In extending its customer service role, one US housebuilder has changed the mindset of the post-completion relationship and notched up a sound business success. The lessons could be applied to even greater advantage in the UK.
A remedial remedy
Let's face it, remedial work can be a pain for all concerned. The customer doesn't want it in the first place, the customer service department doesn't want the continual hassle and contractors would rather be earning money building new homes than losing money fixing things.

I feel most sorry for the customer service department. In many housebuilding companies this dedicated team undertakes a thankless task taking calls from customers with problems, sorting appointments with contractors or chasing those who didn't turn up as promised.

They get very few calls to say thank you and it's all cost, cost, cost.

But exactly how much it all costs is a bit of a mystery to a lot of builders.

Our latest set of answers puts the cost at around £150. So if the average home has a dozen remedial jobs after move in, we're talking £1800 per home or £270m per year in a 150k unit market.

But it's not just the measurable cost – you need also to think about the loss of goodwill and reputation as well as the cost to the spirit of your organisation. There is no doubt that an organisation with few remedial problems feels and performs a whole lot better.

So how do we go about rekindling the spirit of an organisation where remedial work has taken its toll on performance?

Perhaps the answer is a fundamental rethink of the role of the customer service department.

One company to have done just this is Denver-based Oakwood Homes.

This 850-homes-a-year organisation has disbanded its in-house customer service department and formed instead a wholly owned subsidiary, Home Service Plus+.

So what has changed? According to Oakwood Homes president Pat Hamill, in most housebuilding companies the customer service department is set up to to meet warranty obligations and no more. The builder mindset is concentrated on the sale of new homes rather than on the longer-term potential of an ongoing relationship.

Oakwood's research found that customers wanted a different kind of relationship after completion which went beyond just warranty work.

Home Service Plus+ has therefore been set up to perform a number of key services. HSP+, under contract, handles all warranty service for Oakwood Homes but in addition offers customers extended warranties, scheduled quarterly, half year or one year fixed price maintenance services, home repair services and emergency repair services.

In the future HSP+ may also offer home redecoration, showhome maintenance and warranty service for other builders.

A key factor for success, according to Hamill, is that all nine people involved in HSP+ are employees of the company.

But this has not been without its problems. As Hamill says: "It's been painful at times trying to create a service attitude and mentality. HSP+ demands an entrepreneurial type of individual with retail service experience – not always found in a typical builder warranty service department.

Another problem, not necessarily connected with HSP+ but a perennial problem for all builders, is how to manage customer expectations on build quality. If you don't educate them they come up with their own standards that you may not like!

Again Oakwood has taken the initiative.

In 2000 sq ft of its 10 000 sq ft customer options centre, the company has built a model home to show customers the exact build quality they should expect, as well as examples of what is not acceptable to Oakwood Homes.

But it is not just for customers.

"Every one of our builders goes through this model home because half the challenge is getting our own people on board with the standards we expect," says Hamill.

I like the Oakwood concept. HSP+ has a guaranteed income from the house- building side of the business but there is the additional incentive to perform well or it will surely not pick up business from the other services offered.

Over here I would be tempted to take it one step further. I would consider making my construction department purchase all remedial work from my warranty service company at a commercial hourly rate.

And if remedial jobs are not done in the times laid down in my standards, the warranty service company will only be able to charge 50% of its normal rates.

Measurable costs and performance standards could have a significant impact on build quality and service performance.

And customers would spend a lot less time waiting for someone not to turn up to do their remedial work.

A remedial remedy for all concerned.