Special Issue Report: In the Hereafter

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By now, it’s clear. A key theme of this report is “put yourself in your customer’s shoes.” Imagine how unnerving it can be as, at settlement, your customer writes a check for the entire purchase amount and moves into his home. He cannot hold funds back to cover future defects or repairs; no hold-backs contingent upon the speed of repairs; no cash in reserve to cover the completion of items that were not completely resolved by move-in day. All your buyer has is the key to his new home and his faith in you as a builder. Zero leverage.

Just how anxious a buyer becomes about the loss of leverage depends on how much he trusts you. If he trusts you, he expects you’ll live up to the specific promise of constancy and integrity. If your buyer’s “trust account” is at a surplus because of your exemplary actions during the purchase-to-close period, he will be patient and assume you will come through. If the trust account is in a deficit because your pre-close actions caused less-than-impressive feelings in your buyer, it will predispose the homeowner toward suspicion, doubt, and dissatisfaction.

TAKE CONTROL

To reduce the buyer’s natural anxiety at the instant his leverage goes out the window, you need to take steps to fill the buyer’s trust account before move-in. This process will ensure that the buyer is inclined to anticipate a gratifying ownership experience. Try these two strategies during the purchase-to-close period:

• “Normalize” each buyer’s expectations. Buyers often have unrealistic preconceptions about the nature and extent of post move-in customer service that they’ll need. Over-promising service is a misguided attempt to impress the buyer. Your opportunity prior to move-in is to set realistic and specific—quantitative, whenever possible—expectations, the purpose of which is to delight the buyer when these promises are exceeded.
• Develop trust through a “promises made, promises kept” approach. Gary Millet, best-selling author of Creating And Delivering Totally Awesome Customer Experiences, coined the phrase “Promises made, promises kept” to describe the constancy of commitment required to generate a strong aura of “reliability.” Keeping promises is the key to a surplus on your trust account.

OPPORTUNITY KNOCKS

It’s not about the home you build, but the experience you deliver.

Customer satisfaction research in many industries indicates that referrals are more likely from a customer who experiences a problem that was resolved in an extraordinary manner, than from a customer who never experienced a problem at all.

This should come as a wake-up call to home builders who that think their major responsibility after move-in is to simply clear the punch-list and handle the inevitable warranty items. Clearly, the issue is not whether or not the items are cleared but the manner in which this process is conducted.

Homeowners are interested in moving into their new house and then reveling in their new lifestyle. They are interested in sprucing up their landscaping, in furnishing and decorating their new home. The last thing they want to do is have to deal with a parade of re-work contractors, many of whom do not show up when promised or show up without the right materials or tools and vow to return “sometime next week.”

Customer satisfaction is about the customer’s experience, which includes service speed, service reliability, and exceeding expectations.

BEST PRACTICES

Develop a long-term relationship with each buyer. Enlightened builders discover the benefits of loyalty strategies: increased referral sales, repeat purchases, lowered likelihood of litigation. Leading-edge builders are developing programs to maintain contact with homeowners for 10 years or more.

• Once the buyer moves in, get more aggressive about generating loyalty, not less. This is the time to get more communicative. For example, calls by the division’s executives to each buyer on a scheduled—but unannounced—basis will, of course, help assess buyers’ sentiments and identify issues before they become headaches. This also helps to counter the syndrome commonly known as “buyer abandonment,” a legitimate fear that once the builder has the check, the relationship is over.
• Work with your trades to develop procedures to ensure a higher rate of warranty item resolution during the first visit. More than any other service issue, this drives referrals and loyalty. Offer trades bonus incentives for doing things “right the first time” and track their performance diligently; this will also stimulate improvements in the system you are using to give each trade a specific description of the service requirements for each call.
• Cover the basics. Attend quickly to the “dissatisfiers” such as “clean-up after repair.” The bottom line is that customers expect such work, so you don’t receive extra goodwill for following through. On the flip side, not doing it leads to immense dissatisfaction. “Clean-up after repairs” is the second-most important driver of the buyer’s satisfaction with the customer-care experience.

It’s all about continually delighting every one of your customers at every touch-point.
–Bob Mirman is CEO and Alex Roqueta is president of Eliant in Irvine, Calif. For further info, visit www.eliant.com. (continued on 44)

CHECK POINTS

Expectations 101: Homeownership

Tell your buyers a few things to expect after closing.

• Time to clear the punch-list. Promise 10 days, promise 30 days … but whatever you promise, beat it 95 percent of the time. Aim to “wow” and not merely satisfy.
• Speed of response to warranty requests. Promise a specific response time (e.g., four, 24, or 36 hours) only because you know you will do it in half that time.
• Expected changes in the home due to normal settling. Reality Check. Tell your buyers that their home will settle over the first five years or more, and that small cracks will probably show in walls and stucco. Show them pictures of what they should expect.

FOR EXAMPLE

Clean Up Your Act

According to recent customer satisfaction data, it’s surprisingly evident that “cleaning up” is hard to do. However, for The Olson Co., based in Seal Beach, Calif., and Warmington Homes, based in San Ramon, Calif., “cleaning up” is a point of pride and distinction.

According to Matt Savio, vice president of homeowner satisfaction for The Olson Co., an April 2004 summit meeting helped propel his team to putting the care back in customer care. Here are the steps Olson took to “clean up its act”:

• Sets expectations on service, particularly ‘cleaning up’ after repairs.
• Makes booties, vacuums, plastic, and floor coverings mandatory for all repairs.
• Leaves a “While you were out” form that reads, “If not 100 percent satisfied with clean-up, call us.”
• Customer care rep comes out for clean-up if homeowner is displeased. Back-charge trade if necessary.
• Encourages homeowners to be home for repairs, which keeps trades and customer-care personnel “on their toes.”
• An assistant customer-care technician supervises repair work and clean-up.
• Rewards trades for satisfactory clean-up. This strengthens the relationship and builds a sense of “teamwork ideal.”
• Removes written “subcontractor code of conduct.” Skipping the extra paperwork and keeps it personal.
• Holds a “finish” trades meeting before the first phase. Reviews Eliant surveys and reports. It’s another “set expectations” opportunity on the customer-care experience.
• Holds a purchasing-trades meeting at contract time to share customer satisfaction reports and continue developing a personal relationship.

After implementing these processes, The Olson Co. saw its Eliant customer satisfaction scores spike, particularly on the “Year-End” survey. As Savio says, “We’ve definitely seen the results of our improved processes as well as our improved relationships with trades and personnel.”
Warmington Homes San Ramon is seeing powerful results as well. Since late 2003, customer-care and clean-up scores have improved to more than 90 percent on the “Year-End” Eliant survey. In July 2005, Warmington’s San Ramon division was ranked No. 1 on the Eliant “Year-End” regional ranking report. When asked about its secret to success, Joanne Rivero, Warmington’s director of customer care, says, “Our No. 1 priority is in treating our customers, reps, and trade partners with respect. And great personalities in our customer-care reps and superb trades relationships are a key. Clearly, our team takes great pride in their work, and it shows in our scores.”

QUOTEWORTHY

Ice Sculpting

Brookfield Homes of Southland, Mich., took such a cool approach to improving customer satisfaction levels that it created a hot commodity, a team called ICE. Brookfield’s ICE team (Improving Customers’ Experience team) is comprised of staffers from all departments and meets on alternate weeks to address customer experience. This team is passionate about coming up with solutions.

BB050915040L1.jpg Click for larger image SERVICE WITH A SMILE: After four years of putting the CEM process into practice, builders surveyed by Eliant made a steady jump in satisfaction scores in the customer-care department. Gains are attributed to reduced call-backs and increased repair times. ”We came to the realization that we were not performing as well as we wanted,” says Adrian Foley, division president at Brookfield’s Southland operations. “Our turning point was simply making the conscious decision to start getting better.”

According to Doug Behnke, customer service manager and ICE team member, they started with the basics, like delivering a complete home. What’s more, they adopted innovations, such as having service requests sent out to customer-care representatives via BlackBerrys. “We focused on expectations,” says Behnke, “identifying what we were promising to the customer and then drilling down from there.”

Foley participates in ICE sessions, affirming senior management commitment. “The ICE team approach is a consistent forum to voice concerns and solidify solutions, as it provides a clear and positive direction for the team,” says Foley.

“Because we are monitoring our performance, we can be more proactive with our customers while proving to ourselves that this level of success is absolutely achievable,” Behnke says. Brookfield’s customer-care ratings over the past 12 months are on the rise, Eliant found, from the low 70 percent range to more than 90 percent … all in less than one year.

FOR EXAMPLE

Laing’s Laundry List

John Laing Homes in Newport Beach, Calif., has a simple philosophy: Create a home buying experience you would want your own mother to enjoy.

Here are 10 tips (well, 11) to treating customers right that John Laing swears by:

• Deal with every customer with total honesty.
• Take responsibility and admit it even if we are at fault.
• Always keep commitments to buyers.
• Set a goal to beat all targeted due dates.
• Actively and systematically strive to exceed buyer expectations.
• Never infer that we build perfect houses; they are as sound as possible.
• Never finger-point or make excuses.
• Explain what will be done to remedy a situation—make it better than originally planned.
• Implement an “unofficial” extended warranty by making repairs as a sign of total care.
• Make it a priority to treat our contractors as true, trade partners. Call mom (this one’s a freebie).
• Call mom (this one’s a freebie).