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The Difference Between the Best Builders and the Pretenders

Bob Mirman

“There are only three metrics that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow.”

– Jack Welch, former CEO, General Electric

 

I recently reviewed our list of over 150 builder clients, ranked in order of their customers’ willingness to recommend them to a friend. There are some startling differences between the highest-rated vs. lowest-rated builders:

For 2018 YTD, the top 26 percent of our clients consistently receive ‘Willing to Recommend’ (WTR) scores over 90 percent, with many over 95 percent.

  • Our all-client average WTR score has been climbing over the past two years and is now at 86 percent, its highest level in over a decade.
  • We have several builders with WTR scores in the 50-60’s, with one of our newest clients in the 40’s (ugh!).

The top-rated builders or divisions earn consistently high ratings across all their divisions and communities.

  • The lowest rated builders typically have one to two average-rated divisions or communities, with the remainder all poorly rated (below 75 percent).

The highest rated builders SAVE money: They get sued much less often, have lower warranty-reserve requirements, save significant money on lowered (risk-based) insurance premiums, and sell more homes from customer referrals. Some offer two to three-year warranty programs which generate additional sales.

The lower rated builders SPEND more money on fighting lawsuits, more time wasted with resolving customers’ home quality and service issues, losing potential sales resulting from a poor local and social media reputation, while wasting huge amounts of money on higher insurance premiums.

 

Performance Differences

Compared to builders with the lowest WTR scores and actual sales-from-referrals, our higher rated builders perform better on key issues which have been found to drive homeowners’ willingness to recommend their builder (Source: USC, Marshall School of Business). Here are the keys:

  • Extremely high customer ratings for pro-active communication of construction and loan status.
  • Deliver homes clean and complete, in the promised time.
  • Provide a speedy response to warranty requests, with repairs right the first time.
  • Consistently follow Eliant’s “Guidelines for Managing Customers’ Expectations” (Request a copy at kimberly@eliant.com)
  • Have a company or division leader who is visibly involved in promoting the consistent delivery of an extraordinary customer experience: this leader holds staff, vendors, and trades accountable for stronger customer satisfaction ratings, thereby ensuring more active employee engagement.
  • It’s all about accountability: Our highest rated clients follow Eliant’s “Guidelines for Home Builder Bonus Comp Plans” which integrates customer evaluation ratings into compensation bonus plans (Request a copy at kimberly@eliant.com)

To be totally honest, the differential between our highest and lowest-rated builder clients is rather discouraging to my team and me. I’m in the business of improving builder-team behavior, not conducting surveys. We ring a bell in our office when a client shows a strong improvement in customer ratings; it’s a source of pride and defines our character, our culture. So, I take it personally when a poorly rated client ignores our suggestions, turns a blind eye to opportunities to hold staff and vendors accountable, or has “no time” to set up a complimentary staff-training webinar to share best practices or proven tips and techniques.

Take a look at your team’s performance on the six keys above, and then re-read the quote above from Jack Welch. Are you a top builder…or a pretender?