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Wednesday, July 21, 2010 : Customer Satisfaction Research: A Powerful Management Tool

One of the biggest challenges facing homebuilders today is determining what a homebuyer wants—both in the product and in the home-buying process. This information can hold the key to a company’s market position, to their customers’ satisfaction, to operational efficiency and effectiveness, and to that elusive market that for most builders is largely untapped—the customer referral sale!

So what’s the best way to find out what homebuyers want? Simple—let’s ask them! Or, on second thought, maybe it’s not so simple:

• What should we ask and why? The home-buying experience is long, complex and emotionally charged, and it is very difficult to deduce meaningful information from responses to often-asked questions such as “Do you like your home?” or “Was the salesperson courteous and helpful?” Buyer satisfaction is primarily a function of balancing expectations with actual performance. Thus, any research must provide an accurate measure of both performance and buyer expectations. It is critical that the research not influence those expectations, just measure them.
• When should we ask? Up-front? At closing? Right after move-in? At the end of warranty? Or, maybe all—or none of these times? The homebuyer goes through such an emotional “roller coaster” during the buying and delivery process. At what point—if at all, will the homebuyer give us the most objective information?
• What is the significance of the response? What indicates excellent performance versus industry standards? What indicates a problem, or a symptom of a problem, in a completely different area?
• Will we receive a response from a representative sample of our homebuyers? Or will we hear primarily from only the “lovers” and “screamers”?
• Will we receive honest, objective information, or will we generate an emotional response without foundation based upon the facts?
• Who should ask the questions? Studies show customers answer questions differently (usually less honestly) when surveys are conducted directly by their home builder.
• If we ask, will we stir up a “hornets nest” and create new demands for service, new punch lists, and homebuyer manipulation?
• How do we interpret the information we receive, and what operational and communications changes should we make without “giving away the store”?
• If we can solve all the other issues, will we naturally increase our customer referral business to desired levels? 

In our experience, these are valid concerns. Unfortunately, we have observed disappointing results from the majority of those homebuilding companies who have attempted to directly obtain meaningful feedback from their homebuyers. Here is what they find:

• It wasn’t representative! Responses were received from only 40 - 50% of homebuyers contacted—mostly from the “extremists”—the very satisfied and the very angry. The “silent” majority remained silent and the sample remained unrepresentative.
• It was painful! Responses were accompanied with demands for additional service, new punch lists and occasionally comments. It can become a disincentive and cause employees to feel that “the customer is the enemy”—a mortal blow to customer satisfaction improvement.
• It provided mis-information! The responses were superficial and sometimes manipulative, self serving and could not be relied upon as a basis for management decision making.
• It was confusing! The information received—valid or otherwise—was not organized to identify trends, produce meaningful conclusions or a plan of action. The net result was all levels of management reacting individually without any approach to meaningful operational improvements.
• The more difficult questions of buyer expectations, emotions, personal bonding and long term confidence in the company could not be addressed. Purchasing a new home, unlike almost any other consumer purchase, strikes at the most fundamental of human emotions—family, privacy, prestige, security, change, the trauma of moving, etc.

The most successful of customer relations programs are those that are based upon an understanding of the fundamental motivations of their buyers and their emotions throughout the entire purchase, building and move in experience. Buyers tend to be more than willing to talk about their “nail-pops” or “late delivery”, but are extremely reluctant to talk about their inner feelings, especially if they feel they have been bruised or abused along the way.

But, it is this very personal bruising or abusing that we need to know about, if we are to truly solve the customer relations challenge. This emotionally charged process can be designed to predictably improve buyer confidence, and greatly enhance the opportunities to “reap the benefit” in terms of the referral sales, but it must be based upon solid information.

In spite of the disappointing experiences, several homebuilding companies have attempted to “force” a response from the “silent majority” by a survey or the like at the actual closing table. The old axiom “timing in life is everything” proved to be true in dealing with the homebuyer at the point in time of their greatest emotional stress and feeling of vulnerability. The net result was an increased volume of feedback, but it proved to be forced, misleading and superficial.

Another approach which assures virtually 100% response is to call them. The telephone approach, generally, elicits an immediate, “off the cuff” response that does not reflect considered thought and reflection. If there are product or completion problems, the caller often runs into a “buzz saw” of homeowner discontent, most of which is already documented in walk through reports, service requests, and so on.

Problems with buyer confidence or unmet expectations are rarely revealed in depth. This is particularly true if the phone interview is conducted by in-house personnel representing senior management. The information is tarnished by the vested interest, self-protectionism, and perhaps most often, the desire to keep personal feelings confidential and “not hurt anyone”.

So what is the solution? How do homebuilders obtain realistic, useful feedback from their clients?

Woodland, O’Brien & Scott is a management consulting company specializing in the area of the homebuyer’s relationship with the homebuilding industry. Their specific objective is to help a homebuilder increase its level of customer satisfaction, customer perceived quality and customer referral sales. As a result of numerous research studies which include over 400,000 homebuyers, focus group interviews and years of hands-on work with our homebuilder clients, we have developed a homebuying consumer satisfaction research process which has proven to be accurate, timely, and an extremely effective management information system.

It is widely recognized that it is essentially impossible to effectively manage a process as complex as customer satisfaction in the home building business without accurate information and precise measurement of results. The importance of candid, objective homebuyer feedback must not be underestimated.

Our research process is carefully designed to probe the “tough” questions of buyer expectations, emotions and true assessment of the homebuilding company’s concern and professionalism. But, it is specifically designed not to influence expectations or lead the buyer based upon our expectations or those of our clients. Our research process is designed to bring out the underlying causes and “hidden agendas” so that we are able to pinpoint specific areas of weakness as well as opportunities for both improvement and the establishment of meaningful, structured referral generation programs. Buyers have very consistently proven willing to share a totally candid assessment of their entire homebuying experience with us as a non-threatening, but concerned, third party.

Woodland, O’Brien & Scott has consistently found that:

• We receive a high rate of response—between 60% and 85%—from a large cross-section of homebuyers contacted. The “silent” majority is no longer silent.
• On a consistent basis, 40% to 55% of all respondents wish to keep their individual responses confidential—they’ll talk to us, but they are hesitant to share their individual responses or identity with the homebuilder.
• The customer feedback is objective, totally candid and almost free of attempts to manipulate. We utilize email, US Mail and telephone surveying techniques to maximize customer ratings AND comments.
• The research process is painless. Responses are accompanied by virtually no new punch lists or demands for additional service.
• Homebuyers have consistently been willing to share deep underlying feelings, often revealing buyer expectation problems and strengths and weaknesses that were previously totally unsuspected.
• Homebuyers have reacted favorably to the fact that the homebuilder is concerned enough to ask questions through an independent third party, creating a positive climate for future referral generation opportunities.
• Through the research process, we are able to identify and target the most likely sources of future referral sales and actually use this information to create and facilitate better follow up on referral leads.

Woodland, O’Brien & Scott then utilizes the customer research data to pinpoint buyer expectation problems—as well as operational and communications strengths and weakness—to assist our clients in making improvements that dramatically increase customer satisfaction and reduce “pain” throughout the organization. The vast majority of our clients have been able to achieve homebuyer “willingness to refer” ratings of well in excess of 90% in a short period of time. In fact, our clients have increased referral sales from the 11% range (the national average for larger homebuilding companies) to 40+%.

To find out how we can help you, contact us at www.woodlandobrien.com.

Woodland, O’Brien & Scott is a Builder Partnerships associate. For more information about their program, members can login to www.builderpartnerships.com.