Customer Service Standard Setters

These are just a few of the ways that winners of the 2003 NRS Award in Homeowner Satisfaction differentiate themselves from the competition. Pulte Homes of Phoenix delivers 80% of its homes with insulation blown under the roof line rather than onto the attic floor, creating an energy-efficient home guaranteed to have energy costs within a specific range every month. Ausherman Homes requires its employees and trades to put on sanitary booties before entering customers' homes for any follow-up work after move-in. Barone Homes is in contact with its home buyers two to four times daily. Cedar Knoll Builders schedules warranty appointments with trade contractors during the home inspection while the buyer is present. Among many other personal touches, The Green Co. snaps a picture of the buyers when a sale is made and then regularly takes photos of their home during construction. At closing, buyers receive a personal photo album. Pringle Homes has a customer-care department with specific individuals assigned to each buyer. These individuals are a continuous point of contact for buyers, from contract signing to closing, eliminating miscommunication during transition points.

To identify the top performers in customer satisfaction, NRS Corp., which does customer satisfaction research for more than 300 home building companies nationwide, conducted an independent study. With 205 building companies representing 30 states in the study, NRS surveyed 55,177 homeowners who had closed on a new home in 2002 about homeowner satisfaction, making this the largest study of its kind in the home building industry. Unlike the J.D. Power research study, which relies on public records used to access closings, the NRS Award study is based entirely on closing information submitted directly by participating builders. NRS Corp. and Reed Business Information jointly verified the accuracy and completeness of the information submitted to NRS.

Homeowners were surveyed about their satisfaction in several key areas: home features, floor plan/layout, quality of materials, quality of workmanship, price/value, lot and location, sales proc-ess, lending process, options/upgrades/colors, office staff, project superintendent, walk-through, post-move-in warranty service, number of items identified for correction, time taken to make corrections, overall recommend intentions and actual recommend behavior.

An NRS Index score for each builder was calculated by combining a scaled recommend score with the total homeowner satisfaction score. The NRS Index determined a builder’s ranking in the study.

Production builders and custom builders were compared separately because of the unique challenges each type of builder faces and because each generally serves different market segments. Production builders typically deal with higher volumes, while custom builders typically deal with greater demands from home buyers, larger square footages and higher prices.

The differences between the two types of builders has led to a common belief that home buyers must turn to small custom builders for personalized service. However, the NRS survey challenges this notion. As a group, builders who closed on at least 500 homes last year scored 8.42 points higher on the NRS Index than those in the 50-99 group, partly because large builders scored higher than small builders in warranty service satisfaction.

Production Builders
How well production builders handle warranty service seems to be the dominant factor in customer satisfaction. In fact, the five main items that separated the top five production builders from the rest all pertain to warranty service issues, such as scheduling, beginning and finishing work in a timely manner.

The two factors that negatively affected the NRS Index the most were time taken to correct walk-through items and number of items identified for correction at walk-through. Other factors bringing down Index scores related to exterior issues with the yard and landscaping.

The typical production builder scored highest with kitchen appliances, home location, and patient/courteous sales representatives. However, when the size of production builders is taken into account, other factors influence customer satisfaction scores. For example, smaller builders tended to score higher with the lending process, while larger builders scored higher with warranty service, yard and grading satisfaction.

It stands to reason that small builders, which work with mortgage lending firms and banks, would score higher on the lending process than large builders, which often have in-house lending divisions. Mortgage lending presents challenges to setting expectations and managing satisfaction that are unique to the lending culture, and big builders might not understand these challenges well enough to deliver customer satisfaction. Plus, home buyers’ expectations for an in-house lender might be higher than their expectations for a bank or an outside lender.

Following is a brief look at the key factors influencing customer satisfaction with the four classifications of production builders.

On average, builders in this group scored 4.5 points higher on the NRS Index than production builders in general. Warranty service was the leading factor separating these larger companies from their smaller competitors. Not surprisingly, warranty service also differentiated the top five companies in this group from their peers in the 500+ classification. Other key influencers included superintendents who communicated well with buyers and provided quality workmanship. The result: The top five firms in this category scored an average of 23 points higher than the rest of the group on the NRS Index.

Leaders in this group differentiated themselves from the pack by creating superior customer satisfaction in workmanship, warranty service, walls, grading and material quality. Close behind were high satisfaction ratings for the superintendent, illustrating how much customer satisfaction depends on good communication during the project.

Overwhelmingly, warranty service was the leading factor separating the top five builders in this category from the rest. Communication of warranty policies and prompt contact to schedule service were also important. Overall, smaller builders tended to score lower with warranty service. It’s no surprise, then, that smaller companies that deliver outstanding warranty service scored higher than their peers on the NRS Index. In addition, the lending process had a positive impact with this group, which tended to score higher than larger builders.

Small-volume builders scored higher than the 50-99 class on the NRS Index partly because they can provide more personalized service to their small base of home buyers. The top five builders in this group stood out from their peers because of outstanding warranty service, which proved to be key across all survey results.

Although included in the production builder class, builders identified as small-volume were not included in overall Diamond Award competition this year because of the low number of surveys received from this group.

Custom Builders
Custom builders scored very well as a group. However, they face the same challenges as production builders with walk-through items and grading/drainage. In fact, time taken to correct walk-through items was the No. 1 factor differentiating the top custom builders from the rest of the field. Project superintendents also played a major role in impressing homeowners.

Every builder and market are unique, so what one builder does to improve customer satisfaction won’t work for every builder. One size does not fit all. Nevertheless, whether you're a custom builder closing on 30 homes a year or a production builder closing on 30,000, your success depends on customer satisfaction. On the following pages you’ll find profiles of the builders top-rated in satisfying customers.

While other studies have examined best practices industrywide, this is the first study to reveal best practices of the best companies for homeowner satisfaction. Any one of these companies might resemble yours in size, type, market and culture. Find the builder that best matches your company. These builders' stories provide key insights into how their organizations are structured to keep customer satisfaction high. Even if you and your staff think you run the best game in town, the NRS Award winners are sure to provide ideas to help you establish and maintain a reputation for excellence.