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2009 International Builders Show2009 International Builders ShowLas Vegas, NevadaLas Vegas, Nevada

January 20, 2009 3:30January 20, 2009 3:30--5:00 pm5:00 pm

Referral HeavenIncrease Referrals & Reduce Warranty Costs

Carol Smith(719) 481-6247

www.cjsmithhomeaddress.com

Deserve ReferralsDeserve Referrals

• Superior housing value: opinion in customer’s head

• Superior relationship:opinion in customer’s heart

PreviewPreview

• The Satisfaction Message• Align Expectations• Warranty Excellence• Beyond Warranty• Referral Program

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PreviewPreview

• The Satisfaction Message• Align Expectations• Warranty Excellence• Beyond Warranty• Referral Program

An 8% Increase inAn 8% Increase inCustomer Satisfaction =Customer Satisfaction =

• Increase in revenue 8-19%• Decrease in warranty costs 17-24%y• Increase in profits 13-28%

Independent 4-year study,involving 200 communities in 7 citiesby Professor Kenneth A. Merchant, Marshall School of Business, USC

9595--96%96%Optimum level:Optimum level:

balancing cost & return

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Impact of Warranty ServiceImpact of Warranty Service• Eliant Surveys: By year end, more than 41% of a homeowner’s

referral decision is based on satisfaction with warranty

• Woodland-O’Brien: The average builder loses nearly 25% of their homeowners’ willingness to refer during warranty

• Avid Ratings: How well production builders handle warranty service seems to be the dominate factor in customer satisfaction

• Customer Follow Up: Our data shows warranty satisfaction is the greatest influence on referrals after one year in a new home

JD Power & AssociatesJD Power & AssociatesWarrant ser ice 16% (20%)• Warranty service 16% (20%)

• Construction manager 15%• Home readiness 13%• Sales staff 13%• Quality 10%• Price/value 12% (8%)

PreviewPreview

• The Satisfaction Message

• Align Expectations• Warranty Excellencey• Beyond Warranty• Referral Program

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Warranty & Maintenance Warranty & Maintenance ExpectationsExpectations

• Sales• Sales• Design• Construction• Orientation• Warranty

Sales OverviewSales Overview• Product

- Included- Selected

• Quality- Walk the show home with home buyers:- Walk the show home with home buyers: - Inside & out, basement & garage

• Warranty service- Types & duration of coverage- Contact: emergency, standard visits, random requests- Homeowner guide for details

Direct detailed questions to warranty

SelectionsSelectionsSelectionsSelectionsRealistic displaysModel home familiarity“We want you to make informed decisions”

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Frame Stage TourFrame Stage Tour• Plane & shim studs• Glue & screw floors• Pipes protected

Drywall shrinkage repairsSqueaks still possibleVentilation & inspectionPipes protected

• Insulation is nextVentilation & inspectionAfter work in the attic …

Homeowner OrientationHomeowner Orientation• Use, care, warranty• Long term performance• Refer to homeowner guide

f h- Refresh memory….- Here’s where you’ll find….- Good information, including a diagram….- Troubleshooting tips for mechanicals….- Reporting procedures described- Forms

During WarrantyDuring Warranty• Warranty guidelines• Inspection conversations• Repair technician conversations

L tt fi i i t ibiliti• Letters confirming maintenance responsibilities• Updates or reminders• Community workshops/seminars

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PreviewPreview

• The Satisfaction Message• Align Expectations

• Warranty Excellencey• Beyond Warranty• Referral Program

Avoid Avoid BuyerBuyer

AbandonmentAbandonmentThanks for the dough!

Now go away

Drop in Homeowner SatisfactionDrop in Homeowner SatisfactionBetween closing & year end:

8-11% typical,as high as 35%

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Avoid Buyer AbandonmentAvoid Buyer Abandonment• Transition service• Builder-initiated warranty visits• Friendly policies• Long term relationship

Transition ServicesTransition Services• Moving preparation

– Packet– Maintenance & touch up kit

• Move-in day– Check for questions– Survival kit

Reserve parking

• After move-in– Sales visit with thank you gift– Selection consultant visit with

product samples– Construction visit to answer

questions– Reserve parking– Clean drive & walks– Tools & materials– Connection services

(note: includes a liability)

q– Welcome to warranty letter

BuilderBuilder--Initiated Warranty VisitsInitiated Warranty Visits

We’d like to confirm that your home is performing to the standards we promisedpromised

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Reporting ConvenienceReporting Convenience• Welcome requests via

– Email– Company Web site– Fax

Mail– Mail– Drop-off at the sales or construction offices

• Same form for all methods– Included in our homeowner guide– Available at all offices– On the Web site

Email Warranty RequestsEmail Warranty Requests

OnOn--Line Warranty GuidelinesLine Warranty Guidelines

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InspectionsInspections• Explain that you will

- Determine what is needed - Do some repairs?- Issue work orders to trades?

• Research as needed- Talk with colleagues- Review file

• Check cosmetic surfaces

• Review maintenance• List follow-up tasks• Review decisions

InspectionsInspections

– One by one– All at the end

• Reference homeowner guide

Set Repair ExpectationsSet Repair Expectations• Timing• Children• Pets• Furnishings personal items• Furnishings, personal items• Timing• Personnel• Noise• Dust

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Builder ABuilder A

• Warranty repair: 5 days

• Actual: 8 days

Builder BBuilder B

• Warranty repair: 10 days

• Actual: 8 days

• Homeowner: 3 days late • Homeowner: 2 days early

Both homeowners experiencedthe same response time

AvoidAvoidAgreeing to do something you should not do and then doing it badly:

I already did them one favor agreeing todo this. Now they want it done right!

Scheduling RepairsScheduling Repairs• Work date• Administrator

appointments• Direct contact between

• Computer support • Call prior to confirm• Site visit• Oversee workDirect contact between

home owner & technician

• Oversee work

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Warranty RepairsWarranty Repairs• One trip repair

– Read the work order– Take all needed items– Schedule enough time

• Make an appointment• If you are running late, CALL!• Park a clean vehicle in the street in front of the home• Refrain from smoking on the homeowner’s property

Warranty RepairsWarranty Repairs• Check the work area: report cosmetic damage• Protect the work area• Ask to use electricity or water• Use other facilities only if invited to• Conditions inappropriate? Leave & reschedule

ShowmanshipShowmanship

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Bring Bring CleaningCleaningSuppliesSuppliesSuppliesSupplies

in Firstin First

Look for Look for Extras to DoExtras to Do

Leave a Token of AppreciationLeave a Token of Appreciation

• Starbucks• SubwaySubway• Local ice cream shop

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Completion ofCompletion ofWarranty ItemsWarranty Items

• Traditional– Say 30 days– Take 45

• Current best practice– Say 15-21 days– Take 5-10Take 5 10

• Suspend category: safety valve – Homeowner’s schedule– Weather – Back orders

Follow UpFollow Upi• Phone

• Fax• Email• Post card/letter• In person

• Emergencies• Ongoing situations• Incomplete work orders• Complete, unsigned work orders• Complete, signed work orders

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Sample report screens courtesy of Homsoft®

Warranty ID Total Warranty NonWarr Courtesy %Warr %NonWarr %Courtesy

Doors 600 255 2 343 43% 0% 57%

Carpentry 555 350 15 190 63% 3% 34%

Plumbing 519 435 7 77 84% 1% 15%

Painting 458 128 55 275 28% 12% 60%

Drywall 439 219 43 177 50% 10% 40%

Flooring 224 88 22 114 39% 10% 51%

Electrical 214 76 0 138 36% 0% 64%

Timely ReportsTimely Reports

HVAC 206 105 0 101 51% 0% 49%

Windows 176 95 6 75 54% 3% 43%

Siding 134 78 0 56 58% 0% 42%

Cabinetry 129 45 4 80 35% 3% 62%

Landscaping 116 12 48 56 10% 41% 48%

Concrete 109 23 48 38 21% 44% 35%

Miscellaneous 66 0 0 66 0% 0% 100%

Masonry 51 23 0 28 45% 0% 55%

Roofing 39 8 0 31 21% 0% 79%

Appliances 37 0 0 37 0% 0% 100%

Home Owners Assn 36 5 31 0 14% 86% 0%

Tile 35 23 0 12 66% 0% 34%

PreviewPreview

• The Satisfaction Message• Align Expectations• Warranty Excellence

• Beyond Warranty• Beyond Warranty• Referral Program

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Beyond WarrantyBeyond WarrantyLong Term Relationships

Maintenance ServicesMaintenance Services• Within normal visits• Menu (for a fee)• Property management services• After move-in selections

• Post cards exchanged at the sales office– Commonly needed tool or material– Sales person asks for referrals– Prospects would be impressed by this exchange

• Service Sweep: RSVP• Service Sweep: RSVP– Window cleaning– Yard treatment– Filters– Light bulbs in high fixtures– Batteries for smoke detectors– Annuals in spring

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Informational SupportInformational Support• Seasonal newsletters• Email reminders/updates• Seminars/workshops (bring a friend)

– Organic home care– Routine maintenance – Interior design projects – Landscaping techniques– Closet organizing– Tax benefits of home ownership

Social ActivitiesSocial Activities• Community directory (on-line for easy updates)• Meet your neighbor receptions• High–end: catered house warming• Holiday or seasonal eventsHoliday or seasonal events• Community involvement

PreviewPreview

• The Satisfaction Message• Align Expectations• Warranty Excellence• Beyond Warranty

• Referral Program

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Referrals: “You Are Here”Referrals: “You Are Here”• Establish a benchmark• Develop a method of tracking• Set a goal• Establish a data base• Communicate• Track

Referral ProgramReferral ProgramSome customers give referrals without prompting,most need to be asked

RehearseRehearse• Role play at staff meetings• Before, during, & after the sale• All personnel

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A homeowner comments A homeowner comments on the great treatment…on the great treatment…

We’ll provide the same carefulWe ll provide the same careful attention to anyone you refer to us

- Zahra Coulter, Landmark Homes, Calgary

Give ‘emGive ‘emSomethingSomethingto Talk Aboutto Talk About• Sponsor local school’s sports teamSponsor local school s sports team• Be a “green-built” innovator• Participate in charitable building programs• Silent auction model furniture, proceeds to charity • Host holiday events • All of the ‘beyond warranty’ activities

Make It Easy to ReferMake It Easy to ReferReferral methods readily available

• At each business location• Web site• Homeowner guide• Warranty visits• Referral option on voice mail

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After ReferralsAfter Referrals• Express appreciation• Update everyone who gives a referral• Follow up again after the sale• Follow up again after the sale

Tokens of AppreciationTokens of Appreciation• Send something unique

– Special cake– Spring bouquet– Donation to a charity

• Pick a gift from the web site• Pick a gift from the web site• Duplicate gifts to referrer & referree• Repeat gift on the referral anniversary

(Confirm such rewards are allowed by your state real estate commission)

ReviewReview

• The Satisfaction Message• Align Expectations• Warranty Excellence• Beyond Warranty• Referral Program

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ResourcesResourcesHomSoft®, a product of Warranty Management Technology, Burnsville, Minnesota, www.homsoft.com or call Tracey Gundersen, 952-201-5036.

Survey Companies• Eliant www.eliant.com• Woodland-O’Brien www.woodlandobrien.com• Avid Ratings www avidratings com• Avid Ratings www.avidratings.com• Customer Follow Up, Inc. www.customerfollowupinc.com• JD Power & Associates www.jdpower.com

Carol Smith books available from BuilderBooks.com or at 800-223-2665:• Beyond Warranty Building Your Referral Business, 2008.• Homeowner Manual A Template for Home Builders, 2nd ed, 2001. • Meetings with Clients A Self Study Manual for Frontline Personnel, 2002.

Thank you for joining us!

Referral HeavenIncrease Referrals & Reduce Warranty Costs