The True Value of Loyalty

Each year the Avid Awards Presented by Professional Builder recognizes select home builders that deliver the best customer experience, as measured through comprehensive surveys of actual home buyers. Many home builders vie for the honor, but only a few earn the award. Those that are chosen share an important characteristic: a desire to delight customers so much the clients enthusiastically recommend the builder to others.

Most recently, leaders such as Toyota and Southwest Airlines have been elevated to No. 1 in their respective industries thanks to customer loyalty. The same thing is happening in the home-building industry, which has come a long way in understanding the important role customer loyalty plays in generating future business. Builders who ignore their customers' experience will eventually lose market share to savvy companies that earn their customers' loyalty by providing the best overall home buying experience.

But customer loyalty requires more than just delivering a well-built home and servicing problems at warranty. In fact, our extensive research shows that companies who score higher only in warranty tend not to receive as much loyalty as companies with lower warranty scores. The key difference is the number of issues being handled by warranty in the first place, and less in how well they fixed broken items. Customer loyalty isn't garnered when a builder services warranty items that should have been done right the first time.

Never has the ability to delight customers been more important than right now, when so many home builders are experiencing record inventories and diminishing sales. Consider one of this year's Avid Award winners, The Green Company, which generates more than half of its business from referrals. While many other builders are forced to spend more marketing dollars to lure prospects, The Green Company has legions of delighted customers doing much of its marketing for free.

Avid Award winner Engle Homes Orlando has been able to leverage its reputation for outstanding service during the current market slump, closing more than 200 homes this February. And instead of feeling forced to slash prices or offer huge cash incentives, John Wieland Homes & Neighborhoods, another Avid Award winner, has been able to keep prices steady and protect its margins thanks to its reputation for customer delight.

As builders become increasingly cognizant of the impact that customer experience has on the bottom line, more are soliciting feedback from their home buyers and using that data to improve their overall operations.

Today, roughly 95 percent of home builders survey customers. This year's Avid Award winners illustrate what can happen when you put solid data to good use.