to be pretty simple: quality, quality, quality. But today, while the perception of quality may help you sell your homes, it will do little to stimulate referrals. When it comes to building customer loyalty, what matters is not just the home you build but the experience you deliver.

High quality no longer provides a guaranteed point of difference. Although most sizable builders provide quality far in excess of what was provided 10 years ago, buyers' base of expectations cancel out many quality construction features as a competitive edge. Delivering the “expected” tends only to satisfy; consequently, when you provide high quality, you receive much less credit than you did 10 years ago.

Steve Wynn, whose latest Las Vegas creation has his name splattered all over it (The Wynn Hotel), offers sage advice for anyone with thoughts about opening a casino, advice that home builders can learn from: “If your business is just about slots and gambling, you are very vulnerable.”

Wynn understands that his product—gambling—can now be found all over the country. To get people to come back to Las Vegas, he knows he has to offer something more than a casino the size of Rhode Island.

“People want a unique experience: good restaurants, great entertainment, fanciful environments, beautiful architecture. That is what people will get on an airplane for.” You have to admire this guy … he gets it.

Thus, you can no longer rely on product quality to ensure the viability of a business franchise. In every consumer goods and services business, it's critical to look beyond product features to the purchase experience in order to secure a point of distinction.

Consider for one moment the expression “the purchase experience.” Now, take a careful look at all the ads you see during the next week. Count the number of times you hear or see the word “experience.” You'll probably be surprised at how often it occurs in everyday advertising. Here are just some examples: “It's the Experience Economy,” “The BMW Experience,” and “The Marriott Experience.”

John Laing's Dave Prolo is right. The next five years will see the home building industry go through a major shift toward the consumer.

Your customers are not just hoping for an experience. They're expecting it.

–Bob Mirman is CEO of Eliant in Irvine, Calif. For further info, visit www.eliant.com.

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