Could some of the most in-demand housing markets be cooling off?
A warranty service company in San Francisco guarantees home service work 100%--no questions asked.
You can't build a perfect house, but you can deliver perfect service. That's what Ned Seawell believes, and it's the underlying philosophy of his highly successful company, PSBI Home Finishes in San Ramon, Calif.
Seawell is vice president of business development for PSBI Home Finishes (the initials stand for Perfect Service Builders Inc., the original name of the company, which he founded in 1991 with Mike Giosso, president). Home Finishes is a general contractor and participates in various kinds of construction projects, including custom home building and remodeling. It also maintains professional painting and drywall repair crews. But construction only accounts for about 10% of the firm's activities, says Seawell. The main thrust is warranty service work for homeowners and home builders in the San Francisco Bay area and Sacramento.
"Perfect service means we will come back, no matter how many times it takes, to get the job done right," says Seawell. "We've left a trail of satisfied customers."
Outsourcing customer service is a growing trend in housing, especially with small builders who are trying to keep operations lean.
"Customer service is a high-overhead item that's difficult to manage because demand is a variable builders can't control," says Chris Gatley, a builder/developer who joined Home Finishes in 1998 as vice president of homeowner services. "A builder who's doing 12 houses needs to address service issues, just like a builder who's doing 75 houses. But the smaller builder doesn't want to go out and hire one person just to handle service-that would be cost-prohibitive.
"But if the builder can buy a fixed-price service from us on a house by house basis, and we can amortize the cost of our personnel over several projects, it makes sense for us and it makes sense for the builder," Gatley says.
He acknowledges that the builders most difficult issue in outsourcing customer service is giving up control of the process. "We raise their comfort level by giving them real-time information feedback," says Gatley. That feedback is provided through a new system, pioneered by Home Finishes, that has been up and running for about six months. The linch-pin of the system is the company web site, which has an interactive database tied into it that is accessible to homeowners, builders and trade contractors through a special password. Updated daily, the database tracks the status, in real time, of a homeowner's customer service needs and the progress made on callbacks during the warranty period.
Homeowners can only access information about a particular house, but builders can view information about every house in every one of their communities.
"They can also retrieve lot-specific or vendor-specific information, so it becomes a tool for evaluating how well a trade contractor or supplier has performed," says Gatley.
Service requests and comments can also be made over the Internet, in addition to the more traditional methods such as telephone and fax.
"We started with several pre-packaged customer service software programs and tried to work within those parameters, but many of them were developed by software-oriented, rather than builder-oriented, people," Gatley says. With the help of consultants, Home Finishes' team developed a customized system that's easy to read and use.
345 People-And Growing
Home Finishes has seen rapid growth and change in a short period of time. In May 1997, the company had 110 employees. Two years later, that number had reached 345, with 400 projected by June 1. Project managers cover specific territories and get to know the key people involved, such as the builders' superintendents and customer service managers.
The company has two divisions: builder services and homeowner services. Builder services consists of a production painting department, a prep and detail department that prepares homes for delivery, and a customer service department that operates under the builder's supervision on individual projects.
Homeowner services, which Gatley oversees, includes Fast Track, a program that allows builders to purchase turnkey customer service on completed projects. The builder phones in or faxes service requests to Home Finishes, who contacts the homeowner, does the work and bills the builder.
Training is vital to the company's success, says Seawell. "If new hires come to us with limited knowledge but a good attitude, we can train them from ground zero," he says. Home Finishes personnel are armed with the technology they need to get the job done, including two-way radios, cellular phones and laptop computers.
The Home Finishes business plan includes a goal of $100 million in revenues by 2005. Giosso and his management team have targeted several markets for expansion, including Reno, Los Angeles, San Diego and Arizona.
"The way our systems are set up now, we can easily maintain our operation from one central location," Giosso says. "We would open satellite offices, but our headquarters would always be in San Ramon."
At press time, Home Finishes was planning to launch a new post-warranty service on June 1. When the builder's one-year warranty expires, homeowners will have an option of membership in a service program similar to an auto club, says Giosso.
"They pay a fee for 24-hour-a-day, 7-day-a-week emergency service," he says. "They can also call a Home Finishes representative for recommendations on other services."
Home Finishes' list of clients includes large production builders in northern California such as Warmington Homes, Shapell Industries and the O'Brien Group, plus giants like Centex Homes and Pulte Homes.
John Broesma, vice president of operations for SummerHill Homes, Palo Alto, has used Home Finishes for the past year to do prep and detail work in the builder's three active communities.
"I was pleasantly surprised," Broesma says. "I've been very satisfied with their work. I haven't seen our customer survey results yet, but I review all the walkthroughs and the punchlist items are very minimal. We're able to sign off on every house in 30 days."
Carol Stubbs, director of customer service for Brookfield Homes in Pleasanton, uses Home Finishes crews for painting, prep and detail work and warranty service on various sites. They have been very responsive, she says, especially "in crunch times when we need something done quickly. They also know how to get into an occupied home and take care of problems."
Dean Thorn, vice president of operations for Suncrest Homes, Antioch, hired Home Finishes several months ago to help him close out two small projects of 10 and 22 houses, respectively.
"Because of the high price point on these jobs (high $400,000s to $850,000), we didn't want to drop the ball and not have any clear contact point for communication for the buyers," says Thorn. "We brought in Home Finishes as a test case because we had no customer service people on those sites full-time."
Thorn says that so far, the company is passing the test with flying colors: "We're real excited about what they bring to the table. The after-warranty service makes a lot of sense, not only for builders but also homeowners."
Home Finishes conducts a Quality Control Inspection (QCI) once a house is substantially complete. Seawell says the QCI offers another look at the builder's handiwork from a fresh perspective. Thorn adds that the third-party inspection "draws a line in the sand" for superintendents to aim at.
"Whether there are 40 items or 240 items on the checklist, the supers know it reflects on them," he says.
Another benefit of outsourcing service to Home Finishes is that homeowners learn how to take ownership for themselves, Thorn says. "If they have a legitimate warranty issue, they'll notify Home Finishes, and Home Finishes takes care of it or notifies us that the work needs to be done. They're not stopping my guys on the street to come by and fix their cabinets. It allows a very clean transition."