New Home Sales

Five Reasons Why ...

Five Reasons Why Home Builders Should Invest In An Exceptional Customer Experience

By Dan White 5 min read

Why would new home builders create just a satisfactory customer experience when they can reap all the benefits of an exceptional one? 

At New Home Star, we’ve always been all about the customer, and surveys are at the heart of knowing buyer needs and desires throughout the home buying process, as we discussed in a previous article. We talk a lot with our team about the importance of driving customer success, but we also flip the script and consider it from the builders’ perspective. Why should builders care about the ins and outs of the customer journey and how buyers are feeling at each stage?

A recent study by Bokka of production builders showed that referral sales improved by an average of 30% within four years of these builders introducing a customer survey program to measure satisfaction at different stages of the building process. Ultimately, measuring and implementing programs to improve the customer experience is an investment with bottom-line returns — and in a competitive market, every sale counts. Here are five specific reasons why a focus on exceptional customer experience pays off.

1. It Leads To More Referrals.

As the Bokka survey statistic above shows, a better customer experience generally leads to a higher number of referrals – and as a builder, referrals can make or break your business.

Think of the last time you bought something online. You probably wanted to check out the website page with the product details and overview, but your gaze went immediately to the reviews section — what’s the rating out of five stars? How many one-star reviews does it have? Is the essay-long five-star review enough to make me want this product so much I’m going to buy it on the spot, right now? 

We always see statistics that show practically everyone is starting their new home searches online these days, and many people also inherently have a distrust of big organizations — they want to hear from buyers themselves how the purchasing experience went. Honest, truthful assessments are critical. That’s why buyers need to have a repertoire of great customer reviews to help show new customers what they can bring to the table. The better experience customers have during the home building process, the more likely they’ll be to leave positive reviews that make prospective customers want to engage with your services. 

2. It Decreases Cost 

The number of marketing channels to drive model home traffic continues to explode. Most of them have accountability metrics to help you allocate your assets, but the traffic that converts best in your model homes matters most. 

Generally speaking, a prospect not accompanied by a Realtor converted at a rate of 1:20 to 1:30. Conversion rates often improve to 1:4 if a Realtor is involved. If the prospect is referred by family, a friend, or a colleague, the closing ratio jumps closer to 1:2. As these conversion rates illustrate, prospects referred by past customers are pure gold. If buyers invest in surveys and put the time and investment into creating a memorable experience, customers will pass the word on to friends and family, thereby increasing referrals and improving conversion rates. We have some tips for how to best talk to customers about surveys and encourage them to participate (more participation = even better overall experience and higher conversion rates) in a recent article here.

When builders and agents track customer experience and use it as a strategic driving method, they’re helping to ensure a strong traffic and conversion pipelines for months, quarters, and years to come.

3. It Increases Profit

A happy, cared-for buyer is a more profitable buyer. Consider a situation with two different buyers closing on the same home. One family has an amazing experience throughout the entire home buying journey, and therefore, they perceive the home they buy as higher quality and feel more pride in the purchase. It’s inherently less likely that they’ll look through a lens of negativity or with a magnifying glass at their new home to identify potential issues. Another family has a less-than-ideal customer experience and is focused more on the commodity than the relationship — they’re looking for issues the first few days versus enjoying the milestone of just living in their new home. If the buyers care less about the experience of the new home and are in a state of distrust, they’re poised to see more things that aren’t right and take a negative stance. If this happens, builders are typically brought quickly back into the fold to address problems.

Another example: it’s the day of walk-through and your customer identifies a few random nicks in the flooring. The construction manager agrees and assures they’ll repair the damage in a way that makes everything blend seamlessly. If you’ve built a relationship of trust and demonstrated concern throughout the home buying journey, the buyer will accept your recommendation and move on. If you haven’t, they’re likely going to assume your solution is the cheap way out that only benefits you. As a result, they’ll likely fight you on it, so they’ll demand a replacement of the entire floor.

These two scenarios illustrate that builders who don’t invest in customer experience in the upfront end up spending money on the back-end and in post-closing for repairs and maintenance. Increased communication and trust leads to better efficiencies and a positive long-term relationship between the customer, builder, and sales agent.

4. It Helps With Builder Reputation

Most good builders are aiming to make a name for themselves and build their reputations. Putting the time in to determine customer satisfaction and what’s working through surveys helps. Research has shown that builders with robust customer survey programs earn more than two-thirds of their sales based on their reputation and relationships with past customers. 

Building a positive reputation through a strong customer service approach also helps builders’ relationships with sales agents. Agents won’t go out of their way to risk reputation with a client by referring them to a builder if they don’t think that builder is invested in their buyer experience. A builder can have a bad transaction and won’t go out of business, but a negative experience with an agent can make or break their reputation and dramatically impact earnings. By working to keep a positive reputation with customer satisfaction strategies like surveys, builders can keep the entire process and the relationships with both the buyer and the agent seamless.

5. It Motivates Team Members

Satisfied customers make satisfied team members! Whether as a Director or on the front lines as a Sales Associate, life is easier for everyone — the sales agent, the customer, and the builder — if you prioritize customer satisfaction and consistent customer surveying.

At New Home Star, we have a culture of winning together, and we find that the more we put customer satisfaction and transparency at the center of what we do, the happier our team members are and the better we perform.

Investing in exceptional customer service is worthwhile; a delighted customer produces more leads in any market condition. Down markets hit all builders hard, but those with strong customer satisfaction scores weather the storm best. Rather than depending solely on market conditions to fill their sails, they have a broad base of highly satisfied customers singing their praises and evangelically referring family and friends whether the market is strong or soft. At New Home Star, we’re passionate about enabling builders to create strong relationships with buyers that last far beyond the move-in date.

Originally published Jan 4, 2022 3:35:12 PM under New Home Sales, updated January 4, 2022

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