Ralph Baja is National Director of Customer Relations and Process Improvement for Century Communities. Builder and Developer magazine sat down with him to discuss the warranty service experience for customers, which he refers to as the final frontier for improving ROI.
Builder & Developer: Ralph, builders are looking for new ways to enhance margins. What strategies has Century Communities been following?
Ralph Baja: Well, I’m convinced there is a final frontier to conquer in homebuilding. No, it’s not manufactured homes, Tesla solar panels, or standard “shiplap.” It’s much more profound and simple than you think.
The answer: it’s your warranty group.
It’s your warranty team that takes care of your customers after the closing, whether it be a dedicated group of warranty professionals or superintendents that handle both the building and servicing of a home. Our industry’s greatest opportunity to generate repeat and referral sales – and improve margins – is in the way we take care of our customers after key turnover.
B&D: Aren’t most homebuyers happy with their purchase?
RB: Absolutely! But, the reality is that most builders focus a lot of energy upstream – their land pipeline, opening communities, and delivering closing goals – while the energy generally wanes after key turnover. According to Eliant’s research, post-close surveys indicate an average 10 percent drop in home owners’ “Willingness to Refer a Friend” during the first year after move-in.
Our team believes that to be a builder with staying power and one that genuinely cares about its brand a greater emphasis must be given to the post-close customer experience.
B&D: What specific elements of the post-close experience deliver the biggest bang for the effort and cost?
RB: There is a business case – a ROI – for exceptional warranty service.
Let’s use the new car purchase experience as a good example. There’s a honeymoon period of the driving experience before inevitable service is required.
What’s the service experience like?
- Was setting the appointment easy? Were the times convenient?
- How many times did you have to bring your car in? Once, or a second time after parts were ordered? (It’s always nice if parts are available for same-day service.)
- If you had to leave your car, did you have to get a rental, or did the dealership arrange for a loaner car? (You’d probably appreciate it more, if they did).
- Did the dealership proactively communicate the status of the repair, or did you have to hound the warranty rep to get the repair status of the car?
- Did you get a cleaner car than what you arrived in? (Vacuumed floor mats, car washed.)
We’ve all had great and not-so-great experiences, and with either case we’ve either felt greater brand loyalty … or not. Let’s face it – bad service erodes trust, and will lead to brand abandonment and the poor experiences being shared widely. To be a best-in-class builder, the warranty experience must be what we’d expect for our own home – simple, done right the first time, and clean.
B&D: How does this impact the builder’s ROI?
RB: Well, let’s take a closer look at the business case for exceptional post-close service:
- Eliant states that the #1 driver of ‘Willingness-to-Refer’ is the customer service experience.
- Look at your warranty team as your secret weapon. View them as your “Post Close Sales Force.” Warranty service done well will bolster repeat sales from referrals. Increased referral sales give builders an opportunity to reduce Advertising and Marketing budgets, driving down the cost to capture buyers significantly.
- Homeowners’ perception of the warranty rep’s service will drive their overall perception of your company. They are one in the same.
- Hire people with extremely good people skills who genuinely care for others. Yes, knowing how a home is built is important, but being able to connect with a buyer – I’d argue – is much more critical.
- Here is the ROI Bottom Line: Get with your finance team and graph homeowner satisfaction against warranty spending …and litigation costs. Our statistical analysis has confirmed a direct correlation between high homeowner satisfaction ratings and lowered costs of doing business, including a lowered threshold for warranty reserves and reduced litigation exposure. Discuss this with your insurance firm. I know the results of your analysis will surprise you.