Biggest Little Builder in America

Pulte’s customers get personal treatment that beats that of most small custom builders.

By Bill Lurz, Senior Editor | August 31, 2003
Pulte's customers get personal treatment that beats that of most small custom builders. If you don't believe it, ask them in Phoenix ... we did.


Shocking as this might be to other builders, large and small, the numbers don't lie. Pulte Homes, that bastion of bigness, had customer satisfaction scores in its Phoenix division that are better than those of every other builder that entered the NRS competition except for the small companies building fewer than 50 houses a year. And even at that level, Pulte more than held its own.

Pulte Homes of Phoenix had an NRS Index score of 179.85, derived from 589 surveyed buyers. That compares with an average NRS Index of 145.22 for all other production builders entered in the competition. The next-best score was 2.58 points behind. So Pulte Phoenix easily won the NRS Diamond Award for production builders - including those in the class from 50 to 99 closings a year. As if that's not enough of an eye-opener, the average custom builder score was 178.55, more than a full point below Pulte Phoenix's.

More than 96% of Pulte's Phoenix customers said they would recommend the builder, and 92.6% have made at least one recommendation. More than 32% have recommended Pulte four to six times to others in the market for a new home. That's the same kind of word-of-mouth loyalty that fattens the wallets of the best custom builders.


How Pulte Does It

"Pulte's customer service is second to none," NRS president Paul Cardis says. "They empower their teams in each community to do the right thing for the customer, from first contact to beyond warranty. They train the sales agent, builder and customer service manager to make those tough judgment calls, and then they trust the call. So dealing with each Pulte community team is very much like having a personal relationship with a small custom builder.

Top Five Difference-Makers
  1. Completed warranty work in timely manner: 87.40 (average: 63.63)
  2. Grading/drainage: 81.13 (average: 57.40)
  3. Quality warranty repairs and service: 87.06 (average: 64.43)
  4. Began warranty work in timely manner: 88.17 (average: 65.93)
  5. Kept informed of construction progress: 93.00 (average: 71.64)

"In warranty service, it's amazing how fast they turn a problem into an opportunity to impress. Yet people don't expect as much from Pulte because they know they're dealing with a huge company. There's a built-in expectation that a production builder will fight against spending money on houses after closing. When they're treated really well during the warranty period, it blows them away."

Pulte's Phoenix division president, John Chadwick, says everything he does in customer service is directly related to Pulte's corporate "Homeowner for Life" strategy. "Retaining customers as they move through different life stages and income levels is a key goal that all our systems, processes and training are geared around," he says. "It's a conscious business strategy, not a fad."

Pulte's seven-step customer relations process begins with a pre-construction meeting with the full community team. This meeting sets up the entire customer relationship. "We set expectations about the whole buying experience," Chadwick says. "We establish trust that will last into years of homeownership."


An Ounce of Inoculation

There's a critical aspect of setting expectations that Cardis calls "inoculation." Pulte Phoenix does it, and that's one major reason it did well in this competition. "They don't try to downgrade expectations," Cardis says. "You can't do that. That just makes people nervous about quality and service. But you can be truthful and align expectations to reality. What Pulte Phoenix has discovered is that buyers really want to know more about maintaining their homes, and they will eagerly embrace a learning relationship toward that end."

NRS Diamond Award:
Pulte Homes Phoenix
Headquarters: Scottsdale, Ariz.
Communities: 18
Product: Detached homes priced from $115,000 to $450,000
2002 closings: 589
2002 revenue: $120 million
Employees: 125
Chief executive: John Chadwick

Award classification: Production builder, 500+ units
NRS Index score: 179.85
Homeowner satisfaction: 88.71
Recommend scaled score: 91.14

96.4% of homeowners "would recommend."
92.6% had made at least 1 positive recommendation.
32.3% had made 1-3 referrals.
32.3% had made 4-6 referrals.
3.7% had made 7-9 referrals.
24.3% had made 10 or more referrals.
Average referrals per surveyed customer: 4.78
Expectation difference: 0.053 (current satisfaction minus expected satisfaction)

At every stage of the seven-step process, the community team stresses that houses, like cars, must be maintained to perform well and that the homeowner must actively partner with Pulte to keep the house in top shape.

"We teach them to spot trouble before the problem becomes big," Chadwick says. "The homeowner is another set of eyes. What they spot saves us money in the long run. And we find they are eager to learn how to prevent problems. For example, we teach them to look for cracks in the caulk around tubs and showers, anything that might let water get into a wall."

"That's inoculation," Cardis says. "They're telling the customer what might go wrong, how it could go wrong, how to prevent it and what it will take to correct a problem if it occurs. This prepares the customer for possible issues. The net effect is a more supportive, trusting customer.

"Pulte Phoenix engineers houses for high quality and low maintenance, but they augment this with an extensive ap-proach to education and expectation management. They have an active feedback loop in their construction processes aimed at continuous improvement. Whenever they discover a product performance or maintenance issue on the warranty side, they drive that information back into the pre-close orientation, where they alert buyers to watch out for it."


Training Investments

It's hard to train salespeople in construction knowledge and superintendents in relationship skills, but Pulte does it. It eases into the relationship hand-offs from sales all the way to warranty by having all three members of the community team involved in many of the meetings during the seven-step process.

"Pulte Quality Leadership" is a training initiative that introduces all employees to the "key drivers of customer delight." The firm also invests in "building quality relationships" classes. "It's a full day for employees and key trades where we do role playing and hands-on exercises to teach people how to react to different personality types and establish trust with diverse buyers," Chadwick says. "Every sales agent, super and customer service manager goes through it."


Warranty Process Critical

Pulte recognizes that warranty work is the key element in maintaining happy homeowners who will refer new customers years after closing and buy another Pulte home in the future. The firm's warranty processes are a clinic.

The customer service manager be-comes an advocate for the home buyer even before closing when he or she takes "ownership" of the home from the construction super during the "quality assurance walk," five workdays before the pre-closing orientation. "Once we deliver the home internally to the CSM, that person becomes the primary contact for the customer," Chadwick says.

When a warranty issue arises, customers can contact the CSM by faxing a warranty work request form they receive as part of their orientation package, by calling a warranty service hotline or by e-mail. "Our goal is to handle all warranty requests within a week, painlessly for the customer," Chadwick says. "The CSM will visit and assess what needs to happen, then coordinate the involvement of trade partners. We schedule work to the convenience of the customer, not the trade. We go in as a team, under the leadership of the CSM, sequence through the event, clean up and move out fast."


Work Beyond Warranty

Chadwick concedes that requests for work beyond the warranty period are a constant challenge. "We visit, and our CSM asks himself, ‘Should this have failed?' If we don't think it should have happened, we fix it. But if a lack of maintenance caused the problem, we talk to the homeowner about that . It's why we spend so much time educating them about maintenance. And we spend a lot on training our employees how to handle those situations. We empower them to make the call. Our core value is to do the right thing."


Regression Analysis Shows Energy Efficiency Matters


Regression analysis is a complex mathematical exercise NRS Corp. uses to isolate the factors in survey data that contribute most to customer satisfaction. "We put all the Pulte questions into an analysis to see which ones had the highest direct correlation to willingness to recommend," Paul Cardis explains. "We can break out the product attributes and service features that drive whatever variable we're trying to isolate - in this case, recommendation intentions."
Here are the top three of each, along with comments by Les Woody, Pulte Phoenix's director of customer service, on what the firm does in each area that might account for the impact on willingness to recommend:



[1] Energy efficiency
Woody: "We're building a 2x6 wall with blown insulation in all our homes, and in 80% we're using some extreme measures that are part of Masco's ‘Environments For Living' systems. Part of that EFL approach is to blow insulation into netting held up against the underside of the roof to reduce heat buildup in the attic. In our model homes, shoppers can look through a Plexiglas window into the attic and see what we've done. We put a thermometer in there so they can see that the attic temperature is often only 3 degrees higher than air-conditioned space even though the outside temperature may be 113 degrees. That really separates us from our competitors."
[2] Number of floor plans and designs
Woody: "We have about the same number of plans and elevation options as our competitors, but we are regionalizing ours by bringing in best sellers from our divisions in California and Las Vegas. And our plans are very carefully matched to targeted buyers through consumer research. We have identified 11 buyer profiles we call ‘targeted consumer groups.' When we open a community, we have plans with the right bedroom counts, floor-plan variables and pricing to hit the TCG for that location."
[3] Masonry
Woody: "Many of our elevations now offer faux stone and brick elements. It's getting a lot more popular, and it's not a high-cost upgrade. But our competitors are also doing it. There's not much competitive advantage in it for us."



[1] Operations clearly explained at walk-through
Woody: "Our customer service managers do the walks. By having the CSM there, especially at the pre-closing orientation, we build a bond with the buyer. And we no longer go into it with a lot of loose-leaf papers that overwhelm people. We present the buyer with a very professional binder with tabs, much like an owner's manual for a car. It's a care manual. There's a lot of maintenance stuff in there, and we go through it all."
[2] Home is clean for review at walk-through
Woody: "The CSM takes the house from production at the quality assurance walk, five days before the customer's walk. He looks at the house with the customer's perspective, so we have five days to get it spotless before the customer sees it. Cleaners don't run into trades still in the house. By the pre-close orientation, the house just shines."
[3] Warranty representatives are professional in appearance
Woody: "It's a surprise that's so important, but we issue our warranty people 10 knit shirts a year with the Pulte logo. We want our people to stand out from the trades so customers can clearly see who's in charge. Appearance is a big deal, no question."


Pulte Homes Phoenix
Wow Factor - changing air filter and providing free box of filters; outstanding condition of home on delivery; virtually unlimited warranty service; energy efficiency
Smooth Transition - seven-step process: next department's representative at previous process meetings (e.g., customer service manager helps superintendent at walk-through)
Know Your Customer - targeted consumer group meetings to educate employees about buyers
Inoculation - pre-drywall discussions with buyer of potential issues (e.g., water intrusion)
Setting Expectations - outstanding homeowner manual
Relationship Value - BQR classes (building quality relationships)


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