As a professional builder, hopefully you work hard and invest a lot of resources to ensure that your customers have the most satisfying experience possible. But good—or even great—satisfaction ratings do not equate to the most profitable return on your investment. For that, you need to convert your most satisfied customers into legions of loyalists—happy homeowners who eagerly rave about your business and generate untold referrals.
Before you can focus on developing “avid fans”, it’s helpful to understand why their loyalty is so important. First, loyalty translates into a steady stream of customer referrals—the lifeblood of any home building operation. Second, loyal customers are more flexible and tolerant during the purchasing and building experience. Third, loyal customers help build positive brand awareness simply by talking favourably about your business. This kind of behaviour doesn’t always yield immediate referrals, but it goes a long way in supporting the superiority and quality of the brand.
In many cases, Customer Relationship Management (CRM) programs do provide a respectable return on your investment, but most builders could be doing much better if they simply maximized the loyalty of their delighted clients. Studies show that your happiest customers drive the most referrals, and by focusing more attention on these home buyers you can achieve greater returns than if you focused equal attention on lesser satisfied home buyers.
Before you can target your happiest customers, however, you must identify them. The best way to do this is with a reliable measuring system, such as professionally designed and executed customer surveys.
Many home builders conduct surveys at closing, but our research finds that this surveying method delivers artificially high scores. That’s because “social desirability effects”—the need to be likeable and to avoid conflict—kicks in when the builder rep is present. The same thing happens to many people when they are dining in a restaurant and the waiter asks, “How is everything?” Most people will say “fine” even if the steak is too rare or the pasta is overcooked. It’s a lot easier than complaining, which carries the risk of being labelled socially undesirable.
Our research shows that if you survey home buyers just seven days after the closing, builders’ satisfaction ratings drop 12 points on average. That is partly because the euphoria, hopefulness and excitement that the home buyers experienced when closing on their home has waned, and the reluctance to complain or create conflict has subsided, a much better gauge of who is happy and who is not.
Banking on the Best
Once you have identified your happiest customers through reliable surveys, you are now in a position to target them for various CRM programs. (Note: Don’t forget about the problem customers either. Both need appropriate attention.)
As you go through the surveys of your most satisfied customers—those who say they would recommend you to another home buyer—try to determine whether your happiest customers are absolutely delighted with their purchasing experience. You’ll be surprised to discover how many of your satisfied customers are not avid fans. And there lies the opportunity to make them delighted so that their rate of referrals goes up. Your task is to figure out how to convert them from satisfied customers into loyal advocates for your business.
“Is this really worth the effort?” you might ask. You bet. Our research shows the transition from good to great satisfaction will result in customers going from making one or two referrals to making 10 or more referrals! Having a system in place that encourages referrals from clients is a critical part of the equation.
As you’re looking over the surveys of your most satisfied customers, make sure to focus on the areas with the lowest scores with a survey. Most employees ignore these areas, reasoning that an overall positive rating is good enough for them. They don’t realize that there were areas to improve that would convert the buyer to being an avid fan. The fact is, this is the easiest time to “wow” customers because it takes little effort to follow up and fix many of the “problems” they cite. Most home buyer complaints at this point have to do with cosmetic aspects of their home features, such as cabinets, drywall or paint. Many of these items are inexpensive fixes and will go a long way toward delighting customers.
If these items are not addressed, the home buyer is likely to tolerate the situation and consciously or subconsciously hold back referrals. In the end, you want them to be so delighted that they’re talking to everybody about how great you are, maximizing your return on making them happy.
Paul Cardis and Christian Caswell are with AVID Ratings, Canada’s leading provider of customer loyalty management services for the home building industry. They can be reached at paul.cardis@avidratings.com or christian.caswell@avidratings.com.
