Same old story - different ending

• Competition for customers;

• Competition for the best land; and

• Lack of skilled people and keeping those you have on-board.

As would the business change issues:

• Improving build quality;

• Improving customer satisfaction; and

• Supplier partnering.

There were however two distinct differences:

• I was in the USA; and

• I was speaking to five builders who have faced up to these issues, have turned them into opportunities and who are extremely confident about the future.

The elite

Ok, so I was talking to the elite, including Estridge Homes - current holder of the prestigious National Housing Quality Award. By elite I mean housebuilders with very high customer satisfaction, loyalty and referrals. I am assured the average US housebuilder is not in the same league but whatever, these five housebuilders do show quite clearly what can be done. More importantly they ARE achieving differentiation through service quality, something which many UK housebuilders seem reticent to accept is possible at all.

What follows are the key points I picked up during my discussions.

Customer as a friend - not a foe

These housebuilders make sure that everyone - every member of staff, every supplier and every subcontractor - appreciates that a housebuilder only exists because it has customers.

Estridge Homes, for example, invests heavily in customer relationship building, says Charlie Scott, executive vice-president. “Shortly after the initial contract and before construction, we invite customers to come to our head office for a ‘pizza party’. Here they are shown a video outlining the process they are going to go through and they are taken on an office tour. We hope to make them feel that we are people NOT a faceless business and we want to align their expectations with reality - for example if we think the streets will be muddy at first we tell them and we ask them to be patient with us.

“We are now working on a warranty orientation session where customers can learn how to take good care of their new homes and how we can provide service. We believe this will reduce our servicing costs.

“We have also set up a customer communications centre which any customer or potential customer can call from first visit onwards - 24 hours a day, every day. This centre is linked to all potential customer-facing staff by e-mail, pagers, phone and high-speed faxes. The centre handles questions on construction issues, schedules, closing information and warranty service. The call centre contacts the most relevant person to give a reply and promises follow up within 24 hours. It takes 27 000 calls per year and every call is monitored to ensure complete customer satisfaction.”

Measuring customer satisfaction is vital

Happy people work better and take more pride in what they do.

Buzz Hoffman, president Lakewood Homes

Will Holder, president of Trendmaker Homes believes that: “The customer satisfaction monitor is the single most important aspect of the success or failure of the company. It has highlighted our opportunities and helped us understand what to do with those opportunities.”

Estridge Homes emphasises the need for top management involvement. “Most builders do some form of CSM, but we really take note of the results. Feedback is nice but you have to be willing to change. We are prepared to make the necessary investments to change our processes. Top management has to be as committed to CSM as the people on the front line.”

Buzz Hoffman,president of Lakewood Homes agrees: “The philosophy of customer focus and change has to come from the top - if your people do not believe that you believe in it then just forget it, you are going nowhere.”

High satisfaction creates referral sales

Using delighted customers to drive referral sales is very feasible (these builders have referral sales between 30% and 40% - the US average is nearer 10%) BUT a clear message is do not try to drive referral sales until you are achieving exceptional levels of customer delight.

John Rymer, vice-president of marketing at George Wimpey-owned Morrison Homes is particularly confident: “We encourage every prospective customer to knock on the door of any one of our customers and ask them about our company, our products and our services. We are very confident that they will receive a very positive response.”

Happy customers build realtor support

“Realtors love us. Like us they want happy customers. They know that Morrison Homes have delighted customers and this means that they also get high levels of referral.”

Trendmaker adds: “About 60% - 80% of our transactions are through realtors. They bring a buyer to us and that buyer buys our home and after they move in they say thank you Mr & Mrs Realtor for referring us to such a fabulous company, I love my home. The next thing you know they bring somebody else in the door.

“We have had occasions where the land developer has done a focus group using realtors and the realtors have told them that their favourite builder is Trendmaker Homes. One deal we got into was incredibly competitive - there were 100 builders trying to get in and only two actually would. We got in exclusively on the back of the realtors.”

Everyone wants to work for a winner

All the housebuilders I spoke to were immensely proud of their employees. Training, involvement, motivation and empowerment are commonly used words.

As Trendmaker Homes says: “We create a feeling in our employees that they are going to be successful with our business and it is going to be measured by what their customers say. We help them analyse their own results, build on their strengths and help them eliminate weaknesses. We are very competitive in this market. We have high quality employees and a large part of that is that people like being part of a winning team and here we have a very clear way of measuring success. So you can individually be a superstar and at the same time you can be part of a winning team.”

Morrison Homes reports: “We have an extraordinary quality of employee. People like working with successful companies. Employee bonuses are dependent upon our customer satisfaction results. We involve every employee in this.”

Lakewood says: “Our people are bright enough and creative enough to know what needs to be done to improve quality or customer service. They are just given a mandate to get the job done correctly - they have a great deal of empowerment given to them. Company morale is very high - happy people work better and take more pride in what they do.”

Suppliers and subcontractors

The attitude in the USA is “firm but fair”. Partnering is the norm and there is much sharing of information between builder, subcontractor and supplier including customer satisfaction information. However there is no doubting whose house it is. As Estridge says: “The site is responsible for ultimate quality - not the subcontractor. We do not allow our builders to bad-mouth subcontractors - the builder must take responsibility. The customer has to see that everyone is working on the same team.”

Trendmaker’s view is: “Our suppliers know that we want our customers to be happy and we are dead serious about it. We make it plain if they do not get good CSM scores they cannot stay with us.”

CR Hackworthy, president of Bright Keys adds: “The problem is that you are using the same pool of subcontractors as everybody else. You cannot compete by just handing out more money because that is not competitive- right? What we do is compete by making them want to work for us because it is better, it is faster, and we turn around money. They think, ‘we like these people’, it is a good product.”

Take the long term view

Lakewood Homes believes that with referral sales at over 35% their selling costs are significantly reduced and since measuring satisfaction their remedial costs are $1000 per home less than before. Bright keys also reports a big reduction in servicing times.