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Repeat Success
Even in a down market, Gerstad Builders generates an impressive 50 percent of its sales from referrals and repeat buyers, some of whom are living in their third Gerstad home. Factor in that every one of its home buyers has made at least one referral, and it's no surprise that Gerstad Builders has the most delighted home buyers in the U.S., earning it top honors as the 2008 Avid Diamond Award winner.
So how does Gerstad Builders instill such loyalty among its home buyers? “We have always had an open relationship with customers,” explains President Roger O. Gerstad. “We always wanted to be attentive to the
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An open relationship with clients is part of the firm's success, says President Roger O. Gerstad. Photo: Peter Wynn/GettyImages |
This is easier said than done. Even incredibly customer-centric companies such as Gerstad Builders need to constantly reevaluate processes to guarantee the optimum home buyer experience. For example, a few years ago, the company encountered an expectations problem, whereby home buyers were envisioning things one way and the builder was interpreting them another way. “Anything the customer doesn't understand, he or she has the ability to misinterpret,” Gerstad says. “We obviously felt we were doing something great, but it was blowing up in our face.”
That marked the beginning of the company's renewed efforts to better establish customer expectations. The result is a pre-construction meeting attended by the home buyer and representatives from the purchasing, production and sales departments.
“This meeting ups their comfort level of the people who are going to be building their home,” says Operations Manager Jennifer Thomas.
Having been in the community for 37 years, Gerstad enjoys a trusted reputation that no amount of marketing can create. In addition, some members of the management team have been working together since the late 1960s, something that's evident in the familial way they interact.
One area that Gerstad Builders scores exceptionally high is “reasonable cost of upgrades.” When pricing upgrades, the company simply takes the wholesale cost and applies a multiplier to derive the resale cost. Home buyers, however, might be responding more to the way that upgrades are sold than to their actual cost. Rather than using design consultants, Gerstad has its sales associates walk home buyers through the design choices at a centralized design center.
Another area in which the builder receives high marks is cabinets and trim. Gerstad attributes this to the company's quality oak base cabinet frames and state-of-the-art kitchen designs.
“When we come up with a new product, we look at the hot buttons in today's market and still bring it to the customer at an affordable price,” he says.
“Ours look like custom and upgraded kitchens, and our home buyers feel the value is there,” says Lynda Conkel, director of marketing.
Strength in customer service has helped Gerstad avoid the deep discounting that many other builders have had to endure. “The industry is mandating that you make some concessions on prices, but for us it's limited to certain areas or features,” Gerstad says.
No matter where the economy goes, Gerstad maintains that the company has a formula for success. “Your staff and your land are the most valuable assets you have,” Gerstad says. “And a good staff will bring good home buyers.”
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