Perhaps more than any other builder, PulteGroup had gauged its success by how many of its divisions ranked first in customer satisfaction or home quality each year by J.D. Power & Associates, the marketing information services firm.
Last year, Pulte’s Centex brand ranked highest in home quality in Austin and Phoenix. And one of Pulte’s brands finished among the leaders in Washington, D.C., Tucson, Tampa, Orlando, Southern California, and Houston.
So when the Westlake, Calif.–based J.D. Power told its customers in July that it would not be evaluating customers’ satisfaction with home builders in 2011, Pulte ostensibly seemed to have the most to lose among its peers from a marketing standpoint.
Pulte readily acknowledges that its participation in this study over the years has led to improved customer satisfaction across all of its brands. And despite the study’s cancellation, “we currently are continuing to implement what we’ve learned with an emphasis on first-time versus follow-up quality,” stated Deborah Meyer, Pulte’s chief marketing officer, in an email to Builder on Thursday.
But Pulte is one of the industry’s biggest marketers—last year it spent nearly $55 million on advertising—and while the J.D. Power rankings are important, they aren’t the only weapons in the builder’s marketing and research arsenals, nor are they the only way Pulte sustains its exposure with buyers. “We will continue to collect our own robust customer feedback to ensure we meet and exceed customer expectations,” said Meyer.
J.D. Power explained that it chose not to measure home buyers’ satisfaction this year because it wasn’t confident it could provide reliable analysis with the pool of builders and volume of home-buying transactions significantly reduced by the collapse of the housing market. Even before this decision was made, the number of markets where J.D. Power measured customer satisfaction last year had dwindled to half of the 34 it measured during the peak of the last housing boom.
The firm said it would use this year “to conduct a complete review of its program” for the housing industry, without providing any specifics.
Other past recipients didn’t sound overly anxious about J.D. Power’s pulling out of their sector, although what they are doing to fill the marketing void, if anything, is mostly being kept under wraps. (Builder placed calls with every builder that finished first in either satisfaction or quality in the 17 markets in which J.D. Power conducted surveys in 2010, but heard back from only a handful.)
“We have a plan, but we’re not going to reveal what it is,” says Bill McDonough, chief marketing officer for M/I Homes. Replacing the buzz it got from J.D. Power last year will be a tall order, as M/I ranked No. 1 in both quality and satisfaction in Washington, D.C., first in home quality in Tampa, and was among the leaders in Charlotte. McDonough notes that M/I also ranked No. 1 in its hometown of Columbus, Ohio, for two consecutive years before J.D. Power stopped polling customers in that market.
M/I acquired the rights to use J.D. Power’s marketing name and the image of its familiar trophy in M/I’s advertising and marketing materials. Builder was unable to contact J.D. Power’s senior director Dale Haines to ask him how much the firm charges builders to market its brand—one builder source put the fee at between $50,000 to $75,000 per market—and how many of last year’s winning home builders took advantage of this licensing opportunity.
At least three of last year’s winners said they did not pay J.D. Power for the rights to license its brand, including Ryland Group, whose Atlanta division ranked first in home quality in that market. “We chose not to highlight it in our marketing,” says Drew McIntosh, a spokesman for Ryland Group.
LGI Homes, which ranked first in home quality in Houston, also took a pass on licensing J.D. Power’s brand and image. “We told them it was not in our budget, so it’s hard for me to say that we missed it,” says LGI’s chief executive Eric Lipar. He concedes that being recognized by J.D. Power can create positive press for a builder. “And we passed around their press releases to our sales team.” But Lipar also doesn’t think J.D. Power’s brand means as much to LGI’s customers, who are primarily renters who are becoming first-time buyers, and are more interested in price and monthly mortgage payments. “Our relationships are based more on [buyers] working with our salespeople.”
In Denver, Classic Homes ranked first in both home quality and customer satisfaction last year. But Classic chose not to license the brand, and used the award “on a limited basis in our advertising,” says Kim Sandoval, Classic’s marketing director.
Classic prefers to play up local awards. It’s been voted best home builder for the past three years in a reader poll conducted by the Gazette of Colorado Springs. And Classic has also won the Better Business Bureau’s Excellence in Customer Service award.
So while winning the J.D. Power awards is a plus, says Sandoval, it’s not central to Classic’s marketing or advertising.
John Caulfield is senior editor for Builder magazine.
Learn more about markets featured in this article: Denver, CO, Houston, TX, Atlanta, GA, Columbus, OH.