Sales from Referrals: Two Overlooked Opportunities

You need more than home quality to drive sales from referrals

By BOB MIRMAN

Twisted my knee a couple of days ago. Not sure how. Probably doing something extremely strenuous, like getting into my golf cart. So, at 5:25 this morning, I limped out to my community spa for some whirlpool action. Turned the timer-dial to 20-minutes. Nothing happened. No bubbles, no water-jets, no action. Rotated the dial back and forth. Turned the emergency switch on and off. Cursed rather loudly.

In frustration, I hit the dial with the palm of my hand…and the bubbles erupted. I made a mental note to start with that palm-strike maneuver next time.

Then I noted on the sign that the spa is programmed to come on at 5:30 each morning. It was exactly 5:30 and my palm-strike was coincidental to the auto-start-up.

But for a moment, I had been incorrectly convinced that my palm-strike was the determining element. Psychologists call this ‘superstitious reinforcement’ because the event (water-jets) was inadvertently paired with a meaningless action (palm-strike).

Does Home Quality Create Referrals?

That made me think about how homebuilders often misinterpret their actions as having an impact on homeowners’ referrals.

Example: Construction quality is certainly a primary factor in the customer experience.

But a quality-built home is promised by every builder and totally expected by every homebuyer. So, when high-quality is delivered, the buyer receives exactly what he/she expected and is, therefore, simply satisfied. BFD.

Influential, passionate referrals do not come from satisfied customers but from customers who are DELIGHTED with their experience.

Poor home quality creates a lowered likelihood of a referral, but a high-quality home does not create homeowner referrals.

From our joint research with the USC Marshall School of Business, there is clearly a short-list of builder-team behaviors which drive ‘Willingness to Refer:’ Proactive communication of construction progress, job site cleanliness, and repairs right-the-first-time are the three which are given the most attention. In fact, most of my articles and training deal with these three ‘Referral Drivers.’

But for driving future sales from referrals, here are two opportunities often overlooked:

1. Consumers very often turn to a new home versus a resale because of the desire to personalize their home with new products and technologies initially unavailable in a resale home. The design selection process is an integral part of the emotional experience.

Design consultants do an incredible job in selling options and upgrades, but a terrible job in selling the value of their service. It’s consistently one of the poorest rated elements on our buyers’ evaluations.

Customers need to be reminded of the value of this service, including advice they will be receiving regarding color selection and choices of appliance models & flooring; one-stop shop for all options; additional warranty protection; and timing of installation.

USC tells us that the perceived value of the design selection experience is a critical driver of ‘Willingness to Refer.’

2. Speaking of emotional experiences, a recent survey found that 34 percent of recent buyers said they had been “reduced to tears” during their home purchase (Homes.com; 2018). Wow. No doubt, many of these tears were the result of stress and anxiety during the mortgage experience.

The number one thing you can do to improve the mortgage experience is to maintain proactive communication of loan status. This is not rocket science. Keep your customers updated before they have to call for a status report.

Home quality is part of your customers’ expectations, but don’t expect it to drive sales from referrals.

Bob Mirman is a psychologist and founder/ CEO of 34-year old Eliant, the building industry’s largest firm specializing in managing the customer experience. He may be reached at contact@eliant.com

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