Keeping Customers Satisfied Is Crucial in the Homebuilding Industry, Where So Much of Your New Business Is Through Word of Mouth. A Variety of Software Tools Can Help You Measure How You're Doing at Making Homebuyers Happy.

Just one unhappy customer can ruin a homebuilder's reputation. And it's often a silent customer that is the source. Customer satisfaction—and excellent customer satisfaction at that—is critical for the success of any homebuilder.

After all, word of mouth is still one of the greatest assets a builder has. And to help you protect those assets, there are a variety of Web-based customer survey tools available—some focused just on homebuilding—that survey the variety of areas contributing to your customer's experience.

Companies that deliver consistently satisfied, loyal customers have lower costs to market and can better service their clients, while spending significantly less on warranty claims. Whether you start one home a year or 15,000, surveys are crucial to your ability to gather three types of data: actionable information, testimonials, and performance measurements.

Actionable Information/Testimonials: This is data required to improve your customer's experience today. The goal of gathering actionable information is to turn a moderately loyal or dissatisfied customer into a very loyal customer. By quickly acknowledging and addressing a customer's concerns, builders can convert even a seriously unhappy customer into a passionate spokesperson for their company.

It has been said that as few as 1 in 20 customers take the time to voice a concern unless prompted. So without an effective customer satisfaction survey, you aren't likely to hear your customers' opinions, and even less likely to be able to fix a problem.

Happy customers are as unlikely to let you know when things have gone great as unhappy customers are to voice a concern. So a good survey tool should also automate and expand your testimonial-collection process by gathering positive feedback.

My company does a great deal of surveying, and has found that approximately half of all the comments we receive are testaments to the customer's positive experience.

We are as likely to hear "Everything went great. Bob and his team are wonderful!" as we are to learn that "We're still waiting on our cabinet hardware to arrive." When such positive comments come in to your employees, post them to your Web site and insert them into your marketing materials.

Performance Measurement: This helps you understand just how well you're doing in the big picture and what you need to be doing to improve overall performance. Using a tool that can monitor your company at the "macro-level" allows you to observe trends, rather than focusing on a single occurrence.

Examples of the types of questions that performance measurement will help you answer are:

• "80 percent of my last 20 customers would recommend us again. What do we need to do to make sure at least 90 percent of our next 20 will?"
• "Casey was my top-performing project manager last year. Where does my bottom performer need to focus his efforts to improve?"
• Performance measurement enables you to set goals, evaluate and motivate your team, and assess the effectiveness of new initiatives.

Who Can Survey Your Customers?

Builders can get the actionable and performance-measurement information they need by collecting it themselves or commissioning a third party to collect it. But when it comes to gathering customer-satisfaction data, unbiased, unfiltered feedback is critical to successfully obtaining useful information.

Historically, the owner-builder or sales manager who has the closest relationship to customers is the least likely to elicit honest testimony. Moreover, designing instruments to capture data accurately and effectively takes up valuable time. Outsourcing customer satisfaction surveys to third-party providers is one possible solution and a growing practice, and, as a result, a number of companies have sprung up to offer these services.

Surveying for Large Builders

Three of the major companies servicing the large homebuilder market are J.D. Power and Associates (www.JDPower.com), NRS Corporation (www.NRSCorp. com), and Eliant (www.eliant.com). These companies will survey a "statistically valid" sample size of a large builder's customers for satisfaction. Typically, this involves a mass mailing of a survey form to recent customers.

Phone and email surveys that drive up response rates are utilized by NRS Corporation. J.D. Power's mail surveys can yield a 25 to 30 percent response rate, whereas NRS clients often see as high as a 50 percent response rate with a combination of mail and phone/email surveys.

Costs for complete customer-satisfaction surveying from a company such as J.D. Power can start around $30,000 per year or more, depending on the markets and customers. These companies also offer consultative analysis and reporting that can profile customer-satisfaction issues and opportunities for large-volume builders, particularly examining trends over long time frames. In addition, J.D. Power offers a ranking service that is specifically designed for builders with more than 75 home closings in one or more of six large metropolitan markets. The detailed results of those ranking studies are available to the builder before the summary results are made available to the public.

Surveying for Small and Mid-Sized Builders

For small and mid-sized builders, new, highly specialized customer-surveying companies exist, such as Woodland, O'Brien and Associates, Inc., delivering highly focused customer-satisfaction surveying with analysis. A comprehensive customer-satisfaction survey and a full complement of reports and analysis can cost from $8,000 to $12,000.

Another new source for objective, third-party customer-satisfaction and -preference surveying is packaged or bundled sets of Web-based software tools, such as Guild Quality, designed exclusively for builders and remodelers.

There are four primary types of information that such software tools can deliver to contractor customers:

• What each individual customer has to say about their experience—"Did my customer have a great experience, or are there any issues out there that I need to know about?"
• How they perform in comparison with other contractors like themselves—"How does my performance compare with relevant industry standards?"
• How their performance is trending over time—"Are the changes I put in place last quarter helping us realize the results I intended?"
• How their individual team members are performing—"Which of my project managers and sales people deserve recognition for exceptional performance, and which ones have issues they need to work on?"

Why High Response Rates Matter

How valuable is it to get a high response rate? If you build 10 to 20 homes per year, or remodel 10 kitchens per year, and you receive survey responses from only five or six customers out of 10 to 20 total, you aren't likely to get an accurate picture of your company's performance. It obviously doesn't make sense to judge your entire company's performance on the experiences of just a few customers.

The key to gaining actionable information and accurately measuring your performance is to get responses from a majority of your customers. Coupling high response rates with a brief, purposeful 20-question survey can yield the information contractors need to get a true, objective snapshot of their businesses.

Regardless of what service or vendor you choose to help you measure and improve your performance, a complete survey tool with high response rates will make a clear difference in driving up referrals, driving down service and warranty costs, and exploiting the cheapest and most effective marketing program in the industry: happy, loyal customers.

Geoff Graham is a part owner of The I'On Company, developer of I'On in Mount Pleasant, SC, and founder and president of GuildQuality, a performance measurement and improvement resource for building professionals nationwide.