Do you see what I see?

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You never get a second chance to make a first impression. While this adage may be true, when it comes to home building, first impressions count, but so do second, third and even fourth impressions. Many new homes have been sold based on a positive first impression between prospective buyers and the sales staff.

December 01, 2005

You never get a second chance to make a first impression. While this adage may be true, when it comes to home building, first impressions count, but so do second, third and even fourth impressions.

Many new homes have been sold based on a positive first impression between prospective buyers and the sales staff. Too often, however, home builders place so much emphasis on winning over new customers that they forget to continue to impress homebuyers once they've signed on the dotted line.

Satisfaction Decay

Industry observers have assumed for years that as time passes, homebuyers will become

 

steadily less satisfied with both their purchasing experience and their builder's performance. This is called satisfaction decay.

Most observers believe the decay is an incremental decline that happens one gradual step at a time. To test the decay theory, NRS Corp. surveyed 59,684 homebuyers who closed in 2004. The focus of the survey was to evaluate the homebuyers' overall satisfaction with their particular builder at five specific points in time:

  1. At the time the contract was signed
  2. One month before closing
  3. At closing
  4. Thirty days after closing
  5. Today
  • Buyers were asked to reflect on their experience and rate each particular point in the process. The findings (shown on page 44) show the vast majority of home builders do a good job satisfying customers during the sales process. What happens during the design, production, loan and closing phases is a different story, particularly when you compare builders ranking high in overall customers satisfaction to those with lower scores.

    According to the study, homebuyers that went with builders ranking in the top 2.5 percent for overall customer satisfaction had little satisfaction decay compared to homebuyers who bought from builders ranking in the bottom 2.5 percent for overall customer satisfaction. The Table on page 44 graphically depicts the differences in the rate of satisfaction decay between these two groups of homebuyers. The performance values displayed are the median scores for each group, based on a scale of 1 to 10, with 10 being the best score possible.

    Homebuyers who bought from builders in the top 2.5 percent experienced satisfaction decay of 4 percent, from 9.06 when the sales contract was signed to 8.704 today.

    Those who purchased from builders in the bottom 2.5 percent, however, experienced a 46 percent satisfaction decay, from 8.426 to 4.517.

    Conclusions

    The study reveals significant conclusions about buyer satisfaction. While most builders are excelling at customer satisfaction during the sales process, something appears to happen during the design stage that sends customer satisfaction plummeting. There's a disconnect causing many homebuyers to quickly become dissatisfied with their home builder.

    The data shows that a builder's ability to influence customer satisfaction is strongest at the point of initial contact (see figure on right). As time passes, it becomes increasingly difficult to affect the satisfaction experience because the homebuyer's impression of the builder is more solidified.

    What does that mean for builders? Any customer satisfaction or service recovery efforts you make will have a higher return on investment the earlier they're conducted in the building process.

    What's not clear from the data is whether a builder is given a second, third or even a fourth chance to win back a dissatisfied customer.

    Smooth Transitions

    Ideally, every department should work together for the best interest of the homebuyer. There should not be any lags in service. Transition points are critical to make sure customer expectations are realistic and satisfaction remains high. Industry leaders focus heavily on smooth transitions from one department to the next.

    The following list highlights how some builders have maintained high levels of customer satisfaction during transition points:

    • Assign individual employees to each homebuyer or set of homebuyers as a continuous point of contact throughout the process, from contract signing and design to construction and closing.
    • Provide a single number homebuyers can call whenever they have questions at anytime throughout the building process.
    • Involve representatives from each department in the process of other departments. For example, a project supervisor might be involved in the sales meetings. This ensures that information is clearly communicated and understood from department to department
    • Establish a project management system, whereby the project manager is, in effect, the builder for a particular community. With this system, homebuyers deal with one senior level management person. Smooth transitions are more likely with fewer people communicating with the homebuyers.
  • Though high levels of customer service should be provided throughout the sales, construction, closing and warranty periods, it is at these transitional points where home builders can really make a difference and impact their customers' long-term satisfaction and eagerness to make referrals.

    To create smooth transitions, there must be seamless handoffs between departments and staff. It means you have to have good organizational systems to know where homebuyers are in the construction process and what their needs are at any given time. It means having a steady and reliable workflow so that logjams — which exacerbate customer dissatisfaction — are kept to a minimum. It also means having excellent employees who are trained extensively in customer service and know how to handle a variety of customer types.

    Rate of Satisfaction Decay
    TOP 2.5% OF BUILDERS BOTTOM 2.5% OF BUILDERS
    Contract 9.06 8.43
    1 month before closing 8.90 5.37
    At closing 8.89 5.14
    30 days after closing 8.82 4.62
    Today 8.70 4.52
    Main drop after contract 0.36 3.91


    PACARDIS@NRSCORP.COM

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