The Secret to Client Loyalty? Overdeliver
A product’s success depends on meeting or exceeding customer expectations through five critical user experiences. Here’s how this truth impacts home sales.
This is Sam Rashkin’s second in a series of articles based on his second book, Housing 2.0: A Disruption Survival Guide. It is intended as a roadmap for high-performance builders to become the most successful in the industry. Learn more about the Housing 2.0 program here.
It was 2008, and the industry I love, housing, was confronted with another downturn. Yes, downturns are inevitable, but this one was devastating. In fact, the bottom had virtually fallen out, with an 85 percent reduction in housing starts in many of the nation’s largest markets (e.g., Arizona, California, Florida, Nevada and Georgia). They call the 2007 to 2009 period “The Great Recession” for good reason.
I was national director for ENERGY STAR Certified Home during this period, and we were in the midst of moving the housing industry from Version 1 to Version 2 specifications. This was the first significant program change in a decade. The key new mandatory building science requirement was the Thermal Bypass Checklist, which identifies comprehensive air barriers throughout the home. I had just finished a series of West Coast 1-day training courses on the new specifications and boarded my return flight home exhausted. And then I bolted up in my seat.
After months of observing residential projects across the country, urgency for the housing industry to deliver a total user experience consumed me. It was a sudden moment of clarity that high performance alone would not have a meaningful impact on the success of the builders I had come to know and care about.
In other words, our massive effort to transform home builders to one more critical building science best practice would ultimately have minimal impact on their business outcomes.
I realized the success of any product depended on meeting or exceeding customer expectations for five critical user experiences:
- Company: Shared values.
- Design: Product appearance.
- Performance: Product functionality.
- Quality: Product fit, details, and durability.
- Sales: Support and service.
Although this framework represents a personal assessment, subsequent research validated a new user experience imperative. However, my generic product user experience framework had to be tweaked for housing. Decades of observations suggest consumers know very little about home building companies until it’s time to buy. This is the result of two factors unique to the industry.
Figure 2. Housing user experience optimization scores for typical builder
First, research suggests people only purchase homes about three times during their lifetimes. Moreover, more than 80 percent of homes purchased are existing homes where the name of the home building company is rarely known, typically not a prominent factor in the decision process, and not involved in the transaction.
Of course, this begs the question: Why is the home builder company not prominently featured on an existing home? We will put this aside for now and discuss it in a later article on owning customers for life.
Second, there is a general lack of brand recognition for most home builders. This is because they are often small regional companies and are not well-known outside their communities. The large national builders, meanwhile, often have too much variation in their product among geographically dispersed divisions to have a strong, consistent corporate brand promise.
Given such infrequent life moments where consumers are engaged with a housing industry not grounded in strong brand awareness, home buyers usually do not begin the process with significant “Company” expectations. Thus, the “Company” experience doesn’t translate to homebuying as it does to most other products. Instead, it becomes part of the sales process where an individual builder has to earn home buyers’ trust that their company delivers great product value and service.
The well-known real estate industry sales mantra “location, location, location” suggests that the community experience unique to housing may be the most important when buying a home. And this makes sense, since you can always upgrade a home, but the neighborhood amenities and culture that profoundly impact everyday life and future value are completely out of each resident’s control. Thus, “Community” replaced “Company” when developing the housing user experience benchmarking tool introduced in my first book, Retooling the U.S. Housing Industry (see Figure 1).
If housing is the ultimate consumer product, it could be surmised that the industry is best positioned to maximize profits by meeting and exceeding user experience expectations. And since home buyers are getting exponentially more informed, it also stands to reason that home builders cannot deliver a “3-star or less” user experience without significant negative impact on their ability to attract new customers and charge higher prices. Thus, home builders need to score well on all key user experiences.
Figure 3 Housing user experience optimization scores
This epiphany was a wake-up call. The home user experience I was observing on projects representing 10,000s of homes was substantially sub-optimized from widely available best practices. My user experience benchmarking profile for the industry at large, based on decades of extensive engagement (see Figure 2).
Admittedly, I am a tough judge. But I let the low user experience scores reflect a belief there is a huge opportunity for improvement and better business outcomes. It is always best to be positive.
Starting with this average benchmarking score for a typical home builder, all that would be accomplished successfully promoting ENERGY STAR Certified Home certification across the nation is a small bump in the “Performance Experience” as shown in Figure 3.
However, observations from other industries suggest devastating outcomes where businesses fail on just one key user experience. Consider these examples:
- Company experience failure: When Volkswagen did not accurately report diesel emissions and created huge litigation expenses and a crisis of confidence in their brand.
- Design experience failure: Where Toyota’s first uninspired Prius had weak sales compared to impressive growth following the introduction of a much more unique and compelling design appropriate to this truly transformational vehicle.
- Performance experience failure: When Samsung Note 7 smartphones had problems spontaneously catching on fire and had a long battle winning back customer confidence.
- Quality experience failure: When more than 1,100 people were sickened by tainted food served by Chipotle that has led to a prolonged period to regain substantial sales lost.
- Sales experience failure: When Wells Fargo bank got caught and incurred huge litigation costs overselling investments to meet quotas rather than serve their customers’ best financial interests.
All of these failures and their huge impact on business bottom line outcomes demonstrate how critical it is to meet or exceed expectations for all key user experiences. Thus, even though I had the privilege to lead a national program successfully marching toward 2 million-plus ENERGY STAR Certified Homes, my larger goals for moving the industry to great housing were not close to being met.
Figure 4 Housing user experience optimization opportunity with Housing 2.0
This awareness has led me to a comprehensive framework for consistently optimizing the housing user experience. Like any new concept, this user experience optimization framework needed to be put through an effective vetting process. This led to more than five years of workshops with hundreds of housing industry executives based on my first book. This engagement effectively served as a personal research project that has led to my substantially revised and updated second book, Housing 2.0: A Disruption Survival Guide.
And like most endeavors, it is a journey that never ends. The guidance provided is intended to help high-performance housing professionals get on their own personal optimization path that hopefully looks like the benchmarking scores shown in the figure above.
Observe that the goals shown are not perfect 5s; they never should be. It is good form to always leave room for continuous improvement. Most important, substantially improved business metrics can be expected as leaders in housing user experience distance themselves from laggards. I invite you all to start your own journey and be part of the Housing 2.0 program.