The 2017 International Builders’ Show (IBS) marks my 26th consecutive year of attendance.
Do you hear the voice of the customer?
IBM, GE, and American Express are among the Fortune 500 companies that have implemented “voice of the customer” programs. Find out how VOC can help you create a customer-centric culture.
Customer feedback, as many home builders know, is a vital piece to creating a customer-centric culture. While countless hours of hard work and preparation go into designing plans, creating construction drawings, estimating, purchasing, and construction processes, very few builders invest equal time in designing a great customer experience. Listening to your customers through a formal “voice of the customer” (VOC) program is one cost- and time-effective way to identify where your company is lacking when it comes to delivering an exceptional home buying experience.
VOC is a term used in business to describe the in-depth process of capturing a customer’s expectations, preferences, aversions, and emotions. A complete VOC program includes customer feedback techniques, performance measurements, benchmarking, and reporting systems that help prioritize future company performance. Many home building companies have already recognized the value of continuous improvement programs (CIP) in their product and production processes, but they stop short of collecting the data/feedback required for a “customer experience” CIP. A voice of the customer program functions as the driver for customer experience continuous improvement.
VOC is a hot topic outside of home building. A Google search for the term finds more than 106 million hits, and numerous Fortune 500 firms have VOC programs, including IBM, GE, and American Express. What is it about VOC that has garnered so much attention? The answer is simple: more business. For example, a recent Booz Allen Hamilton study found that customer-centric organizations outperformed their industry peers 2:1 in revenue growth and generated profit margins 5-10 percent above competitors. More specifically, in a 2008 study, Woodland, O’Brien & Scott found that builders who consistently improved their customer satisfaction rating also saw higher sales, lower operational costs, and lower warranty costs.
Is a VOC right for you?
To build a VOC program first identify your starting point in terms of customer centricity. Be honest with yourself about your organization. Ask yourself: Is there genuine respect for customer satisfaction and feedback to improve our products and processes?
One home building company may have a completely different outlook on VOC programs and customer satisfaction in general from another builder firm. For instance, many companies have more of a transactional view of their business, and, as such, look at customer satisfaction as a byproduct of delivering a home. Other companies view customer satisfaction as something they hope their customers will experience during the transaction. Some builders consider customer satisfaction to be a part of their core strategy and are intuitively aware of the benefits. These firms strive to simultaneously build a high-quality home and a strong relationship with their clients. Finally, the highest-order builders consider themselves “servants” of their customers and community, and this servant outlook is a company core value. These builders live, breath, and demonstrate servant behavior in all facets of their business (i.e., with peers, employees, vendors, developers, and bankers).
There is no “right” customer centricity category. It is far more important to accurately identify your company culture in terms of this transaction to servancy range. Builders skewed more toward the transactional end of the scale seek customer feedback differently than those builders skewed toward the relational side of the scale.
Select your feedback tool wisely
If you decide to move forward with a VOC program, you must accurately capture customer feedback. Keep in mind that VOC collection tools can solicit feedback in various ways — from self-administered surveys to Web-based, pre-packaged digital surveys to third-party, multi-touch customized surveys. The survey means selected can signal to the customers as much about how you value customer feedback as anything else they experience. If your company presents itself as a relational-based company but then solicits customer feedback with an impersonal and curt survey, it can be quite contradictory and even damaging (akin to sending your spouse an electronic anniversary card). However, this format may be totally appropriate for a transactional customer relationship. Ideally, your company will select a customer feedback tool that compliments your customer relationship and collects feedback about your product, customer handling/communications, and services.
Another point to ponder is the challenge of self-administered or direct surveys. Studies show that as many as 50 percent of a builder’s customers wish to remain anonymous in their ratings and commentary. These customers are likely to be less than forthcoming in surveys conducted first hand, by the builder. The desire for anonymity is based upon human nature. Take, for example, a restaurant staffer asking, “How is everything?” This almost always invokes an auto-response of “fine” instead of honest, improvement-opportunity suggestions. As is the case with all research projects, bad information that hides or misrepresents customer dissatisfiers can be far more damaging than collecting no information at all.
The best feedback tools help the customer to uninhibitedly “re-live” their entire experience while seeking both rational ratings and emoting responses. Rational ratings (numerical) help builders objectively measure, benchmark performance, and identify problems. Emotional responses (written comments) give the rational ratings “volume” and often point to both consequences and solutions to the problems. As an example, asking a customer to rate the “condition of their home at delivery” on a 1 to 5 scale may help identify home cleanliness, but the customer comment, “The home was dirty, the toilet was soiled upon move-in, and we had to thoroughly clean the entire home before we moved in,” brings clarity to the problem and signals the emotional damage.
Measure, review, and report
A lot can be determined from where VOC programs reside on a company’s organizational chart. Generally speaking, the lower the VOC resides the less importance placed on customer satisfaction and feedback. Almost all of our top-performing builder clients run customer care programs at the senior management level. On the other hand, senior leaders who delegate VOC programs into the bowels of the company often create a culture of “mandated” customer satisfaction, where staffs tend to focus on the minimum satisfaction performance standards, which ultimately encourages more transactional customer encounters.
To this end, many Fortune 500 companies have executive-level leaders with specific titles — including chief customer experience officer (CCEO) and customer care champion (CCC) — with staffs and healthy budgets who aim to define, measure, report, and promote customer satisfaction within their organization. These organizations calculate their return on customer care in terms of recurring revenue and referral sales. Their duties include defining the company customer experience vision, identifying annual performance objectives, coaching and training inter-departmental strategies, monitoring/reporting key metrics, recognizing and rewarding outstanding customer satisfaction performances, and promoting customer-centric values.
While a smaller-sized builder may not have the resources to allocate a similar budget to VOC, it is advised to assign responsibilities and reporting for VOC to senior management to bring awareness into the boardroom and management meetings.
The customer experience plan
Many home building companies spend thousands of hours a year in the design details of their products to be marketed to the public. No detail is overlooked, from square footage and features to lines of sight and trim details. And these plans are reviewed annually for updates, revisions, and enhancements. Rarely is there an equally detailed “blueprint” for the customer experience. This is likely the number-one area of inequity separating peers, regardless of their industry.
The companies with the most successful VOC practices that have diligently designed, executed, and continuously improved upon their own unique customer experience blueprint have been generously rewarded with higher referral sales, greater marketshare, lower operational expenses, higher employee satisfaction, and enhanced shareholder equity.
Senior-level titles and big budgets are not prerequisites to successful voice of the customer programs in home building operations. However, for a builder to implement a successful VOC program yielding similar results, they must: recognize their customer centricity; collect accurate, helpful customer feedback; measure, manage, and report customer feedback results and improvement opportunities; embrace VOC strategies to improve the customer experience with accountability at the ownership/senior level; develop and continually improve their own unique customer experience; and define strategies to achieve a return on customer satisfaction.
How customer-centric is your company? Take our self-assessment test and find out.
1. Do you solicit customer feedback?
- We ask questions in person – 1 pt
- We have a survey at the closing table – 2 pts
- We send an electronic survey – 3 pts
- We retain a third party to collect feedback – 4 pts
2. We have identified the key metrics of customer satisfaction for:
- Our product – 1 pt
- Our product and sales process – 2pts
- Our product, sales, and construction processes – 3 pts
- Our product, sales, construction, customer service processes – 4 pts
- All areas in our company that touch the customer – 8 pts
3. Do you review customer feedback on a regular basis?
- Every survey that comes in – 1pt
- Every survey and monthly totals – 2pts
- Every survey and monthly totals by community – 3pts
- All the above plus trend analysis and annual reviews – 4pts
4. Where does your voice of the customer (VOC) program reside in your company?
- Service department – 1 pt
- Sales management – 2 pt
- Operations management – 3 pts
- Owner or executive leadership – 8 pts
5. Where is customer feedback shared with the company personnel and vendor partners?
- On a bulletin board – 1 pt
- In a newsletter – 2 pts
- In regular company meetings - 3 pts
- All of the above plus regular community and boardroom meetings – 4 pts
6. What is your company’s philosophy on customer satisfaction?
- Customer satisfaction can help us avoid negative PR and stay out of trouble – 1 pt
- Customer satisfaction can help with market position, referrals, and reduce costs – 2 pts
- Customer satisfaction is a core strategy and a major part of our growth plans – 4 pts
- All of the above and it is a total team effort – 8 pts
7. We have the following positions/titles (or similar responsibilities/mindset):
- Service manager – 1 pt
- Customer care champion – 4 pts
- Chief customer experience officer (CCEO) – 8 pts
8. Our customer feedback tool:
- Collects customer ratings – 1 pt
- Collects ratings and comments – 2 pts
- Collects ratings, comments, and digs deep for customer feelings – 8 pts
9. Do you utilize outside experts or consultants to objectively collect or analyze your customer feedback to the same degree you do with architects, accountants, advertising agencies, website designers, and general business consultants?
- No – 0 pts
- Customer feedback/collection – 1 pt
- Customer feedback, analysis, and benchmarking – 2 pts
- Customer feedback, analysis/benchmarking, and improvement – 4 pts
- All of the above and design/engineering of the customer experience – 8 pts
10. Our “willingness to refer” rate (customers indicating they would refer their builder to a family member or friend) is:
- Unknown – minus 5 pts
- Less than 80 percent – minus 10 pts
- 81-85 percent – 1 pt
- 86-90 percent – 4 pts
- 91-95 percent – 8 pts
- 96 percent or more – 10 pts
11. Our referral sales rate (customers citing they bought their home due to a referral from a family member or friend) is:
Unknown – minus 5 pts
- 0-10 percent – 0 pt
- 11-20 percent – 5 pts
- 21-30 percent – 10 pts
- 31-40 percent – 25 pts
12. We invest as much time in designing, reviewing, and improving our “customer experience plan” as we do with the products/blueprints we build (note: provide the ratio of product design hours to experience design hours):
- 20:1 – 1 pt
- 10:1 – 3 pts
- 5:1 – 10 pts
- 2:1 – 20 pts
Customer Centricity Scale (10 point allowance for sole proprietorships):
- 0-15 Transactional
- 16-30 Transactional with customer-conscious
- 31-45 Experience business model
- 46-80 Relational business model with referral sales potential
- 81+ Market-leading customer-centric reputation with 40+ percent referral sales potential
Charlie Scott is a principal at Woodland, O’Brien & Scott, a customer satisfaction research and consulting firm with offices in Indianapolis and Minneapolis. He can be reached at email@example.com.