Study Surveys Homebuyers' Satisfaction With Builders, Top Performers Receive
National Homeowner Satisfaction Award By Paul Cardis, Sean Boyce and Anthony DeMarte, NRS Corporation
Customer satisfaction is vital for the survival and growth of any business, and
nowhere is that more true than in the home building industry. To better understand
how well homebuilders are meeting their clients' expectations, NRS Corp., a research
firm specializing in customer satisfaction research, recently worked with homebuilders
from across the country to survey their 2001 clients.
Results from the National Homeowner Satisfaction (NHS) research reveal some interesting
findings builders can use to better maintain and improve customer satisfaction.
Overall, 80% of homebuyers surveyed would recommend their builder to family and
friends. This percentage is 1% lower than the national percentages found in larger
comparative databases of homebuyer satisfaction kept by NRS Corp. This finding suggests
that the data collected in the NHS research is representative of production builders
nationwide.
To honor builders with exceptional customer satisfaction, the National Homeowner
Satisfaction™ (NHS™) Award has been created. Three levels of the NHS™
Award are presented to the best builders in three categories:
The 2002 NHS™ Diamond Award
The NHS™ Diamond Award is presented to the builder who has the highest NHS™
Index score in the NHS™ Study. Based on NHS™ survey results, the No.
1 builder in National Homeowner Satisfaction and the recipient of the 2002 NHS™
Diamond Award is:
Ginsburg Development of Hawthorne, N.Y.
A builder with between 100 and 500 closings in 2001, Ginsburg Development demonstrates
exceptionally high customer satisfaction, which is evident in its overall rating
and its customers' strong willingness to refer Ginsburg Development to family and
friends. Ginsburg Development lead all builders in the NHS™ results and ranked
in the top 10% of the NRS Corp. National Builder Database for homeowner satisfaction.
The 2002 NHS™ Award: Over 500 Closings
The builder with more than 500 closings per year who ranks in the top 10% of the
NRS. Corp National Home Builder Database for homeowner satisfaction, and scored
the highest among all builders with over 500 closings in the NHS™ Study is
honored with the NHS™ Award.
The winner of the 2002 NHS™ Award for Production Builders with more than 500
closings per year is:
Engle Homes - Arizona Division
The 2002 NHS™ Excellence Award
In addition to recognizing the No. 1 company in customer satisfaction, NHS Excellence™
Awards are given to builders who rank high in the NHS research study and receive
customer satisfaction scores among the top 10% of builders nationwide, based on
the NRS database. The NHS Excellence™ Awards are given in two categories:
greater than 500 closings and between 100 and 500 closings per year.
The winner of the 2002 NHS™ Excellence Award for Production Builders with
more than 500 closings per year is:
Village Homes - Colorado Division
The Winner of the 2002 NHS™ Excellence Award for Production Builders between
100 and 500 closings per year is:
McStain Neighborhoods of Boulder, Colo.
The components of customer satisfaction measured in the NHS Study include: home
features, floor plan/layout, quality of materials, quality of workmanship, price/value,
lot and location, sales process, lending process, options upgrades colors, office
staff, project superintendent, walk-through, post move-in warranty service, number
of items identified for correction, time to make corrections, overall recommend
intentions, actual recommend behaviors.
Total Homebuyer Satisfaction for each builder was calculated as a weighted average
of the company's satisfaction scores across all categories. Meanwhile, survey respondents
were also asked to rate their willingness to recommend their builder. Each builder's
score for this question was then averaged with its Total Homebuyer Satisfaction
score to yield an NHS Index score. The NHS Index score was used to determine the
builder rankings in this study.
Critical Homebuyer Referrals
Whether a homebuyer is happy enough with his or her experience to recommend the
builder to someone else may seem trivial, yet referrals are vital for business success.
In general, 80% of all homebuyers surveyed would definitely or most likely recommend
their builder to family and friends. Builders with the highest scores for Total
Homebuyer Satisfaction would be expected to score the highest for the Recommend
question. This finding would be consistent with other research conducted in new
home construction, as well as in other industries. The results of this study reflect
that relationship. Higher scores on total home buyer satisfaction resulted in higher
scores on the recommend to family and friends question.
Overall, would you recommend your Builder to family
and friends?
Definitely yes 47%
Most likely 33%
Unlikely 11%
Definitely not 9%
Overall Satisfaction averages compared to Willingness
To Recommend averages:
Top 5 Builders Bottom 5 Builders Difference
Overall Satisfaction averages 86.5 73.2 (13.3)
Willingness To Recommend averages 91.0 71.4 (19.6)
In addition to tracking how likely clients are to recommend their builder to family
and friends, NRS asked customers how many actual recommendations they have made.
This question is important because it relates more closely to actual behaviors than
to mere intentions and provides additional insight into the likelihood of recommending
a builder to family and friends. The results of the NHS study reveal that a high
percentage of customers have made a significant amount of recommendations for their
builder. These results further support how valuable having satisfied customers really
is to a homebuilder's business.
Since purchasing your home, how many actual recommendations
of your Builder have you made to others?
Top 5 Builders* Bottom 5 Builders**
0 referrals 20% 47%
1-2 referrals 42% 30%
3-5 referrals 28% 19%
6 or more 10% 4%
* Total of 80% of customers making referrals
** Total of 53% of customers making referrals
The results reveal that the top five companies have 80% of their customers making
actual recommendations, while the bottom five companies have 53% of their customers
making actual recommendations. Interestingly, the top five builders have 38% of
their customers making three or more recommendations, while the bottom five builders
have only 23% in this category. While the importance of customer satisfaction is
rhetorically touted as being important, seeing data like this makes upper management
cringe when the lost business is realized into dollars. Given the fact that most
builders spend 1%-3% of gross revenue on advertising, the expense becomes greater
for those toward the bottom in customer satisfaction.
Expectations Vs. Reality
Satisfaction at any given point in the project cycle is the sum of customers' perceptions
minus their expectations. In this study, respondents reported that prior to signing
contracts with their builders their expectations tended to be higher than the actual
satisfaction scores reported after moving-in and living in their new home.
Prior to signing a contract, please rate the level at which you expected to be satisfied.
Very Dissatisfied 0.3%
Moderately Dissatisfied 0.4%
Slightly Dissatisfied 1.1%
Slightly Satisfied 9.8%
Moderately Satisfied 39.2%
Very Satisfied 49.2%
NHS Index averages compared to Expectation averages
Top 5 Builders Bottom 5 Builders
NHS Index averages 88.8 72.3
Expectation Averages 86.3 90.3
Difference 2.5 (18.0)
Aligning expectations and perceptions is key to achieving high customer satisfaction.
This is an important point because many buyers have unrealistic expectations. (Consumers
don't always realize that building a home is not like building a car in a controlled
environment.) In order to achieve high customer satisfaction it is important that
builders be realistic about what a buyer is going to experience. If a builder is
doing a great job, then aligning consumer expectations with what they are going
to receive is that much easier and satisfaction is almost guaranteed.
These survey results show that those who did worse in customer satisfaction set
higher expectations and delivered less than those who scored the best in overall
customer satisfaction. The top five companies have an average expectation score
of 86.3 while the worst five have a higher expectation score of 90.3, a four-point
difference in favor of the bottom five builders. This same result was evident on
the remodeler NHS data, as well. More startling is the difference between what customers
perceive and what they expect.
Using the formula above, the top five builders score 2.5 in customer satisfaction.
The bottom five builders have a -18.0 when perceptions are subtracted from expectations.
The old adage "promise less and deliver more" rings clear in these results.
In addition to not over-promising and under-delivering, several additional areas
are unique to the top performing builders in this study.
Where the Leaders Stand Out
One of the most valuable aspects of this study is its insight into the best practices
of builders who score high in customer satisfaction. The following table ranks the
NHS questions that yielded the greatest difference between the top five builders
and the rest of the builders in the study. Ranking the categories this way suggests
a simple correlation between the practices of superior performing companies and
their high customer satisfaction ratings.
Comparing best practices scores of top Builders with other Builders
Category Top 5 Companies The Rest Difference
1. Time taken to make walk-through corrections 85.7 71.0 14.7
2. Post move-in warranty service 86.3 75.7 10.6
3. Project superintendent 88.1 77.6 10.5
4. Number of walk-through items identified for correction 70.4 60.8 9.6
5. Quality of workmanship 84.7 75.1 9.6
6. Walk-through / home orientation 88.4 79.7 8.7
7. Overall service satisfaction 87.3 79.8 7.5
Of the seven categories listed as breakout areas for the top five builders in this
study, success in walk-through and service related issues are most prevalent. Of
the categories listed, four of the seven specifically relate to service. The remaining
three relate to product workmanship, the number of walk-through items identified
for correction, and ratings of the project superintendent (which could have been
related to service issues rather than exclusively product/workmanship).
These results coincide with other research studies conducted by J.D. Powers and
NRS Corp., which have identified service issues as paramount for achieving high
customer satisfaction. Service is where the best builders in this study differentiate
themselves from the rest of the pack. The time taken to make walk-through corrections
is the most important area identified, having a 14.7 point difference between the
top five and the rest of the builders. This is followed by post move-in warranty
service, followed by ratings of the project superintendent. In sum, it appears that
builders should focus on the time taken to correct any issues, especially since
issues are almost always going to occur in any on-site manufacturing process, such
as home building.
Along this same line, warranty service is No. 2 on the list of to do's to be the
best in customer satisfaction. Simply, the longer you make customers wait for service
the worse your scores will be. No. 3 the project superintendent has been getting
more exposure to the customer and must be skilled at providing the best service
while also being a great manager and craftsman. With boom in housing over the past
years finding good project superintendents and trades is increasingly difficult.
The way that many of the top builders are able to have skilled project superintendents
interacting with their customers despite the shortage, is through extensive training
on this very topic of customer satisfaction.
At the same time that service is critical, the delivery of the home is must, and
No. 4 on the list of to do's targets, the number of items identified for correction
at walk-through. This means that the quality of workmanship (No. 5) must be evident
prior to walking through a home with a customer. This means lots of internal quality
checks before a customer ever views the home.
The last two practices relate to service. The walk-through is not only about the
quality of the home, it is about the service that is being provided and the skill
of the representative to properly handle the expectations of the homeowner. In the
end, service is where it's at, and customers expect it and the best builders deliver
it.
1) Time taken to make walk-through corrections
Please rate your level of satisfaction or dissatisfaction with the time it took
your builder to make walk-through corrections:
Very Dissatisfied 12%
Moderately Dissatisfied 5%
Slightly Dissatisfied 6%
Slightly Satisfied 11%
Moderately Satisfied 24%
Very Satisfied 42%
2) Post move-in warranty service
Please rate your level of satisfaction or dissatisfaction with the post move-in
service:
Very Dissatisfied 8%
Moderately Dissatisfied 5%
Slightly Dissatisfied 6%
Slightly Satisfied 12%
Moderately Satisfied 25%
Very Satisfied 44%
3) Project Superintendent
Please rate your level of satisfaction or dissatisfaction with the project superintendent:
Very Dissatisfied 8%
Moderately Dissatisfied 4%
Slightly Dissatisfied 6%
Slightly Satisfied 11%
Moderately Satisfied 24%
Very Satisfied 48%
4) Number of walk-through items identified for correction
Overall, the number of items identified for correction your new home was:
Much Less Than Expected 17%
Less Than Expected 23%
Slightly Less Than Expected
18%
Slightly Greater Than Expected 19%
Greater Than Expected 11%
Much Greater Than Expected 12%
5) Quality of workmanship
Please rate your level of satisfaction or dissatisfaction with the quality of workmanship
of your new home:
Very Dissatisfied 1%
Moderately Dissatisfied 1%
Slightly Dissatisfied 1%
Slightly Satisfied 5%
Moderately Satisfied 20%
Very Satisfied 72%
6) Walk-through/home orientation
Please rate your level of satisfaction or dissatisfaction with the walk-through
/ home orientation:
Very Dissatisfied 5%
Moderately Dissatisfied 4%
Slightly Dissatisfied 6%
Slightly Satisfied 12%
Moderately Satisfied 25%
Very Satisfied 48%
Areas of excellence
Based on the mean average of all responses to each survey question, the following
five categories scored highest for satisfaction:
1. Floor plan/layout of home - 92.5
2. Lot and location - 89.0
3. Office staff - 98.0
4. Overall product satisfaction - 97.5
5. Sales process - 97.3
Room for improvement
Overall, the five categories that scored the lowest for satisfaction are:
1. Number of items identified for correction - 63.4
2. Time taken to make corrections - 76.0
3. Quality of workmanship - 76.6
4. Post move-in warranty service - 78.9
5. Project superintendent - 80.4
Results of the Number of items identified for correction question strongly suggests
that this category poses the greatest challenge for all of the NHS study participants.
However, builders with higher scores for the Items identified. question also have
higher NHS Index scores. As one might expect, minimizing callbacks helps to maximize
satisfaction.
Although this first NHS research study is one snapshot in time of how the participating
companies perform with customer satisfaction, in order to plan and navigate for
improvement it is crucial that surveys be taken regularly. The key to improvement
is to focus on one or two areas at a time, and to make sure that you are measuring
your customers' satisfaction and monitoring your company's performance constantly.
The 2003 NHS study will be even more insightful, as NRS expects broader participation
from more builders across the United States. If you are a builder who did not participate
in this year's study, be sure to apply next year. Perhaps the information gained
from this year's study will help you prepare your company for the recognition of
excellence that it deserves.
Methodology
The application process for the 2002 National Homeowner Satisfaction (NHS) research
study began in early spring 2002. Builders from around the country submitted information
on each customer from 2001. All participating builders closed at least 100 closings
in 2001, and every customer from that year was mailed a survey. About 30% of the
total survey population of 15,123 contributed data to the study. NRS Corp. developed
and deployed the survey, collected the data and performed analyses of the findings.
NRS and Professional Builder jointly verified information provided by participants
prior to the survey mailing to ensure accuracy of closings for the year.
