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The Impact of Construction Quality on Referrals

Bob Mirman

Based on the results of surveys administered to hundreds of thousands of homeowners, Eliant has identified the survey categories and questions which had received the lowest level of satisfaction.

 

Each of the survey’s ‘Quality’ categories contains a number of detailed questions which are designed to provide builders with a prescription for improving the performance of their subcontractors, vendors, purchasing agents, and other employees. While our builder clients use this information to see how they rank against some of North America’ s best builders, the most valuable use of this information is to guide the establishment of ‘Action Plans’ designed to improve the builder’s performance on those key issues having the greatest impact on buyer satisfaction and, ultimately, referrals.

 

Given a list of the quality issues ranked in order of homebuyer satisfaction, would your ‘Action Plan’ simply start with the lowest rated issue and work its way up the list? Hopefully not.

 

Why spend time working to improve a ‘quality’ issue which your homebuyers rate low on the satisfaction scale, but also low on the importance scale? The key is to spend time, energy, and money on improving those problem areas which have the strongest impact on overall buyer satisfaction and future buyer referrals. This “Opportunity Selection” process is critical to the cost-efficient utilization of your customer satisfaction evaluation data.

 

The Key to Referrals is Service

 

On our “Home Quality” assessment, there are questions on Customer Service and many which ask the homeowner to rate various aspects of plumbing, painting, storage, flooring, countertops, and nine other categories of construction quality. (These detailed questions also assist our builder clients in holding their subcontractors accountable for meeting quality standards.)

 

When these issues are listed in order of importance to the ‘buyer’s willingness to recommend the builder to a friend’, a striking fact becomes immediately apparent. Four of the “Top 10 Importance” issues are service related! In fact, the #1 issue–that issue having the greatest impact on future referrals from your current homeowners–is a service issue (see below).

 

Top 10 Importance Issues

 

During the first year after move-in, which issues should you be tracking in order to maximize homeowner referrals? Here is the list of the “Top 10 Importance Issues”. Strong satisfaction scores on these issues are correlated with high ratings on the ‘willingness to recommend’ question; low satisfaction scores are correlated with low ‘willingness to recommend’.

 

Issue #10: Solid roof. Buyers are typically happy with their roof. Most of them never notice the roof unless their family room turns into an aquarium whenever it rains. So, although a solid roof rarely helps your satisfaction ratings, a leaky roof is a deal killer.

 

Issue #9: Windows are easy to clean. Recent buyers rate window trim and molding as most important, but after one year, the ‘ease of cleaning’ becomes a very important issue to future referrals.

 

Issue #8: Walk-thru items are corrected within promised time-frame. This is certainly a service issue, and it has to do with response time. In every region of the country, in every price band in the market, in every demographic segment, the builder’s speed of response to punch-list items and to warranty and repair requests is one of the key ‘Referral Drivers’.

Your consumers are constantly being spoiled by retailers and Internet sites which provide world-class service. Consequently, your buyers expect nothing less from you. Speed of response to service questions and requests is the fastest, most cost-effective way to win your buyers’ hearts…and referrals.

 

Issue #7: Service representatives are knowledgeable about the buyer’s home. Today’s buyers are looking to build a relationship with a builder they can trust. The first factor in determining trust is the credibility of the builder’s personnel, and the initial measure of this credibility is the product knowledge possessed by the builder’s personnel. Interestingly, in a study of recent homebuyers commissioned by BUILDER Magazine several years ago, we determined that the most important attribute of a sales person was also… product knowledge.

 

Issue #6: Builder supplied fencing. Once again, this is the kind of issue that buyers expect to be perfect, and you will not get credit for being perfect. But when that gate in the fence doesn’t close perfectly…

 

Issue #5: Driveways and walkways are without cracks and defects. Again, no extra credit for including a driveway without cracks. Just realize that when you do have a homeowner with problems here, your response-time will be the deciding factor between a disgruntled homeowner and a homeowner who becomes a willing, unpaid member of your sales team.

 

Issue #4: Service personnel are courteous and respectful. This should be a given. It is hard to understand how any builder can be happy with any score below 95% on this issue. Yet, many builders do receive scores that are considerably below the 90% level.

 

Issue #3: Drywall. Most buyers do not even notice the drywall unless it’s wavy or full of nail pops. They fully expect their walls to be straight and square, and will be upset if their home falls below these expectations.

 

Issue #2: Cabinet Material. For years, our surveys of home shoppers have shown that in model homes, shoppers look carefully at the cabinet material as a measure of the builder’s quality. Now it is also clear that homeowners’ willingness to refer their friends is strongly affected by the perceived quality of their cabinet material.

 

Issue #1: High quality of repairs/service. This is far and away the survey issue with the strongest impact on overall satisfaction and future referrals. For many years, I have been saying that the Customer Service department should be considered a profit center. Now it is perfectly clear that a well run service department not only saves money by reducing the cost of potential litigation, but it also helps generate referrals from homeowners who are ecstatic with the service experience.

 

While you should always try to improve all your systems, it makes sense to focus on those issues which return the biggest bang for the buck.