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This article first appeared in the PB April 2006 issue of Pro Builder.

A Sour Experience

Sooner or later, every business encounters customers that are dissatisfied, even when they've received the best service and products available. Sometimes their anger is justified; other times it stems from unrealistic expectations. Either way, these potentially hostile homebuyers can present serious problems for home builders.

We have found that, on average, 7.5 percent of a builder's customers had made a negative referral about their builder to others. Even the NRS award winners, which represent the industry's best in customer satisfaction, had an average of 0.8 percent of their customers making a negative referral about their builder. These customers — who have the capability to drive away business — represent the toughest clients we have to deal with in the home building industry.

Some would argue there is only so much we can do to appease customers and that there will always be some disgruntled homebuyers who will never be satisfied. Our team has found there is reason to hope with these customers, but it requires a sophisticated approach to customer service. This approach employs what we call a Builder SWAT Team, which is critical to protecting your organization from a public relations nightmare.

J.D. Power and Associates recommends builders focus on those customers who are easily satisfied and ignore those who are difficult to please. Our researchers have found this to be problematic and dangerous for builders. We agree that builders should focus their attention on the areas of greatest opportunity, but builders must also have a process for dealing with those moderately to severely dissatisfied customers who can create a public relations disaster in any given market. This is where a Builder SWAT Team is essential to maintaining good customer relations and a reputable public image.

Building Your SWAT Team

We recommend every builder have a SWAT team — a crew ready to go into action when a potentially hostile customer emerges on the radar. What is SWAT? Special Weapons And Tactics. As most people know, SWAT is a division in many police departments assigned to handle difficult and dangerous situations. It is made up of regular police officers who go through rigorous training to learn special tactics for handling extreme situations. With that said, every builder should have in place a SWAT team to effectively deal with hostile customers.

Now, please leave the weapons at home; this is a non-violent approach. What I'm describing here is a specially trained group of employees that is called into action when a hostile customer is identified. The team works to resolve disputes through informal arbitration with the buyer.

There are four key components to a Builder SWAT Team:

  • Identifying Potential Hostile Customers is best accomplished by having in place an active CRM (customer relationship management) and CSM (customer satisfaction measurement) programs. The CRM Program serves the purpose of managing work flow and documenting the history of the buyer in the process. It is during any of the CRM touchpoints that a buyer may be identified as being difficult and requiring intervention. Another way to identify customers is through your customer satisfaction survey program. As surveys come in, your team must be focused to flag low scores and read the comments of buyers to determine if there is a potentially hostile situation. Through examining your data and combining it with your knowledge of the customer's experience, a determination can be made as to the status of the customer.
  • Composition of the Builder SWAT team members includes a project superintendent/builder, warranty representative and executive from the main office who are authorized to make warranty repair decisions. The key is to assemble a team that shows the homebuyer that you are taking that matter seriously. Also, by having top-level personnel involved, the SWAT team will be able to offer solutions and quickly resolve matters without the need to get approval from others in the company.
  • Actions taken by the Builder SWAT team should be well documented. Ideally, the team should meet with the homebuyer at the house, which might require evening or weekend appointments. Start by going through each area of concern and determining if there is an appropriate fix. It often helps if SWAT team members can put themselves in the place of the homeowners and ask, "What would I expect the home builder to do if this were my house?"
  • Resolution and follow up must be immediate. The SWAT team should track all issues and action plans to make sure they are completed in a timely fashion. Inoculate homebuyers against further dissatisfaction by alerting them to any delays they can expect with certain repairs or remedies. Finally, present the homebuyers with a service recovery gift that reminds them how much you appreciate their business and how important you view the homebuyer/builder relationship.

Once the SWAT team has done its job, the homebuyer can be placed back into the builder's regular CRM program. In an ideal world, you would never have to assemble your SWAT team. But knowing that the team is prepared to spring into action if needed is one of the most valuable insurance policies you can have.

Author Information
Paul Cardis is CEO of NRS Corporation, a leading research and consulting firm specializing in customer satisfaction for the home building industry. He can be reached at

A Sour Experience

The following is a true story that illustrates the problems that can arise if you only pay attention to your most satisfied customers. I hope you can learn from this builder's mistake and protect your organization. (The builder I am describing will remain anonymous and some of the details have been changed to protect client confidentiality.)

A client came to us with some homebuyer satisfaction issues. We engaged in a series of survey touch points to have a continual gauge on the builder's performance in customer satisfaction. After receiving some results, the client told us about an incident that had prompted him to sign on with us.

He described a situation where a customer had a problem with a major mechanical in his new home. This issue was exacerbated by the fact the customer attempted to repair the original problem, causing further damage with the product. The homebuyer had contacted the builder and demanded in a threatening tone that the builder fix the problem. Needless to say, this was a tough customer from the beginning.

The builder examined the equipment and correctly determined that the failure was due to the buyer's intervention, causing a violation in the warranty. The builder had two options: fix the problem despite the voided warranty or reject the buyer requests and move on. The builder chose to move on and reject the buyer's request.

As you can imagine, the buyer became quite upset devised a way to seek revenge on the home builder. To publicize his dissatisfaction, the homebuyer filled his pickup truck with 10,000 lemons and dumped them all over his front yard, where he left them to rot. He then posted signs in his yard, calling his house a lemon, and contacted the local media, which responded in droves to his house.

His story was on the local TV news describing the failure of this builder to do its job. The PR damage to the company was significant. In fact, it cost the company many times the value of the disgruntled buyer's entire house.

As outrageous as this story is, there are worse stories of builders who were destroyed by poor public perception due to a PR disaster.

Anyone remember Sundance Homes out of Chicago? In this case the community was incited by a faction of disgruntled customers to petition city hall to prohibit the builder from receiving permits. Within two years, the company was sold to a public builder for the land positions and the home building side was completely dismantled.

The moral of the story? Builders who ignore their most unhappy customers might find themselves without any customers at all.