What benefits does a home builder receive
from having satisfied customers? Knowing the effect on profitability
is essential for putting customer satisfaction in the proper
business perspective. Here’s a challenge for you - find
facts at your own company that substantiate the importance of
customer satisfaction and the benefits you receive. Use the topics
below as a starting point. Since customer satisfaction affects
everyone in the company, involve everyone in the process.
Lower Marketing Costs
Prospects that contact you on the basis
of referrals require no associated marketing costs. The more
satisfied your customers are, the more people they tell about
you and the more enthusiastic the message. Buyers are naturally
attracted to builders with a good reputation. Since opening a
retirement community, referral sales for US Home, Freehold, NJ.
have increased to over 30%. During this same period their marketing
costs have been reduced by a similar amount.
Satisfied customers are also important
because the alternative, dissatisfied customers, causes severe
damage to a builder’s reputation. Dissatisfied customers
not only spread the word to more than twice as many people as
your most satisfied customers, they do it with more passion.
One dissatisfied customer can wipe out the good will of ten satisfied
customers. No amount of marketing can recover
Lower Selling Costs
There is no better qualified prospect than
one referred by a satisfied customer. What makes them so qualified
as a potential customer is that they pre-qualify their builder
even before they visit a model home. Bases on referrals and reputation
alone, Shea Homes, San Diego recently sold-out a first release
in a new community a month before the models were finished!
Higher Sales Conversion Ratios
With referrals, sales conversion ratios
are much higher and sales cycles are shorter. For Triple Crown,
Harrisburg, Pa, conversion ratios on referral sales are over
90%, much higher than their average prospect. To help encourage
referrals, Triple Crown offers homeowners a $500 incentive when
a referral buys a home.
Lower Warranty Costs
On identical homes, satisfied customers
have less callbacks than those who are less satisfied. One East
Coast builder tracked callback and customer satisfaction data
on a community of similar homes built with comparable quality.
Customers with homes that were not delivered on time had lower
levels of overall satisfaction. Although their decreased satisfaction
levels were not originally caused by poor product quality, these
homeowners averaged five times the warranty callbacks as other
more satisfied homeowners in the community.
When the benefits of satisfied customers are well understood, the next step is to examine the effect of a satisfied customer on the bottom line. Put a dollar value on a satisfied customer by using the "What's a Satisfied Customer Worth?" calculation form
. To receive a free copy call (800) 898-2842.