Keeping the Home Buyer Satisfied : Construction: During the housing boom, many customers were unhappy with the service they got, surveys have shown, but declining business has made builders more attentive.
When Robert Mirman started asking questions of Southern California home buyers in 1988, he found that while most were very happy with the places they had bought, an astoundingly large number also were very unhappy at their builder’s idea of satisfactory customer service.
But 1988 was a boom year. Many residential builders were putting up homes as quickly as they could, with little or no thought to anything but getting the paint dry so their buyers could move in.
And anxious home shoppers were standing in long lines, camping out, entering lotteries--occasionally even getting into fistfights--in hopes of securing a new house.
Soaring prices, the collapse of the savings and loan industry and a weakening economy combined by mid-1990 to end the Southland building boom, and since then, Mirman has found, builders are getting better marks for service and quality from their customers.
The grades for customer service still aren’t much to write home about, a C at best, but they represent a quantum leap from that first set of surveys nearly 3 1/2 years ago, when buyers’ report cards gave the industry an F, Mirman said.
Initially, builders’ consumer service grades improved because they were spending more time fine-tuning their homes and responding to buyer complaints in a slow market. But now many have seen the results of improved customer service, and the smart ones, Mirman said, are making it as much a part of their business as the actual construction of homes.
The 46-year-old psychologist has specialized in consumer satisfaction surveys for nearly 20 years. A former staff psychologist and survey specialist with General Mills Corp. in Minneapolis, he moved to Orange County and started his own company, National Survey Systems, in Irvine in 1984.
He initially concentrated on surveys for consumer products companies such as General Mills, General Foods, Procter & Gamble, Hunt-Wesson and Toyota Motors, but branched out in 1988 when he signed his first builder-client, Shea Homes’ Orange County division. Mirman said he is currently talking to several large apartment builders about doing satisfaction surveys of their renters.
But so far he has been tracking home buyers’ attitudes for a growing client list that currently includes two dozen major home builders. His firm has received survey responses from more than 10,000 Southern California home buyers, and Mirman recently prepared a report on his findings for The Times.
Almost half the respondents bought homes in Orange County, and while his study includes responses from home buyers in six counties--Orange, Riverside, San Bernardino, San Diego, Los Angeles and Ventura--the Orange County experience pretty much sets the tone for the overall findings, he said.
The survey for the first quarter of 1988, with about 400 responses, found 81% of the buyers satisfied with the overall quality of their homes. For the first quarter of 1991, 90% of the nearly 1,200 respondents said they were happy with overall quality.
But only 56% of the home buyers answering that survey in 1988 said they were satisfied with their builder’s customer service. The ranking rose and fell several times during the next nine quarters, hitting 66% in the second quarter of 1990. Then, with new construction activity declining dramatically as builders tried to cope with the recession and a housing glut, customer service ratings began a steady climb to a 75% approval rating in the first quarter this year.
Until the bottom dropped out of the market a year ago, most home builders thought of themselves as people who built homes, period. They had little time and less inclination for chores like keeping their customers informed during the purchasing process and happy after they closed escrow.
But now that the home buyer is driving the sales transactions for the first time since the early 1980s, builders who want to stay in business have discovered how important customer service can be.
“The survey is very useful and very, very valuable to us,” said Ellen Lehman, vice president of sales and marketing for A-M Homes/Southern California in Newport Beach.
“From these surveys, we have found which amenities our buyers see as values, which features they prefer and which designs work and which don’t. We have made a number of changes in the products we use in our homes after reviewing the survey data,” she said.
“But most important is the customer service aspect,” Lehman added.
“We found, for example, that our buyers were frustrated with not knowing the timing of when their homes would be ready. They felt they were not being informed. So we now send out a regular series of letters to each buyer, letting them know if we are on schedule, telling them of any changes in timing and keeping them as up to date as possible on the progress we are making on their home.”
California Federal Bank in Los Angeles isn’t one of Mirman’s clients, but the giant thrift knows well the importance of keeping customers happy.
To that end, it has assigned Vice President John Favuzza to resolve longstanding problems with a Laguna Niguel development that its now inactive home-building subsidiary, California Communities, built during the height of the residential construction frenzy in the late 1980s.
Mirman’s surveys show that buyers in the late 1980s had a lot of complaints about quality, with 48% in 1988 and 54% in 1989 finding more than 10 things for the builder to correct when they went on the walk-through inspection before the closing of escrow. That has dropped to 36% with more than 10 problems during the first quarter of 1991.
But California Communities’ expensive move-up homes, many of which sold for $300,000 and up, have been plagued by leaking windows and other construction-related problems. Homeowners in the Palmilla development have been battling the builder and its various representatives for more than a year to get things repaired, according to Ken Pauker, a physician who purchased his Palmilla home in late 1989.
Favuzza said Cal Fed got directly involved in the situation several months ago when it took back the project from a private building firm that it had retained to complete development when it got out of the building business early last year.
Even through California Communities no longer builds homes, its products still reflect on Cal Fed, Favuzza said. The thrift has taken over efforts to resolve the construction problems, he said, so that the homeowners will have a positive image of Cal Fed when everything is resolved.
Image is everything, says Mirman, and the ultimate goal for any home builder should be a satisfied buyer who would recommend the builder’s homes to friends and relatives.
In his initial study of buyers who moved into their homes during the first quarter of 1988, Mirman found that 80% said they would recommend the builder to others. That number has since climbed to 91%.
That sounds like a lot of satisfied customers, he said, but it also means that one of every five buyers, after spending anywhere from $100,000 to $1 million on a new home, was very dissatisfied in 1988 and that one in 10 buyers is still unhappy after making a significant purchase.
Because his previous experience had been with consumer companies like Toyota Motors, whose dealers help shape the car company’s public image, Mirman said he expected home builders’ customer satisfaction ratings to be determined largely by how buyers felt about their sales agents.
“We thought the sales agents would be the key,” he says with a wry grin. “But we weren’t even close. The No. 1 thing is customer service, especially the speed with which problems are corrected and repairs are made.”
Particularly vexing, survey respondents said, has been builders’ sluggish response to requests for repairs. Only 45% of the buyers in the first quarter of 1988 said they were satisfied with service response times. And only 67% were happy with response times in the first quarter of 1991.
“There is still a lot of work to be done,” Mirman said.
Building Better Service Southern California builders get good marks for quality but need to work hard to improve their customer service ratings, according to surveys of more than 10,000 homebuyers--half of them in Orange County-since 1988. SUBJECT: Overall Quality GRADE: B+ COMMENTS: Performance picked up in the first quarter of 1991. Keep it up and you’ll get an A. SUBJECT: Buyers’ Satisfaction With Their Homes GRADE: A- COMMENTS: Good work! SUBJECT: Sales Agents Kept Buyers Informed GRADE: C+ COMMENTS: Need to work on this! SUBJECT: Loan Officers Kept Buyers Informed GRADE: C COMMENTS: People want word fast on whether they get the loan or not. Your performance has dropped a notch. Speed it up! SUBJECT: How Buyers See Your Attitude About Service GRADE: D+ COMMENTS: Less grumbling! service with a smile should be more than just a slogan! SUBJECT: Overall Performance on Customer Service Items GRADE: C COMMENTS: You can do better! SUBJECT: Overall Satisfaction GRADE: B+ COMMENTS: With some work on customer service this could be an A!
Overall quality of home % satisfied ’91: 90%
Customer Service Response Time % satisfied with builders’ customer service response time ’91: 67%
Customer Service Yields Referrals A strong correlation between buyers’ satisfaction with overall customer service and willingness to recommend builders’ homes to friends. ’91, Buyers would recommend to friends: 91% ’91, Overall customer service: 75%