In the October issue, we announce the winners of this year’s National Housing Quality Awards: gold award recipients DSLD Homes and EYA, and silver award winner French Brothers.
Finding your Path to Customer Satisfaction Success
According to Dr. Jack ReVelle, Six Sigma expert and quality guru, the average home has more than 60,000 points of failure during the building process. Having superb customer satisfaction scores means lessening those points of failure and doing a lot of things right throughout the home building process.
According to Dr. Jack ReVelle, Six Sigma expert and quality guru, the average home has more than 60,000 points of failure during the building process.
Having superb customer satisfaction scores means lessening those points of failure and doing a lot of things right throughout the home building process.
When it comes to customer satisfaction, there are multiple paths to success. Most companies have their own unique pathway to customer satisfaction or dissatisfaction. It boils down to the overall experience that each company is structured to provide to its customers.
In doing its research, the NRS Solutions Team observed several trends regarding what matters most to customers during the home building process and to what degree.
NRS used an analysis called Piecewise-Constant Least Square Guide Model. This statistical analysis tool figured out from NRS's data the scores on which questions will predict high customer satisfaction and referral business. The tool provides cut off levels of performance builders need to hit to predict high satisfaction with customers.
The results of the Guide Model are based on the results of the NRS Award Program presented by Professional Builder. The NRS Award program is conducted annually to measure homebuyer satisfaction among builders in the United States and Canada. This year's study was comprised of 241 building companies in 37 states and one Canadian province. The survey measured customer satisfaction levels with a 105-question mailer and an online survey administered to 59,684 homebuyers who closed during 2004. The survey was based on a 10-point scale ranging from very dissatisfied to very satisfied.
When it comes to what matters the most to home buyers, builders may be surprised at what ranks at the top. According to the Guide Model, exterior home features ranked first among categories that separated buyers (see figure 1 above).
Of the nine categories in the survey related to products and services, exterior home features was the first pivotal category that a builder has to get right with buyers. This was followed by overall ratings for the walk-through process. If customers had scores above 6.25 on exterior homes features and a near perfect score — above 9.75 — on the perceptions of the overall walk-through process, then the model predicts that customers would have recommendation ratings of "Definitely Yes," or 9.53, on the "Would recommend to family and friends" question. According to the NRS database, this is the shortest pathway to success for builders.
This finding is supported by this year's winners of the NRS Award presented by Professional Builder. When NRS interviewed John Laing Homes Denver, the NRS Diamond Award Winner (#1 builder in North America in Customer Satisfaction), employees spoke about how important it was to have a clean home for buyers at the initial walk-through.
As Rich Staky, Denver division president put it, "everything we do for the buyer is a reflection on how much we care about our buyers."
Pulte Homes Phoenix spoke about the detailed processes by which its homes are checked and rechecked prior to a home buyer ever setting foot on the lot. This process includes the exterior of the home.
These builders' efforts to present a clean home that showed well from the outside as well as the inside paid off given these builders' customer satisfaction numbers (which are undisclosed).
The true story behind customer satisfaction scores is that most builders consistently deliver below the "Definitely Yes" level previously mentioned. In fact, most builders will give less of a priority to the outside of the house compared to the efforts their staff exerts on the inside.
The results of NRS's study suggest most builders should re-think this strategy. Those builders who excel with customer satisfaction scores have put this strategy to their advantage. It is not uncommon for the NRS team to see builders fail reach the 6.25 exterior home features threshold and more often fail to reach the walk-through threshold of 9.75. Scores below these levels result in a longer road to reach high customer satisfaction and in some cases, customer dissatisfaction.
The second part of the Guide model in Figure 1 shows the results for those who excel in customer satisfaction where they did not achieve a score higher than 9.24 on the overall walk-through process.
When this happens, the overall project superintendent and overall warranty service ratings are vital to keeping customers' referral levels high. More specifically, it becomes critical that project superintendents score above 8.70 on overall ratings by buyers. If they do and warranty service ratings are above 8.18, then we will have recommendation levels that are 8.93, right below "Definitely Yes" but still quite high with buyers indicating "Most Likely" to recommend to their builder. This path to success in customer satisfaction involves more than providing a house that wows customers.
In this path, the builder's service becomes vital in recovering from situations and maintaining a happy customer. Those who excel in customer satisfaction deliver this level of performance with a majority of their customers. NRS believes this level of performance is a big reason for those builders' success. Both John Laing and Pulte have encountered similar situations and due to each company's staff, each recovered better than most builders when houses initially fell short of goal.
There are two other paths to success with homebuyers as well. Data shows if a builder scored above 8.70 on the project superintendent, but fell short on the warranty target of 8.18, (but not less than 6.49) the buyer would still maintain a high recommendation level of 8.08.
The second possibility that could work is that the builder doesn't exceed the target of 8.70 with the project superintendent, but does exceed the 8.18 target for warranty. When this happens, the builder maintains high recommendation levels at 8.24 ("Most Likely" to recommend).
The last scenario shows the results when a builder passes on the exterior of the home but fails on the walk-through, project superintendent, and warranty process target scores. This path leads to a significant drop in the recommendation levels to 6.58 or "Borderline Likely" to recommend their builder and is not a good result for a builder. The best in customer satisfaction keep situations like this to a minimum by having the project superintendent or warranty representative provide superior service.
What can builders learn from the results? NRS provides the following tips for improving customer satisfaction:
- Pay more attention to the outside of your homes. The buyer's perception of the exterior of the home is one of the most important areas for a builder to focus. The data shows it is a pivotal point of failure or success. If you do real well, you significantly increase your chances of creating a happy customer. The exterior sets the tone for a homebuyer's perception of the rest of the process. Keep in mind, however, the home exterior must be followed up with good service to do well.
- Make sure the presentation of the home at the walk-through is the very best it can be. While this includes having a high quality home, the walk-through process addresses service as well. Make sure your homes are clean, well built and are ready both inside and out. Top notch service training may be needed with your staff to reach the levels of performance that the best in customer satisfaction achieve. Remember, if you can deliver a near perfect experience at the walk-through along with great exterior features, you are nearly assured high recommendations levels.
- When builders fail to deliver a perfect or near perfect home at the walk-through, it is very important that project superintendents and warranty service staff do an excellent job. Educate your staff on the important role they play in keeping customers happy, especially when a home has several items needing attention. If they fail to deliver, home builders will end up with lower than desired referral levels. Provide training for these folks and make sure they have well documented procedures to make customers happy.
- Maintain a well trained and invigorated warranty service department. In this path analysis, NRS showed that in cases where builders missed the target on the walk-through and project superintendent, but made the target on warranty service, the data still maintained high recommendation levels. Builders will no longer be able to get by on merely having a strong warranty service department to save satisfaction levels. Either way, warranty service is going to continue to have high demands put upon its shoulders, regardless of expectations.
- Despite a lot of emphasis on service when it comes to customer satisfaction, home quality is still #1 according to the data. Buyers want a well built home that is delivered with excellent service. Ultimately, repairs are going to be needed in a newly constructed home. It is the service that a builder provides during and after the building process that makes up the difference between those that delight homebuyers and those that don't. Set specific customer satisfaction targets for your staff in every area of your company. This will help them to focus on the right things that will affect customer satisfaction ratings.