There’s nothing new about the concept of delivering great customer experiences.
But the term itself has achieved buzzword status over the past few years within the home building industry. And with companies like Amazon, Google, and Apple embracing it to dominate entire industries, builders worldwide are taking notice.
So what exactly does everyone mean when they talk about the customer experience, and why should home builders be taking notice now?
Harley Manning, one of the nation’s foremost leaders on the topic, defines customer experience as “How customers perceive their interactions with your company.” And in his book Outside In, he makes a clear distinction between customer experience and customer service.
We need more than just a net
Consider a high-flying circus act. Manning describes customer service as the net that catches the actors should anything go wrong. The customer experience is the entire performance perceived by the audience. For those of us in the building industry, investing in customer service is a no-brainer. There are many moving parts and a plethora of things that can go wrong (especially when we’re put at the mercy of the trades). So we install a net to improve customer service scores.
But relying on this customer service net is a short-sighted solution. We need a systematic overhaul in order to meaningfully improve the customer experience. It takes a cultural transformation, where everyone in the organization is accountable to customer experience metrics.
For home builders, transforming the culture can be a monumental undertaking
We face real challenges from an industry strongly set in its ways. It’s an industry where the sales funnel is almighty: Marketing is responsible for leads; Sales is responsible for contracts; Construction is responsible for delivery, and Warranty is responsible for customer service.
But change is coming. We’re at a critical point when organizational silos just like this are crushing companies from within.
Here are 7 reasons why the customer experience matters now more than ever:
1) It’s the Age of the Customer
The graphic below distributed by Forrester illustrates the different eras and leading companies during each age. This translates perfectly to our industry and paints a clear picture of the history of home building.
- The Age of Manufacturing fundamentally shaped how homes were built and sold at scale. (Competitive Advantage: builders that were first-to-market)
- The Age of Distribution had a huge impact on the industry, specifically regarding building materials and supply chain management (Competitive Advantage: builders that took advantage of resource distribution to increase efficiencies & reduce costs)
- The Information Age and digitization helped redefine the organizational structures of home builders. We began to standardize processes, options, pricing, etc.
- The Age of the Customer has now put the information (and power) into the hands of the buyer. Customers now know about and expect great experiences tailored to them.
“The consumer is in control, and that’s changing the industry,” says Linda Mamet, vice president of corporate marketing for Irvine, California-based TRI Pointe Group. “They are using their own tools (outside of what we builders produce) to do their research. As a result, they are making decisions before they even engage with us.” Open access to information via the internet and social media has put the power into the hands of the buyer. Customers know what great experiences look like, and they expect them from builders.
2) Home building is becoming commoditized
Look at nearly any builder’s sales and marketing materials and it is obvious that quality, craftsmanship, design, cost/sq.ft, and energy efficiency are de facto Unique Selling Propositions. With standardized (and digitized) processes combined with high turnover in the industry, there is nothing really unique about most builders’ offerings. The location could be considered an exception, but with such fierce competition from developers, land advantage is difficult to sustain in the long term.
In an industry that is more focused on chasing competitors than breaking the mold, we’re creating a sea of sameness for our buyers.
“A quality product at a good value in a preferred location is the cost of entry, not a differentiator unless it is substantially better in one or more of those areas,” says Rob Krohn, franchise digital marketing manager at Epcon Communities Franchising in Dublin, Ohio. “But how you and your company treat people, which either comes from within or originates from the top, … is something that customers really feel and will set you apart.”
3) Disruption is coming to the industry
For those of us in the industry, we’re always wondering what will be the next big thing to come along. And we hear about new technologies like virtual reality or smart home tech and wonder how we can add them to our offering to keep up. But something bigger is coming. In a 2016 article about industries that are primed for disruption, Fortune listed construction as No. 1 and real estate as No. 4.
Tom Walsh, vice president of Maryville, Tenn.-based Clayton Properties Group, couldn’t agree more. “This industry is absolutely ripe for disruption,” he says. “When you look at housing, there are so many opportunities to improve efficiencies, minimize waste, and use technology to improve the customer experience. The dream of homeownership is real, and buyers deserve a world-class experience that is personalized and memorable.”
The disruptor may be factory-built homes, 3D printing, or something completely different, but it will fundamentally shift the way we sell and build homes. And you can bet that a great customer experience will be at the center of the disruption.
4) Millennials demand great experiences
This is the one everyone can agree on. The Millennials are coming, and we as builders must be prepared. For this generation, great customer experiences are the norm. They expect it for a $9 latte, and they demand it for a $300k home. The information and power are in their hands.
“Their home buying experience should be stellar,” says Sonja Sims, Atlanta-based Beazer Homes’ director of marketing. “Millennials are looking for real experiences. Sugar coating won’t work with them. They see through the fluff.” And because they live their lives on social media, they’re going to tell the world about their experience.
5) Referral programs are a thing of the past
Most builders would probably agree the $500 referral program is all but dead already. But the new referral is something much more powerful, yet completely underutilized by builders. In its place is something more powerful, yet vastly underutilized by builders: the unbiased review, posted online, also known as user-generated content. User-generated content is what made Amazon the global leader it is today. Reviews are posted for all to see, and they’re the first thing buyers look for when vetting builders. Mamet says, “Our buyers are going to generate content about us; we might as well embrace it.”
6) Improvements to the customer experience increase profitability
Great customer experiences have a proven impact on the bottom line: Shorter sales cycles, decreased warranty claims, lower cost per sale, lower employee churn, and good customer reviews are benefits too large to ignore. Improving the customer experience is a long-term investment that delivers measurable value to the entire organization. It takes time, but it’s worth it. “Enduring customer satisfaction often involves trading short-term gains for the long-term success of the organization,” says Krohn.
7) It’s the right thing to do
Becoming an organization that’s obsessed with the customer experience has other tangential benefits which are difficult to measure, but easy to recognize. We create a culture where people are rewarded for doing the right thing in life, as well as business. This leads to greater happiness and job satisfaction. Not only is it the right thing to do, but it is also a powerful recruiting tool.
These are just a few reasons why the customer experience matters now more than ever for home builders. Just look through articles published by Harvard Business Review, McKinsey, or Forrester, as well as here on CustomerThink, and it becomes clear that transformation to customer-obsession is no small undertaking. Fortunately, there are a wealth of resources available to help with the customer experience strategy. It’s just a matter of finding the right partners to help discover them.