• From: BUILDER 2011
  • Posted on: March 11, 2011
  • By: Jenny Sullivan
  • Shea Homes was feeling pretty satisfied when it unseated Pulte last September to claim the No. 1 spot on the annual J.D. Power and Associates New-Home Builder Customer Satisfaction Study. But it didn’t stop there. The family-owned builder has now joined ranks with household brands such as Lexus, Cabela’s, The Ritz-Carlton, and JetBlue Airways in a J.D. Power and Associates list of America’s 40 best companies for customer service. And it’s the only home builder to make the cut.

    “Today’s consumers expect companies to do it all and have the right people, the right presentation, the right price, the right product, and the right process,” Gary Tucker, senior VP of global services and emerging industries at J.D. Power and Associates, said with the unveiling of the J.D. Power 2011 Customer Service Champions list. “Brands identified [with this recognition] are getting all of these things right. Some are even outperforming the best of their peers in meeting heightened customer expectations.”

    Shea Homes clearly is at a time when recessionary conditions have made it tougher for some anemically staffed builders to maintain high service standards. “One thing Shea has done successfully is to maintain a level of superior customer service consistently across multiple markets,” Dale Haines, senior director of the real estate and construction industries practice at J.D. Power, observed of the home builder, which operates in California, Arizona, Nevada, Colorado, Washington, North Carolina, and Florida. “I suspect that being a privately held builder might provide them more flexibility in decision making.”

    In compiling its list, J.D. Power evaluated more than 800 brands from 20 major industries, awarding points for exceptional performance in five key areas—people, presentation, price, product, and process. Scores were aggregated based on customer feedback, opinions, and perceptions gathered primarily from J.D. Power’s syndicated research. The company’s quality and satisfaction measurements are based on responses from millions of consumers annually.

    For home builders in particular, Haines said, good customer service can have a positive ripple effect on other areas of the business. Some examples:

    Word of mouth advocacy and referrals. “We know from our data that advocacy and referrals can be a very potent and powerful sales tool,” Haines said, insofar as delighted customers tend to serve as an extended sales force. “When there are few eligible prospective buyers in the marketplace, every one of those is vitally important. We also know that a customer who is referred by another customer, all things being equal, is less likely to cancel a transaction. So this has a positive effect on cancellation rates and reduces the overall cost of sales.” J.D. Power’s research supports this point. Among customers of brands in the top 40 list, 62% said they “definitely would” recommend the brand to family and friends, while just 23% of customers of other companies said the same. Furthermore, 58% of customers patronizing the top ranking companies said they “definitely would” repurchase products or services from those brands, compared with just 36% of customers of other brands included in the report.

    Operational efficiency. High customer satisfaction also tends to drive high levels of operational efficiency, Haines pointed out. “For builders, one of the keystone performance indicators is being able to deliver a home on the date it was originally promised in a state of 100 percent completion. If that doesn’t happen, it’s almost impossible to delight that customer. If you are able to do that, it enables very high levels of customer satisfaction and significantly reduces the amount of warranty and rework.”

    Brand reputation. While brand image doesn’t carry the same impact in residential construction as it does in, say, fast-moving consumer products (builders tend to brand their communities rather than themselves), high customer satisfaction does tend to drive more sales consideration as a result of positive brand reputation. Buyers searching for new homes typically narrow their focus based on location, price, and design. ”It’s where do I want to live, do I like how the house looks, and can I afford it,” Haines said. “But for builders with strong customer satisfaction, there is a brand pull. Instead of a buyer saying, ‘I’d like to live here. Let’s see who is building in this area,’ they might say ‘Where is Shea building? Let’s go look there.’ Positive brand reputation drives consideration at the upper end of the marketing funnel.”

    Just as good customer service affects virtually every aspect of the busines, it must be a priority for every aspect of the business.

    “This is not a recognition we sought. It’s not something you apply for,” Robb Pigg, Shea Homes’ VP of operations, wrote in a recent blog post on the company’s website. “It’s the voice of the actual customer speaking about the experience they had when they visited a Shea Homes community, interacted with one of our sales team members, made a decision to buy a home and have it built for them. It’s the experience they had with our construction team, the designer in our Design Studio, the mortgage and escrow representative. It’s about how we did when we built and delivered their home. And finally, it’s how the home lived and performed in the time that followed their closing.”