By Bob Mirman, CEO
I am a firm believer that there are only three kinds of people in this world: Those who are good at math…and those who are not.
OK, OK…Clearly, math just isn’t my strong suit.
But I am a keen observer of consumers’ behavior during the home purchase experience. And I know enough to be dangerous about regression analysis and other statistical mumbo-jumbo to understand that some things are just more important than others when it comes to creating a home buyer who is willing to refer their builder to a friend or acquaintance.
What does it take to sell a home to a buyer today, and to his friend tomorrow? How do we create sales from referrals? How do we create home buyers who are so devoted to their builder or Realtor that they would go out and drag their friends into your sales office…without being paid to do so?
Customer Care is a broader concept than customer service, because it encompasses all the policies and practices you follow for consistently delivering an extraordinary customer experience, the purpose of which is NOT to create satisfied customers but to drive sales from referrals. Customer Care begins before the prospective buyer even sets foot in your sales office and shouldn’t end until the expiration of your long-term structural warranty period.
Customer Care is delivered by the sales agent in the form of pro-active communication. Or by the design consultant in the form of the value proposition of the design selection process. Or the customer service representative who completes a post-move in repair right the first time.
And let’s talk about builders who believe that Customer Care and customer service are expense items. What they are missing is that by delivering an extraordinary experience, home owners are much more likely to send their friends to your sales offices. The customer experience should create future sales…customer service is a long-term profit center. Is there a better reason?
Customer Care is a profit center because the delivery of an extraordinary customer experience creates…
- Positive Word-of-Mouth and a local reputation
- Strong willingness to pro-actively share the positive experience with friends
- Passionate referrals as opposed to a simple description of the experience
- Sales from referrals and local reputation! Think Apple. Nordstrom. Southwest Airlines.
Eliant’s top rated builders are selling 45-50% of their homes from referrals versus a national average for all new home builders of about 6-8%. This positive gap is not by accident or differing demographics or price points. Builders with a high percent of sales from referrals and word of mouth are providing a customer experience which exceeds their buyers’ expectations.
And by the way – don’t believe for a second that the only way to get your customers to refer their friends is to offer a sizable ‘incentive premium’ for the referral. I clearly remember the desperation during the recession, when some of our client builders we offering up to $10,000 as a referral incentive. Unbelievable.
Look at it this way: How much would you have to receive to send your best friend to a vendor, restaurant, cruise line, movie theater, or a home builder with whom you received an awful experience? I only have one friend who would do that to me…and that may be because I stuck a banana up his car’s tailpipe about two years ago, and he has a ridiculously long memory.
The best purpose of a financial incentive is that it gives your sales person an excuse to call the buyer, explain the incentive, and ask for the referral.
So, what can builders do to correctly prioritize the Customer Experience plan?
Well, after measuring this for over 30 years, we know that there is an inverse relationship between sales volume and customer satisfaction ratings. In an up-market, homebuyer satisfaction declines. Why? We get our feet stuck in the mud of compressed production schedules, too few trades, poorly trained trades, new hires, and overly aggressive sales targets; we forget about the importance of the customer experience to our business model, our future.
I like to look at it this way: you need a blueprint to correctly plan and build a new home. You also need a ‘blueprint for the customer experience’:
- What are the required touch points with each buyer?
- What will you do at each touch point to WOW each buyer?
- In what ways will your department teams systematically set the buyer’s expectations at levels you plan to BEAT?
- How will you pro-actively communicate construction and loan status to each buyer?
- How can you better focus on the FIVE key issues which drive home owners’ willingness to refer a friend to you?
- How will you hold your team accountable for the delivery of an extraordinary customer experience?
- How will you integrate this blueprint into your bonus compensation plan?
And one final point. The primary distinguishing characteristic of builders with great reputations and high survey scores is predictable: The concept, the required goal setting, the recognition process, the accountability all MUST come from the top of the org-chart…or it won’t work. Grass roots programs rarely work for the long term, if at all.