Last month, I attended NAHB’s midyear meeting in Miami and had the pleasure of sitting in on a presentation by Daniel Swift, president and CEO of Des Moines-based architecture group BSB Design.
Customers for Life
Pulte Homes seeks brand allegiance from a most familiar group - its own satisfied buyers.
Our mission is to provide single-family attached and detached housing communities in the United States serving first-time/entry level, move-up and active adult home buyers. We will be a leader in the markets in which we do business.
We will go beyond the old standard of customer satisfaction to a new standard called Customer Delight, exceeding expectations by doing right things right the first time. We will view our customers as being Homeowners for Life.
- Pulte Homes mission statement
Imagine you sold a buyer his first home in his 20s, say, a condo for $80,000. A decade later this buyer, now with family in tow, moves up to a $300,000 model with four bedrooms and three baths for all those kids. Twenty years down the road, now in their 50s with college loans for the kids paid off, the couple buys a luxury $750,000 dream house. However, in their 70s that home is too big so they downsize to a two-bedroom ranch.
Imagine that at each step of the journey, one builder offered that one buyer personalized attention from start to well beyond finish.
At Pulte Homes, that’s called Homeowner for Life. What began as a quality concept for the Giant builder in 1994 has grown into an active policy at work throughout the company’s 41 divisions.
"It’s more than a philosophy. It’s a strategy," said Alan Laing, vice president/E-Business, supply chain and customer satisfaction for Pulte Homes.
Part of that strategy means setting Pulte apart from every other production builder by selling at all price points, from $80,000 condominiums to $1 million luxury homes. "If home buyers are looking for a move-up home, we need to be building it. Most builders don’t build for all consumer groups - entry level, first and second move-ups, active-adult housing, retirement housing. We very specifically do that because we believe in homeowner for life and referral opportunity."
Offering, however, is only part of the equation, according to Laing. "Buyers must have a delightful experience - if they haven’t, we’ve failed."
|Entry level townhomes are a typical first-time purchase for new buyers. This same product offering also appeals to empty-nesters.
To create and keep delighted customers, Pulte involves every sector of the company in its Homeowner for Life strategy on a daily basis. "The cultural message we’re trying to create within the company is that the homeowner is one we value for life, and we treat them accordingly," Laing says.
"One of our lessons learned from customers is they place a great deal of value on the relationship with the Pulte employee. Given this, we have changed our hiring profiles to include a better mix of marketing and communications graduates who are by nature more interested in relationships. As it turns out, in the eyes of the customer the Pulte employee is the brand at that moment of truth with the customer," Laing says.
Pulte also does extensive training with contractors and now holds four-hour workshops to teach its trade partners basic communication skills and relationship management. Classes cover fundamental customer service practices like taking off shoes before entering the house and cleaning up before leaving.
Starting in 2002, contractors will have to be Pulte Certified before they can provide customer service in an occupied home, Laing says. "They have to demonstrate the basic technical skills to do their job and communication skills consistent with our standards. Our research and that of J. D. Power Associates has indicated that one of the biggest drivers to long-term customer satisfaction is quality of service experience. That has driven our behavior - to build a better house the first time and to be professional in servicing it."
"Our referral rates have almost doubled since 1997. In 2001, approximately one-third of our sales will be to customers who are either repeat buyers or are referred to us by friends or relatives. This helps us lower our customer acquisition cost, which is good for the business. The fact that twice as many buyers in the year 2000 were repeat or referred customers tells us we’re doing something right."
And rates are largely up because the Homeowner for Life strategy is now in place in all 41 Pulte divisions, says Bob Halso, Midwest group president for Pulte.
"All of our divisions are employing the same best practices. Tucson, Minneapolis, Las Vegas and Detroit have been doing this longer than the others and are leaders, but all are bunched closely at the top. In January 2000 we awarded 28 divisions the Exceptional Customer Satisfaction award; three years ago there were only seven. It’s a matter of consistently employing the best practice," Halso says.
Part of transforming its far-flung field operations is an organized system of information sharing among the divisions. Pulte’s computerized Uniform Service Tracking Process identifies customer service issues fairly quickly, pushes the information out to the divisions and helps managers "correct problems sooner rather than later," explains Halso. Constant Communication
"We looked at all our best practices, and what we found was those who consistently had a lot of interaction with the customer had built a relationship with a customer," Halso says.
About 10 years ago, Pulte developed a seven-step process of scheduled, face-to-face meetings between its homeowners, realtors, contracts representatives and service personnel. It’s only been in the past few years, however, that all 41 Pulte divisions have consistently practiced the process. Among other things, it includes a series of planned meetings unique to the production builder world, such as:
"We spend a lot of money to build a good quality home behind the walls and if buyers are only looking at cosmetics they don’t see it," says Halso.
Pulte holds two other scheduled meetings before closing that Halso refers to as "nuts and bolts" orientations. These cover areas such as how the house functions, how to use the furnace, water heater and other appliances - even how to maintain the caulk around the bath tub - and how to get service.
After closing, Pulte has three more scheduled meetings with homeowners at two weeks, three months and 11 months, with inspection and service follow-up if necessary.
"That’s why our customer satisfaction scores have risen so dramatically," Halso believes. In 2000, Pulte received two of six highest customer satisfaction ratings for home builders from J.D. Powers for its Las Vegas and Chicago divisions.
"We have the benefit of looking at divisions that score consistently high. We’ve found out what they’re doing and rolled that strategy into training programs nationwide. I don’t want to say it’s that simple, but that’s fundamentally what’s led to the improvement."
Pulte has also benefited from consistently good leadership from its executive management team. "Without that, nothing gets done. It’s not a fad, it’s not something we can get done in one year - it takes time."
"Finally, in the year 2000, we think we got it."
|Pulte has in place an aggressive communication plan that targets entry level buyers ready for a first move-up home (top) as well as a plan to keep the company name front of mind for second move-up buyers as well.
While perfecting its customer care processes is a never-ending activity, the reason for the effort is just as constant - to delight customers so thoroughly that Pulte Homes, the company’s official new name, is front-of-mind for new homes as well as new products.
"What we’d like to do now is maintain the relationship with our customers for a longer time than we historically have in the past. We’d like to extend the relationship beyond one year after closing," Halso says. To that end, Pulte has begun sending newsletters to its customers and is looking to the Internet to improve its Homeowner for Life strategy in the future. With all of its sales offices now online, Pulte hopes to bring information to homeowners nationwide about new products, home maintenance techniques and new Pulte communities.
"We’re seeing many more customers doing their preliminary new home search process online and using that research to make a decision to go to a community," says Jim Lesinski, Pulte’s vice president/marketing. "That’s true for both first-time and existing customers - the Internet is generating a considerable amount of business from repeat and referral customers.
"As a result, we’re seeing fewer tire kickers and more real shoppers in our communities. In terms of numbers, we have more people visiting us on the Web than we do in person in our communities - it’s slightly over one to one. It is an extremely important part of our business."
In the past year, Pulte also did test marketing with existing homeowners, both recent buyers and those who had owned homes for a number of years.
|Active adult communities continue to be a focus for Pulte as demographic data suggests a healthy housing market for years to come.
"We’re doing a fairly extensive mailing to our alumni, it’s the first test of the Homeowner for Life concept to encourage previous Pulte homeowners to move into a Pulte home again," Lesinski says. That effort began in September 2000; with about 60,000 homeowners contacted as of January 2001. While information and numbers are yet to be fully analyzed, Lesinski noted that the mailing generated "a decent response, and we’ve sold a fair amount of homes."
Pulte has also given a Homeowner for Life update to its Web site in the past year. Homeowner photos rotate frequently, for example, showing older couples, young couples and singles, to target all buyer groups. And the company is now in the process of redesigning what Lesinski calls "our next generation web site" - the one that will do what he, Halso and others hope to do: maintain contact with existing homeowners beyond the first year, and sell them their next house. Halso noted that Pulte’s recent branding endeavors - a new logo, television commercials, Dream Home contests and the like - are all driven by the Homeowner for Life strategy.
"We’re much too early in the game for our branding effort to evaluate its success...It’s a wonderful opportunity in the industry but something most everybody in the branding business would say you have to make a commitment to long-term and stay with it to get the benefit."
High tech, glitz and glamour aside, the human touch still counts at the grass roots level when it comes to delighting customers and creating Homeowners for Life, Halso says.
"Joe is building a home for Mr. & Mrs. Smith - that’s the power of this. Joe works for Pulte Homes and he has all the power that brings. But Joe is a person. Home building is still all about the person-to-person relationship."