Avid Ratings Blog

Maximizing Referrals

Success in homebuilding tends to vary by market area in today’s industry. In weak markets, success may be the ability to reposition for market uncertainty. In areas of mediocre market activity, builders that are maintaining or gaining market share may be the models of success. In robust markets, success may mean keeping pace without suffering customer experience chaos. Regardless of market conditions, all homebuilders can accelerate success by focusing on highly qualified prospects.

The No-Cost Conversion Increase
Advertising and marketing are crucial for attracting new customers, however, there is a way to significantly increase the conversion rate of prospects into actual homebuyers and it doesn’t involve a single advertising dollar. The secret is “maximizing referrals” and as obvious as that sounds, it requires innovative systems and processes.

Many homebuilders have sales teams trained to ask prospects how they heard about the builder. Typically, this information is used to determine the effectiveness of various marketing channels, such as social media, print media and other advertising. When prospects mention that they were referred by a friend or family member, that fact may be noted but it often dies there. However, this information is some of the most valuable information for a sales team to leverage.

Profitable Prospects
The reality is that not every prospect has the same likelihood of buying. A marketed prospect who has done minimal research before visiting a sales center is at the earliest point in the buying cycle. Comparatively, a prospect who has researched a builder’s marketing, website, online reviews and more, is likely to be further along in the buying cycle. But the prospects who are most likely to buy are those who have been referred by family or friends. Referrals are “third party endorsements” that create the most cost-efficient, profitable and loyal sources of new business. Referral business delivers the highest return on investment by reducing sales expenses and shortening sales cycles. Based on research conducted by Avid Ratings, referral prospects are twice as likely to make a purchase within six months versus marketed prospects. One particular builder even found the conversion rate of referred prospects to be three times higher than marketed prospects.

The closing ratio for non-qualified leads is 10 percent, versus 60 percent with referred leads, according to sales trainer and author Tom Hopkins. This reinforces the argument that investing resources into identifying and servicing referred prospects will provide big returns. Top-performing builders in customer satisfaction are best positioned to focus on referred prospects and reap the higher conversions that result and this comes down to three simple steps.

Step One – Identification
The first step is to utilize a detailed tracking system for referrals. Not only tracking which prospects were referred but also who referred them, when the referral took place and other key details. The power of today’s CRM software products make this task rudimentary, yet it is surprising how many builders fail to collect, compile and leverage this critical information.

Step Two – Sales Strategy
Even the most thorough information still needs to be acted on and timeliness is critical. Hundreds of thousands of dollars may be sitting unrealized in CRM data unless a sales team is acting quickly and executing a sound strategy. It takes a specific plan to deal with high-priority referred prospects. This plan is different than one used for other prospects because referred prospects typically have heightened knowledge and trust. Referred prospects come in the door because someone close sent them. Personalizing communications can occur more quickly and mentioning the “referrer” in conversations will help to strengthen the relationship. Not all referred prospects will generate immediate business but they all have higher potential.

Step Three – Increasing Referral Traffic
After ensuring that a sound system and strategy is in place for referred prospects, the goal is to increase the amount of referrals coming in the door. Having tools that can identify which past customers are “promoter” customers is indispensable. From there, specific strategies can be developed such as incentive programs to referrers or those referred. There may also be opportunities to create “events” that provide venues for happy homeowners to connect with prospects. Many homeowners want to recommend their builder and creating opportunities for that to occur pays big dividends. 

Be Referable
Referred prospects are a significant source of business for leading builders and “being referable” is vital. That means building quality homes, providing exceptional customer service and creating outstanding homeownership experiences long after the possession date. With those building blocks in place, maximizing referrals becomes the game-changer in any market conditions.

Tim Bailey is Division President of Avid Ratings Canada, a leading provider of customer loyalty research and consulting to the homebuilding industry. Through the Avid system, industry-leading clients improve referrals, reduce warranty costs, and strengthen their brand. He can be reached at tim.bailey@avidratings.ca.


It’s All About Expectations

Setting clear and proper expectations can be the difference between a customer being a Raving Fan, or being raving mad.

by Mark Hodges

Recently, I was talking with an Avid client whose Avid Reports indicated a serious gap in their homebuyers’ assessments of “being kept informed” and “communications” throughout the buying process. Further analysis of their buyer profiles gave us a good indication about why this gap was occurring. We learned that over 60% of this builder’s customers were first-time homebuyers.

Why was this discovery important? Because the experience of buying a new home is not only emotional and scary, it is also entirely mysterious. And because anxiety and frustration occur more intensely whenever someone doesn’t know what to expect from an already anxious experience.

I asked about the builder’s formal interactions with their buyers, and how they went about setting expectations for what the new home buying experience would entail. The short answer was not much. They didn’t conduct Pre-Construction Orientation Meetings, for example, and all other communications were informal. Their buyers were for the most part left to set their own expectations which were, unsurprisingly, lofty and unrealistic.

This neglect was a formula for the results they were experiencing – customers who were unhappy, not so much with their homes, which they rated highly, but with the entire experience from contract to closing and beyond. The builder wasn’t so much doing a poor job building the homes, but they were doing too little to help their customers know what to expect throughout the buying process.

Building a home of high quality is a minimum requirement for a successful homebuilder. It’s a ticket to entry in terms of achieving customer loyalty, nothing more. What sets great homebuilders apart from merely good ones is their programmatic focus on providing a great homebuying EXPERIENCE for their customers. And a great experience begins with setting clear and proper expectations, particularly for buyers who are purchasing a new home for the first time. (Which in my anecdotal experience is MOST new homebuyers!)

So, how do great builders go about setting clear and proper expectations? They do so by institutionalizing formal interactions with their buyers throughout the buying and building process. They instruct buyers on “What to expect at the Design Center”, “What to expect during the construction process”, “What to expect if you want to make changes during construction”, etc.  These formal, scripted events take the mystery out of the process, clearly explain what the buyers’ obligations are, and what could go wrong (like snowstorms or permitting delays) – essentially a list of what the buyers can and should expect while their home is being built. An informed buyer is much better prepared for the uncertainties and occasional issues that can arise during this complicated process. It’s your obligation as a builder to make the processes clear and understandable.

As Paul Cardis noted in his book Service Certainty, setting clear expectations and preparing buyers for some of the uncertainties of the buying and building process can “inoculate” your buyers against the unexpected, better preparing them for the occasional and inevitable disruptions that can cause great anxiety for the uninformed.  In short, the more they know about the process and their role in it, and what could happen, the better able they are to deal with unwanted surprises.

As I mentioned, the builder we spoke of above doesn’t conduct Pre-Construction Orientation Meetings, instead leaving the buyers to wonder why construction hasn’t started (permit delays), why they can’t change their cabinet selections even though their first choice hasn’t been installed (lead times), or why unaccompanied site inspections are prohibited (safety), etc.

Our Avid Advisors can help your company to discover best practices of effective expectation-setting and communications, and help you to implement them in your business. All you need to do is ask. We’re here to help you to create Raving Fans of your customers, and to avoid making them raving mad!



How the Homebuying Experience Has Changed!

by Mark Hodges

Reflecting on my early days in the homebuilding industry (yes, you have to go back to 1983), I was struck by just how much things have changed in the way homebuyers go about shopping for a new home.

In “the old days,” potential customers went to the one source available to them to find new home communities in their area – the Real Estate section of the newspaper. There they found ads usually showing one elevation, perhaps a floorplan, and other basic information about the community. Armed with only that information, they hopped in the car and traveled to the sales office. There they met me (or someone like me) who introduced them to the builder, community, products, features, and site plan, hoping to find the right home with the right features, on the right home site, built by the right builder. In short, they came knowing very little, and the sales process took weeks.

Fast forward to today (really fast) and the experience is completely different. Today, homebuyers first “travel” to the builder’s website, where they find virtual tours of all the available homes, information on each home’s features, available options, and site plans with all available home sites. If the builder uses GoTour®, they find Star Ratings and other important information about the builder, and even information about the products the builder installs in each home. In short, when they finally decide to visit the community, they have already chosen the best home for them, identified the right home site, and even chosen many of the features they want in their new home.

Imagine just how much better informed today’s buyer is before they set foot in the sales office. Instead of asking basic questions about the community, home styles, and features, they can now come asking about the Elm model and about home site #16. They’ve already reviewed the builder’s Star Ratings thanks to GoSocialTM (if the builder is smart enough to use this product) and they know pretty much what they want. Now it’s just a matter of confirming their needs and matching them to the home and features they’ve already selected. Wow!

While we don’t have the data yet to confirm it, I strongly suspect that sales conversion rates are much higher when a customer visits a community to confirm what they’ve already explored via GoTour®. Imagine how much more smoothly the sales process can go when a prospective buyer arrives with a wealth of information – much more than could be found in a newspaper ad!

Now, consider the process of selecting options. In my day, my “design center” consisted of some Formica counter chips and a few cabinet doors lining the walls of the laundry room in the model home. There was no such thing as today’s design centers, where buyers tour literally hundreds of displayed products in gorgeous galleries. Now imagine that they’ve viewed all those products (and their Star Ratings) on GoTour® before their first visit to the community. All builders know that option sales contribute greatly to bottom line profit, and our research shows that buyers spend on average 20% more on options they’ve seen on GoTour®!

Today’s homebuyers are much better informed, much more interested in real consumer feedback about the builder and the products they use, and much more prepared to make a buying decision, much more quickly. This is the power of Avid’s industry-leading products – GoSocialTM, GoTour® and GoSurvey®. A builder who chooses to invest in all these services has a much greater chance of making the sale, selling more options and improving the customer experience by acting on feedback through the GoSurvey® process.

The only question is, why would a builder leave it to chance? Meeting the needs of today’s information-hungry Millennials and greeting well-informed buyers to their first visit at your community is worth the investment many times over. One thing’s for sure – using these valuable tools beats even the most clever newspaper ad, every time! If you’re not already using these products, you should learn more about them as soon as you can.

The Avid Advisor Program

by Mark Hodges

Greetings Avid readers! As a relatively new (and proud) member of the Avid team, I’d like to tell you a bit more about the Avid Advisor Program, of which I am the newest member.

You are likely already familiar with Avid’s industry-leading array of offerings, including GoSurvey, GoTour and GoSocial. Thanks to the valuable customer experience information gathered by GoSurvey, clients discover where they excel and where improvements can be made. Avid’s expertise in obtaining and analyzing customer feedback is unmatched.

Wisely, the Avid team recognized that, in addition to providing a comprehensive understanding of your customer satisfaction via Avid Reports, we need to advise clients on addressing any improvement opportunities that may be identified. To do so, Avid has engaged homebuilding professionals available to assist clients in process improvements and activities to directly impact their customer experience.

Clark Ellis, founder and CEO of Continuum Advisory Group, is an Avid Advisor with broad expertise in helping homebuilders align their processes to the needs of staff, trade partners and suppliers, as they work together to build high quality homes while reducing waste and rework, all focused on creating the best possible customer experience. A “process expert”, Clark and his team help Avid clients map processes, identify inefficiencies and waste, and correct performance gaps that cause customer dissatisfaction.

Jason Forrest, founder and president of Forrest Performance Group, is a well-established expert at the sales and customer relationship management processes that create great customer experiences from the first visit to long after closing. Jason and his team help Avid clients refine customer communications, consult with company leaders on cultural change management, provide sales training and a host of other professional services.

With over 30 years of experience as Senior VP of Corporate Operations for Hovnanian Enterprises, one of the nation’s largest homebuilders, I led the effort to improve the company’s customer satisfaction ratings from a low of 78% to 95% “willing to recommend”. I can help Avid clients identify gaps that negatively affect customer experience and create solutions that will improve results.

Avid Advisors help clients in many ways. We participate in reviewing Avid Reports, help identify root causes of poor ratings and provide recommendations to address them. When challenges become more complex, we can be engaged to conduct site visits, meet with your team and develop a comprehensive plan to address issues that lead to dissatisfied customers. We can also help facilitate the implementation of any measures that may be needed.

If you’d like to learn more about how Avid’s Advisors can help your company significantly improve customer experience, please contact your Avid Client Success representative to connect you with the appropriate Avid Advisor.

The Price of Oats

by Mark Hodges

The residential building product landscape is littered with unfortunate and expensive tales of products gone bad. If you’ve been around long enough, you likely remember fire-retardant treated plywood. Treated with chemicals to reduce the movement of flames from one multi-family roof to another (a fine idea), the product was found to delaminate the OSB sheathing, causing unsightly bulges in roofs and ultimately degrading to the point of being hazardous. Thousands of roofs had to be replaced at enormous cost and inconvenience to homeowners.

You need not to have been around as long to recall Chinese drywall. Laced with formaldehyde from gypsum quarries, the product caused massive corrosive damage to wiring, appliances, HVAC coils and even foil-backed mirrors. Remediation required moving families out of their homes (and housing them), taking the homes down to the studs and rebuilding the entire interiors of affected homes. I had the fun of working with over 40 VERY unhappy homeowners to solve this major problem, and suffered the inevitable evening news coverage that followed.

I’m reminded of an old joke where a man buying oats asked the farmer how much he charged: “That depends on whether you buy them before or after they’ve been through the horse.”

It’s no secret that the price of an inferior product differs significantly from the cost once the deficiencies become known. One more example is the now defunct window manufacturer (who will go unnamed), whose irresistibly priced windows quickly began to suffer broken seals and shifting in the openings, creating havoc in thousands of homes. We all know that you get what you pay for, as these harsh lessons validate.

The good news is that there is much more readily available information today about product quality, thanks to the internet (and great tools like Avid’s GoTour and GoSurvey). The trouble is that purchasing managers are often incentivized to buy the lowest-price product or service, intending to “save the company money” in costs. This seemingly sensible objective results in countless poor and expensive decisions. But I’ll leave that discussion to others.

Instead, I’ll focus on the intangible costs of products that many homebuilders don’t consider. Here is a list of some of the most overlooked costs that don’t get calculated in the ultimate “price” of the products you buy:

On-time delivery – No matter how good the product, if it holds up construction because the manufacturer fails to manage their production and distribution processes, you’re spending money on “empty house days” while waiting for delivery.

Correct delivery – If the cabinets that do arrive are oak instead of the ordered pine, or don’t fit properly in the kitchen openings, you’ve wasted even more time and risk missing your closing dates, which is one of the most important influencers of customer satisfaction.

Changing specifications – If the manufacturer is constantly changing specs on their products without informing you, or you neglect to provide up-to-date model displays, you’ll end up selling products that your customers didn’t buy. And believe me, they’ll notice.

Poor warranty service – If your manufacturers don’t stand behind their products (and instead hide behind flimsy warranties), your buyers won’t blame them, they’ll blame you. Service performance is critical, no matter how good the product normally is – things break.

I could go on, but won’t. The point is that choosing a product based on price alone fails to take into account many potential factors that could increase the ultimate cost – with quality and performance leading the way, but with quality of service coming in a close second. It’s a relatively easy lesson to learn, but a very difficult one to follow, if price is leading your company’s decision-making processes.

So, the next time you’re buying oats, be sure to take delivery before they’ve gone through the horse!

Crossing Home Plate

by: Tim Bailey, Division President of Avid Ratings Canada

Building homes means managing hundreds of processes, while assembling thousands of components made from a combination of natural, manufactured, pre-fabricated and human-assembled materials. The construction process spans several months, in conditions that may include scorching heat, drenching rain, gusting winds, frigid snow or anything in-between. It is not surprising that Dr. Jack B. ReVelle, Six Sigma expert and quality guru, has noted that “the average home has more than 60,000 points of failure during the building process.” Building homes is not an easy sport.

Stopping at Third Base
In light of the complexities of home building, it seems reasonable to think that making it to closing with only a handful of incomplete or deficient items should be considered a victory. Unfortunately, homebuyers rarely look at what has been accomplished, but rather, what remains incomplete when they receive keys for their new home. A builder with a short list of deficiencies at occupancy may view that as a “win,” but most homebuyers score that less generously in customer satisfaction. “Stopping at third adds no more to the score than striking out. It doesn’t matter how well you start if you fail to finish,” according to legendary major league baseball player Billy Sunday.

On the scoreboard of customer satisfaction, two key elements are in play when buyers take possession of their new homes: The first is the “number” of deficiencies and the second is how homebuyers “perceive” that number. Even the best builders “leave runners on third” at times, but customer satisfaction leaders score higher by managing customer expectations while turning over homes with few, if any, shortcomings.

Number of Incomplete Items
Survey data from Avid Ratings’ “All-Canada” database indicates 22.2 percent of homebuyers reported having “three or fewer” deficiencies at the time of their pre-delivery walk-through, with 2.6 percent of those buyers reporting zero deficiencies. Hopefully the goal for all home builders is to have zero deficiencies by closing ─ or preferably by the pre-delivery walk-through ─ however, this data suggests that 97.4 percent of homebuyers report some deficient items at their walk-through.

In comparison, data from an industry-leading builder in customer satisfaction shows that 55.3 percent of their homebuyers reported having “three or fewer” deficiencies at their walk-through ─ 33.1 percent better than the “All-Canada” data above ─ with 6.4 percent of their buyers reporting zero deficiencies. A good batting average in baseball is typically above .300 and similarly, while leading builders are not perfect, they are batting at higher averages in the delivery of deficiency-free homes.

Perception is Reality
Setting expectations for homebuyers is a key factor in customer satisfaction, as customer perceptions become reality. Homebuyer perception regarding deficiencies at the walk-through is crucial to monitor and understand. Survey data from Avid Ratings’ “All-Canada” database indicates 71.8 percent of homebuyers believe the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items.” This leaves 28.2 percent of homebuyers feeling that the number of deficiencies at their walk-through was “more than expected” or “much more than expected.”

Again in comparison, data from an industry-leading builder in customer satisfaction shows that 85.4 percent of their homebuyers believe the number of deficiencies at their walk-through was either “about as expected” or “less than expected/no items” ─ 13.6 percent better than the “All-Canada” data above. This leaves 14.6 percent of their homebuyers feeling that the number of deficiencies at the walk-through was “more than expected” ─ no homebuyers reported “much more than expected.” Even the best builders are not hitting home runs every time they are setting customer expectations, but they are generally leading the league in this area.

Finishing Strong
Managing the complexities of homebuilding should bring the reward of homeowners that are passionate fans, but this is only possible if customers receive complete and ready homes that align with their expectations. Turning over homes with few, if any, deficiencies shows up on the scoreboard through referrals and positive reviews. Finishing is always the most important part of the race.

Optimize 3Ps to Create Outstanding CX

By: Tim Bailey – Division President of Avid Ratings Canada and Paul Cardis – CEO and Founder of Avid Ratings

There are proven business initiatives that generate profound results and home builders may employ one or more of these initiatives, such as Lean, Six Sigma, or Kaizen, to stay the course towards sustained excellence. Lean initiatives help reduce waste and inefficiencies. Six Sigma practices reduce defects and deficiencies. Kaizen maintains a focus on continual improvement. The core building blocks of all business improvement initiatives are People, Product, and Process. Understanding the interactions of these 3Ps is essential to CX — the customer experience.

A key ingredient in a successful organization is the people. The collective knowledge, attitude, aptitude, and level of genuine caring has a tremendous impact on the success of the organization. Having the right people only solves part of the equation, as they must also be aligned to the right roles. A highly skilled construction manager who consistently exceeds time, quality, and budget objectives, but falls short with customer-facing interactions, should either be provided with thorough training to help excel at customer interactions or be buffered from those situations in order to leverage what he or she does best for the company. Hammering a square peg into a round hole does not create solutions, only friction. Recognizing key strengths of individuals and aligning these strengths with respective roles and responsibilities will maximize success.

Comprehensive and ongoing training will always generate a significant return on investment. Acquired skills and knowledge better equip team members to be trusted and empowered. An organization is only able to scale successfully if people are afforded the trust and authority to make decisions within their area of responsibility. It is important to remember that trades and suppliers form a substantial percentage and integral part of the “people” for a home builder, and must therefore be considered part of that detail in the 3Ps blueprint.

The best people and processes cannot be successful if the product misses the mark. In home building, “product” includes factors such as design, specifications, location, and price. Achieving a successful “product-market fit” is the goal, and fortunately there is a vast amount of data that can be leveraged to ensure product-market fit is not left to chance. Home builders are not building structures, but providing “solutions”. Intimately understanding the needs of home buyers in a target market allows product to be brought to market that meets those needs and provides those solutions.

Product design must consider demographic, ethnographic, psychographic, and economic information for a target market. Home building is a high-stakes industry and including features or specifications that are not valued by a target market adds unnecessary costs. Designing a product that “checks all the boxes” for the target market will maximize value for customers, increase sales velocity, and improve margins.

A well-intentioned team and market-matched product will not be able to succeed without a sound process. “A bad system will beat a good person every time,” according to quality expert W. Edwards Deming. A good process is repeatable, scalable, efficient, and constantly improving. Auditing the current process in home building means digging deep into every area of the company. It is a significant undertaking but reaps great rewards. Process analysis unearths existing bottlenecks, non-value-added stages, inefficiencies, and waste. Layering the customer journey over that process exposes potential “friction points” and allows the process to be engineered to enhance the customer experience.

The effects of process deficiencies are often easy to spot, but identifying root causes is what facilitates improvement. A root cause exercise of “5 Whys” is a common practice in Lean, Six Sigma, and Kaizen methodologies. It involves digging deep into a negative effect by asking a series of “why” questions five times. The answer from each “why” forms the next question and the fifth “why” generally exposes a root cause.

Using 3Ps for CX
The customer experience is at the core between the interactions of people, product, and process. To “manage with metrics” to optimize the 3Ps, leading companies rely on:

  • Employee feedback
  • Trade feedback
  • Customer feedback
  • Production statistics
  • Deficiency/warranty data
  • Market research
  • Financial results

Business excellence designed around the 3Ps will result in teams that are engaged, organized, and advantaged, and a customer experience that creates loyal promoters.

Are You Struggling with the Trade Shortage? What if You Could Build Your Homes in 44 Hours?

One of the major issues facing our industry today is the shortage of skilled labor in many markets across North America. If your company is among those struggling to get enough trades to your communities, what can you do to solve this problem?

The simple answer is to make the trade shortage someone else’s problem by creating an environment where available trades can operate more efficiently and profitably at your communities instead of at your competitors’. So, how do you do that?

On Monday, August 5th, 1999, our team set about to prove that better scheduling, proper supervision, smarter use of skilled craftsmen and on-time delivery of materials could dramatically reduce the amount of time it takes to build a home. At 7AM that morning, we broke ground on a 2000 sq. ft. home. At 12:45PM on Friday, August 9th, we received our Certificate of Occupancy. In total, the home was completed in 44 hours, as we worked from 7AM to approximately 5PM each day.

Details of the project included:

  • We held a morning-long planning meeting with all trades and suppliers a week before starting, where every step and minute of activity was calculated and committed to. We had a minute-by-minute schedule.
  • The home was built with standard construction methodologies (no tricks), with the exception of using super-heated concrete to accelerate the curing of the footing, thus allowing us to pour the slab on this ranch home at 3:30PM on Day One. The home was stick-built using pre-assembled roof trusses.
  • The home was not a basic home. It included tile floors, Corian countertops, a fireplace, tiled walls in the bathrooms, an irrigation system – even the mailbox was installed at the curb in time for the final inspection.
  • Crew sizes were expanded significantly to accommodate the tight schedule. The home was completely framed and sheathed on Day Two. The roof was completed, windows installed and all rough mechanicals on Day Three. Insulation and sheetrock were installed on Day Four, cabinets were installed, with some mechanical finals being completed. Finally on Day Five, the home was painted, mechanical finals completed, driveway poured, irrigation and sod installed, all by noon.
  • The municipality worked with us (they certainly had to) to complete necessary inspections throughout the week. The Building Inspector commented that he would likely never again do a Rough Electric inspection on Tuesday and an Electric Final inspection on Thursday!!

So, what did we learn? We learned that maximizing the crew sizes and the distinct role of each craftsman (i.e. the electricians divided their work among crew members – one installing outlet and switch boxes, one cutting wire to length, one fishing wire, etc.). The home was pre-wired in about 90 minutes, while other work was going on.

We figured out which crews could work simultaneously instead of devoting entire days to one trade, even when they could finish their work before lunch.

We learned that having all the materials readily at hand greatly sped the process. And we learned that having our Superintendent on the ground for every single minute of work on the home provided better coordination, troubleshooting, etc.

So, what’s the point of all this? Every day, trade owners assign their crews to work at numerous building sites in your market. I can guarantee that they send their crews to the job sites where the homes are ready for them to work, where the materials are on hand, where they can do their work productively and without interruption, and most important, where they can make the most profit.

Contrarily, they’ll go last to the job sites where the schedule is chronically inaccurate, where the homes aren’t ready, where they end up making “dry runs”, wasting time and losing money because the builder didn’t have the systems or mechanisms in place to ensure maximized productivity. They’ll go last to the job sites where the construction documents are incomplete, where the options they’re to install aren’t clearly designated, where the previous trade(s) left a mess and incomplete work. And perhaps most important, they’ll go last to the jobs where they know they won’t get paid in a timely fashion.

The secret to solving the trade shortage is to be the best builder to work for in your market. That’s a tall order, but is an iron-clad solution if you’re looking for one. Trade Partners make choices every day about which homes in which communities command their attention, and which are their priority (not yours!).

No, you don’t have to build homes in 4 ½ days, but if you can develop the scheduling rigor, material delivery processes and great supervision, you won’t have to worry about trades showing up. They’ll be lining up to work on your homes.

By the way, when we sold the home, they buyers had zero items on their walk-through list. You can not only build fast, you can build with high quality, with the right team, the right processes and the right trade partners.

It’s All About The Culture

Many years ago, when I was a young new home salesman, I had the misfortune to work with a Construction Superintendent who considered our customers to be an unwelcome interruption of his day. He grumbled his way through every encounter, treating them dismissively and disdainfully. Once, while conducting a final walk-through with a particularly finicky customer, who in his estimation was taking too long, he informed them at the foot of the stairs that they had 15 minutes to tour the second floor, after which he was leaving, finished or not. Not surprisingly, they were in my Sales Office in short order seeking intervention, and then spent several weekends parked outside the Sales Office, warning prospective buyers about how we treat our customers.

The company stood by the Superintendent, reinforcing his behaviors, in large part because he performed reasonably well in other areas, like budget control and construction schedules. The company thus demonstrated to me how they really feel about their customers, despite their public claims. I learned that taking care of customers was less important than protecting the company’s interests, that treating customers badly was acceptable. It spoke volumes about the company’s true priorities and culture.

As an Avid client, you already take customer satisfaction seriously, as evidenced by your commitment to tracking performance through Avid surveys. I hope that you also have vigorous mechanisms to act on gaps in your team’s performance in managing their customer relationships. To me though, it comes down to the kind of culture you create, the integrity and ethics you demonstrate, and the behaviors you embed in your company’s DNA.  Consider the following questions:

  • How often do you stress the importance of your company’s integrity and commitment to the customer in company communications, meetings and conversations with team members?
  • Are your key decisions based on what’s best for your customers? Do your decisions reflect your integrity and fairness toward customers?
  • Does your team consistently make decisions that are in the best interest of your customers, following your example? Can they predict how you would handle customer satisfaction issues when they arise?
  • How much recognition do you provide to team members who excel in serving their customers? Do you celebrate and publicize great customer care stories?
  • Do your employee performance reviews include discussion about their customer satisfaction scores and the quality of their relationships with customers? Are integrity and ethical behavior among your core values?
  • Do your incentive compensation plans include high customer satisfaction ratings as a condition of receiving bonuses?
  • Do you hire people partly on the basis of their values and expressed sensitivity toward customers and co-workers?
  • Do you tolerate employees like the Superintendent described above? (This question is particularly important. Having even one employee who treats customers badly sends a very loud message to all other employees!)

Your team looks to you for evidence of your personal integrity, and ethical and fair treatment of your customers, business partners, and them. Your decisions and actions speak louder than your words. Do you consistently “walk the talk”?

In a related topic, the Avid Team has been spending a lot of time lately discussing the importance of transparency and integrity in publishing customer satisfaction data. Some companies manipulate such data to improve their perceived standing among customers, an activity which is now illegal and subject to serious penalty if discovered. As important, those companies’ employees are surely aware of these actions, exposing management’s willingness to compromise the company’s integrity and ethical standing in a shortsighted attempt to boost sales.

A leader can’t be “mostly ethical” or demonstrate integrity most of the time. It’s an all or nothing proposition. That goes for how you treat your employees, your business partners and your customers. If that Superintendent works for you today, invite him to “seek excellence” elsewhere tomorrow.

How often do you stress the importance of integrity and commitment to the customer in your company’s internal communications and meetings?

Mastering the Homebuying Experience

Greetings Avid readers! First, I thank Paul Cardis for inviting me to join the Avid team as an Advisor, and for his confidence that I can contribute to helping Avid clients achieve high levels of customer delight. I look forward to working with Avid and perhaps with you.

Throughout my career in homebuilding, I have often had the responsibility to improve and enhance the homebuying experience for my company’s customers. During my years as VP for Quality for Hovnanian Enterprises, (and ultimately as SVP of Corporate Operations) we were successful in raising the customer satisfaction ratings from a worrisome 78% “willing to recommend” to a much more gratifying 96% in just a few short years. We accomplished this by focusing on three key areas – 1) creating a culture of commitment to the customer, 2) building a better-quality home and 3) redesigning the customer relationship (CRM) processes.

Certainly, you can’t provide a world-class experience for your customers if your employees don’t care about them. Further, building and delivering a high-quality home is an essential requirement. In this article, though, I’ll focus on the third “leg of the stool”, the CRM processes, which I believe are the most critical, and often most overlooked keys to creating “Raving Fans” among your customers.

First, a change of context. Most homebuilding companies don’t actually build anything. Very few of their (your) employees ever swing a hammer or hold a paintbrush. Your homes are designed and constructed by other companies you hire. You are a process management company, overseeing the processes by which your homes are built. In that sense, your relationship with your customers amounts to a series of encounters driven by operational processes. When those processes are poorly designed or executed, your relationships with your customers suffer.

When customers complain that they didn’t understand that optional features shown in your model aren’t included, the process of communicating standard features is flawed. When your Construction Manager doesn’t know that your customer added skylights at the Sales Office, your change order process is suspect. And when, 30 days before the contract closing date, you still haven’t notified your customer that the home will not be ready in time, your internal communication processes are broken. Breakdowns in your internal processes inevitably affect your customers. Fixing those processes, then, is the way to eliminate the negative outcomes that infuriate your customers and fuel dissatisfaction.

I recommend focusing on the customer experience from a process perspective. Begin by assessing each of the formal “touch points” with your customers. Are the included features carefully explained? Is the “beginning to end” process of buying a home fully outlined at contract signing? Is your Construction Manager prepared for the “Pre-Construction Meeting” where selected options, home siting and construction schedule are reviewed? (Do you conduct these meetings?) Do your customers know what to expect when they visit your Design Gallery? How often do you update them on the status of their home during construction?

Managing the customer experience is a matter of deeply understanding the processes you design to manage that experience. Setting clear expectations and communicating proactively throughout the buying experience are actually key drivers of your customers’ satisfaction.  Delivering a quality home at the end of the process is almost a given, a ticket to entry. Delivering a worry-free, enjoyable and predictable experience is the way to turn an “OK” homebuying experience into a “WOW” experience. You can’t simply will yourself to improve the customer experience by fixing mistakes, over and over. Look for the root causes of problems, and you’ll usually discover that poorly designed (or executed) processes are the culprits.

Your customers are not an interruption of your work. They are the purpose of it. Focus on the processes by which you manage those relationships and your customers are certain to appreciate the difference, and the “quality experience” you make possible.