A basic axiom of business is that people tend to buy from companies they like - especially those that add value to the transaction above and beyond the cost of the goods and services being sold. In marketing terms, this added value is often referred to as "relationship value", which refers to the bonds (both real and perceived) that are created among the customer, the home builder and the brand.
Though some large home builders have toyed with customer relationship management (CRM) strategies and initiatives, there has been little effort to make the relationship itself valuable to customers. Many companies talk about creating customer value, but what they are really talking about is making customers more valuable to the firm by selling them more products and services. While there is nothing wrong with creating more valuable customers, this has little to do with creating strong customer relationships.
Likewise, many home builders do a great job when it comes to managing the various transactions and encounters they have with their customers, but this does not automatically create a relationship with value. In fact, most home builders provide mere "functional" value, which lasts only as long as the homes they build meet customers' expectations. Real relationship value, however, requires much more. It requires that the buyers genuinely like you, regardless of the fact you are an employee they are obliged to work with.
One of the best ways to solidify a customer relationship is to offer a unique product or service that totally impresses your customers and differentiates you from your competitors. This is known as your "wow factor" and it represents your ability to be original and special. Though a wow factor can go a long way in creating relationship value, it is rarely (if ever) enough. More often, true relationship value is created by connecting with home buyers on a series of levels, while engaging in the day-to-day activities, such as offering information and guidance before, during, and after construction; providing financing advice; and providing prompt warranty repairs but explaining why it happened in the first place.
Making this happen has more to do with the people you hire and their ability to exude the warmth, spirit and pride that characterizes your company. Emotion is key in any attempt to improve relationship value, says Jim Barnes, professor of marketing at Memorial University of Newfoundland and author of Secrets of Customer Relationship Management: It's All About How You Make Them Feel. "The much more lasting form of value will elicit an emotional response from customers," he says. "It is less easily duplicated by the competition and generally contributes to less emphasis on price."
Consider, for example, the value WestJet creates by employing qualified and friendly employees. Value is created every time a passenger is made to smile. "The creation of such emotional value for customers is fundamentally different from the creation of functional value through price reductions, increased convenience and technology," Barnes notes. "Both forms of value are important. However, genuine customer relationships cannot be formed on the basis of functional value alone. Customer relationships require an emotional connection with the firm if they are to thrive."
In short, relationship value is more than an emotive experience - it's an emotive experience that centres on the company.
The Green Co. in Newton, Massachusetts, is one such builder that does a ton to enhance the value of its customer relationships. For example, the builder takes pictures of the home buyers at the sale and of the home throughout the construction process and presents a photo album to the homeowners when they move in. The company also created its Ambassador Program, in which potential customers meet current homeowners at prospect/customer socials and breakfasts.
In order to deliver true relationship value, home builders must get to know customers as individuals - or at least market segments - so that they can identify the best approaches for improving their relationship value. After all, what works for The Green Co. may not work for another company or clientele.
Be certain, however, that anything you do to increase relationship value is executed well. The act alone is not enough to impress consumers, and a poorly executed task can backfire - especially if it disappoints on an emotional level. Instead of increasing the relationship value, it may diminish it. That's why it's also important to measure the effectiveness of your relationship value efforts to make sure they are working as intended.
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.
