The Difference Between the Best Builders and the Pretenders

“There are only three metrics that tell you nearly everything you need to know about your organization’s overall performance: employee engagement, customer satisfaction, and cash flow.” – Jack Welch, former CEO, General Electric

By BOB MIRMAN

I recently reviewed our list of over 150 builder clients, ranked in order of their customers’ willingness to recommend them to a friend. There are some startling differences between the highestrated vs. lowest-rated builders:

For 2018 YTD, the top 26 percent of our clients consistently receive ‘Willing to Recommend’ (WTR) scores over 90 percent, with many over 95 percent.

  • Our all-client average WTR score has been climbing over the past two years and is now at 86 percent, its highest level in over a decade.
  • We have several builders with WTR scores in the 50-60’s, with one of our newest clients in the 40’s (ugh!).
  • The top-rated builders or divisions earn consistently high ratings across all their divisions and communities.
  • The lowest rated builders typically have 1-2 average-rated divisions or communities, with the remainder all poorly rated (below 75 percent).

The highest-rated builders SAVE money: They get sued much less often, have lower warranty-reserve requirements, save significant money on lowered (risk-based) insurance premiums, and sell more homes from customer referrals. Some offer two to three year warranty programs, which generate additional sales.

The lower-rated builders SPEND more money on fighting lawsuits, more time wasted with resolving customers’ home quality and service issues, losing potential sales resulting from a poor local and social media reputation, while wasting huge amounts of money on higher insurance premiums.

Performance Differences

Compared to builders with the lowest WTR scores and actual sales-from-referrals, our higher-rated builders perform better on key issues which have been found to drive homeowners’ willingness to recommend their builder (Source: USC, Marshall School of Business). Here are the keys:

  • Extremely high customer ratings for proactive communication of construction and loan status.
  • Deliver homes clean and complete, in the promised time.
  • Provide a speedy response to warranty requests, with repairs right the first time.
  • Consistently follow Eliant’s “Guidelines for Managing Customers’ Expectations” (Request a copy at kimberly@eliant.com).
  • Have a company or division leader who is visibly involved in promoting the consistent delivery of an extraordinary customer experience: this leader holds staff, vendors, and trades accountable for stronger customer satisfaction ratings, thereby ensuring more active employee engagement.
  • It’s all about accountability: Our highest rated clients follow Eliant’s “Guidelines for Home Builder Bonus Comp Plans” which integrate customer evaluation ratings into compensation bonus plans (Request a copy at kimberly@eliant.com).

To be totally honest, the differential between our highest and lowest-rated builder clients is rather discouraging to my team and me. I’m in the business of improving builder team behavior, not conducting surveys. We ring a bell in our office when a client shows a strong improvement in customer ratings; it’s a source of pride and defines our character, and our culture. So, I take it personally when a poorly rated client ignores our suggestions, turns a blind eye to opportunities to hold staff and vendors accountable, or has “no time” to set up a complimentary staff-training webinar to share best practices or proven tips and techniques.

Take a look at your team’s performance on the six keys above, and then re-read the quote above from Jack Welch. Are you a top builder… or a pretender?

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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