There are some things in life that will always be a mystery. For instance, why are there interstate highways in Hawaii? If 7-11’s are open 24-hours a day, why do they have locks on the front door? Why do the lights always turn red when I’m in a hurry, but are invariably green when I’m looking for an opportunity to stop and write something down? And, why am I obsessed with hardware stores?

 

OK, I admit it. I have this thing for roaming the aisles of hardware stores. I love the gadgets, the new tools, the unusual, the forgotten. It takes me 45 minutes to buy a light bulb.

 

My garage is a virtual cornucopia of hardware heaven. I have more tools than Bob Villa.

Unfortunately, I am as handy as my uncle Morty from Chicago, who still brags that he is so unhandy that the only tools he owns are a de-clawed hammer and a screwdriver with a handle that rotates when he tries to screw something (up).

 

Anyway, there is a Home Depot about 6 minutes from my house. It’s huge, with aisle after aisle of unimaginable ecstasy. You would think that someone suffering from “Bi-

Polar-Hardware-Disorder” (BPHD) would choose to go here at every opportunity.

 

But, 10 minutes from my house is a small, local True Value Hardware store. The selection of products is probably 2% of Home Depot’s inventory, and True Value’s prices are at least 10-15% higher. Unlike Home Depot, they don’t offer classes in “Macramé and You” or the “Science of Grout Cleaning.”

 

But, True Value is still my first choice when my wife threatens to cut me off unless I finally purchase and hang that new towel rack in the bathroom.

 

Here’s why I go there first: Within 2 minutes after walking into this True Value, I am almost always approached by one of the blue-vested employees and asked if I need any assistance in finding an item. When I tell him what I need, he doesn’t just say “It’s in aisle J,” he says, “Follow me!” and off we go. Once he finds the item, he sometimes asks me what I’m going to use it for and – if he sees a better alternative – he tells me why this option is a better choice (and he never giggles about my naiveté). In fact, I sometimes walk out with drawings.

 

I don’t go to True Value for its products. Or for its prices. Or because it’s convenient to my home. I go there because I appreciate the service. It’s the experience that counts to me. The staff acts as if they are ‘consultants’ and they appear happy to share their expertise. One of these ‘consultants’ is a one-armed guy who bills himself as the “One-Hand Handyman,” and he has forgotten more than I will ever know about home repair.

 

I am obviously, a loyal customer of my local True Value Hardware store. Not because I shop there frequently, but because I choose to go there first and because I pro-actively tell my friends (and now you) to go there, as well.

 

Lessons for Home Builders

The reasons that consumers buy a home are different than the reasons why they will refer their builder to a friend.

 

The buying decision is controlled by the consumer’s perception of the home’s price, size, design, lot size, and merchandising. However, none of these factors has any bearing on the homeowner’s decision to refer their builder to a friend.

 

The factors which influence the buyer or home owner’s decision to refer a friend vary during each phase of the move-in and ownership cycle. Very early on, during the ‘move-in honeymoon’ phase, “Installation & Workmanship” is the primary factor in the referral decision (Our “Move-In Survey” asks the new buyer to evaluate 25 issues in this category10-30 days post move-in). In fact, almost 30% of the early referral decision is based on this ‘initial quality’ perception. The other 70% is based solely on process-related (i.e. experience) issues like the options process, home readiness, treatment by construction personnel, sales process and personnel, etc.

 

However, as the new buyer rapidly evolves into a homeowner, a rather dramatic shift in priorities takes place. Between 1-5 months after the move-in date, buyers turn their full attention to one primary issue: Customer Care. In fact, by the 10th month after move-in,

54% of the referral decision is based entirely on the buyer’s experience with the

Customer Care process and personnel (University of Redlands study, “Homebuyer/owner

Referral Drivers”; March, 2003). Homeowners will refer their friends to your firm – not because of your product – but because of the experience you offered during the sale, closing, and particularly the after move-in service of their home.

 

No matter what kinds of homes you are building, no matter where you build, no matter what segment of the market you are targeting, your buyers consider you to be a service company. It’s the quality of this service – from sales, design, options, lender, closing, and customer care reps - that convinces homeowners to send their friends and relatives to your doorstep.

 

While all of our 180 clients inevitably demonstrate significant gains in buyer satisfaction ratings and rankings, some do a better job than others. From working with Greth Homes,

MBK Homes, US Home (Denver), John Laing Homes (Colorado Springs), and other best-of-the-best builders, we have found some common factors in the approach these successful builders take. Here my suggestions:

 

1.       Within each department, concentrate on improving the 1-2 factors which have the strongest impact on homebuyer/owner referrals. Do not take a ‘shotgun’ approach and try to improve everything at once. The ‘rifle-shot’ is more effective in the short and long run.
 

2.       Develop an “Immediate Response System” (yes, that’s IRS) to deal with issues raised in buyers’ surveys. To support this requirement, we send out a computercopy of every buyer’s survey via e-mail to each subscribing manager within 24-hours of receipt. This immediate information flow allows managers to quickly contact a homebuyer/owner and resolve (or at least respond to) his concerns.
 

3.       Develop an “Above & Beyond” (A&B) program. Each department or team identifies 1-2 actions that all employees or contractors will take to exceed most buyers’ expectations.
 

4.       To maintain your employees and contractor’s attention on those priority behaviors which will significantly impact homebuyer satisfaction, it is imperative to recognize and reward those who comply with these new performance requirements. Our survey reporting process provides a monthly rating of each customer-contact person, in rank order for ease in identifying and rewarding the “Best Practices” performers. This report is automatically e-mailed to every representative.
 

5.       Buyers’ and homeowner ratings and comments should be discussed at every company and department meeting. This will continually remind each employee to look at the world through the buyer’s eyes.
 

6.       Finally, every department should operate as if they were a service organization first, and a home builder second. For instance, since buyer loyalty is based on the experience offered by the builder, the role of the sales person should be to sell each home shopper a new home today, and to sell every buyer their next home as well.

 

Whether you are selling homes or hardware, the factors which determine consumers’ loyalty are the same. Pay attention to your homebuyer’s experience and your buyers will reward you with their referrals and repeat business down the road.