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.
Simplicity Standard at Douglas Homes
Simplifying the purchase process and delivering quickly on warranty service build trust and satisfied customers.
For entry-level and first move-up buyers, the new home process overwhelms the senses. The amount of information, the number of details and the decision-making pace pile one on top of another, and the combined load often erodes trust and breeds unhappiness.
At NRS Excellence in Class winner Joseph Douglas Homes in Brookfield, Wis., simplifying the purchase process and delivering quickly on warranty service do the opposite: They build trust and satisfied customers. Building 60 homes this year, owners Deron Butler and Joe Orendorf structure their customer interactions to both emphasize choice and simplify choice. "Our cafeteria plan helps buyers find the perfect new home option for them and then guides them to the plan that fits their needs," Orendorf explains.
Specifically, Douglas Homes buyers choose from:
- Contractor-only: As is standard throughout southeast Wisconsin, these buyers first secure their own lot and then select from an array of Douglas house plans they can customize with Douglas' in-house designer. "Buyers carry the burden with this approach," Butler says. "For those that have the time to devote to finding a lot, buying it, selecting and customizing a plan, we want to be their builder. We just want to offer other options to make it easier for our customers."
To separate itself from the competition and erase buyer anxiety, Douglas crafted its guaranteed pricing philosophy. Rather than create what sales manager Mike Bauman says is an artificially low base price and then tack on thousands of dollars in lot improvement costs, Douglas determines upfront all the costs for what other builders call allowances and puts them in the contract at a fixed price. If subsoil problems crop up, "we eat them, and we live by that guarantee," Butler says.
- Packaged product: With an inventory of available home sites in multiple neighborhoods, buyers combine their purchase to include the lot and home. This turnkey offering appeals to locals and transplants alike, Bauman says. "For buyers, this eliminates the need for multiple construction loans, it limits the number of contacts, simplifies financing and makes scheduling easier."
- Ready-to-go homes: Douglas starts construction on a select number of spec homes each year. These ready-to-go homes, as the company calls them, serve two important purposes. As demonstration homes, they showcase Douglas' construction standards at various stages of completion, and as furnished models, they offer a quick move-in to the time-sensitive buyer.
Eliminating hassles for the customer and the company also drives Douglas' approach to pricing and options. Pricing begins with the guarantee on lot improvement costs. The next phase, complete base pricing, gets buyers "from a house to a home," says Bauman, and includes as standard what many builders offer as upgrades: low-E windows, fireplace with surround, high-efficiency heating and cooling equipment, structured wiring, kitchen appliances (specifics dependent upon plan) and more. To get to what Douglas calls its complete base price, buyers must select one of three options packages that mimic the good, better, best philosophy so familiar to buyers: the select, preferred or luxury package. Standardizing on options packages means buyers can see and select everything with the sales manger in one meeting at the company's design center.
The benefits of standard options carry into the field as well. Job managers and trade partners know the specs for each home and work with the same products regularly. "We work with an excellent base of trades and usually the same crews," Orendorf says. "Selecting a standard group of products as upgrade options eliminates headaches for them. It also streamlines purchasing and prevents construction delays due to product back orders."
No matter which purchase or options package a buyer selects, Douglas customers interact with just three people while buying, building and servicing their new home. The sales manager takes the buyer through the purchase process up to permitting. The job manager takes over until closing. The service manager enters at closing and manages all issues through warranty, which often extends beyond the 12 months specified in the contract. "Fulfilling the buyers expectations (as well as our own) doesn't mean we disappear after a year," says Oren-dorf. "We do what's right, no matter when."
Warranty manager Jim Bonkoski completes 75% of all warranty requests internally. He prides himself on responding to oral requests for service (the most frequent means of customer contact during warranty) within 24 hours and usually completes the required repair on the first visit. For jobs that require trade involvement, new product or more time, Bonkoski schedules the follow-up appointment before leaving the home. "Quick response to customer concerns during warranty means everything," Bauman says. "We can build the home on time and deliver it white-glove clean at closing, but that doesn't matter if we drop the ball during warranty, so we work very hard to deliver exceptional service fast."
"We're not revolutionaries," both Butler and Orendorf say, and neither believes they need to be to achieve superior customer satisfaction. "We know those things that matter to buyers - a single point of contact at each phase to answer questions, a new home delivered new house clean, responsive service should problems arise - and we deliver in those areas."