Every third party homeowner survey company has concluded that warranty service is
the greatest influence on getting referrals. Regrettably, most builders are unaware of this
tidal wave of support for warranty service because they use only ONE survey company.
As a result, it’s easy to miss the powerful pattern of statistics that has surfaced. Consider
just a few of the conclusions that have been discovered by these well-respected survey
- A major study performed by Professor Ken Merchant of the University of
Southern California found that an increase in profits between 13 and 23 percent
is available to builders who increase customer satisfaction by just 8 percent.
- Eliant Surveys (www.eliant.com, contact Bob Mirman) reports that 51% of a
homeowner’s decision to refer is based on satisfaction with warranty service.
Further, only 5% of referrals occur before closing, leaving 95% for after closing
(that is to say, during and after the warranty period). What memories do you want
fresh in homeowners’ minds?
- Customer Follow Up, Inc.(www.customerfollowupinc.com, contact Marc
Warren) provides further support: 53% of homeowners who would NOT refer
their builder cite inadequate follow up and slow resolution of warranty issues as
the reason. Eighty-two percent of that group rate their builder at a 7 or less (on a
10 point scale) for resolution of warranty issues. You must perform at top levels
to earn referrals—slow, slipshod service will not qualify.
- Woodland-O’Brien (www.woodlandobrien.com, contact Charlie Scott) has
concluded that the average builder loses nearly 25% of homeowners’ willingness
to refer during the warranty period. What a waste after all your hard work keeping
buyers content up to this point—don’t walk away from rewards that are available
for just a bit more effort and attention. This effort is less expensive and more
certain to work than costly marketing campaigns.
Yet most builders still think of warranty service as an annoying, tedious, necessary evil.
This attitude is reflected in the fact that homeowner’s satisfaction drops between 8 and
11 percent between move in and year end—typically caused by the builder seeming
to “turn its back” on the homeowner. Regrettably, referrals drop along with satisfaction.
The steps that follow can help to change that and lead to more sales and increased
Change Your Thinking
Think of the closing not as an end but rather as a beginning. Work for a healthy long-
term relationship with homeowners. Treat it accordingly with planning, good systems and
procedures, and genuine appreciation for your homeowners. This will align your thinking
with your homeowners’ hopes and expectations.
Establish a proactive structure for service. I recommend two builder-initiated visits–
a primary visit (typically between 30 and 90 days) and an anniversary visit (at 10-11
months). Avoid the mid-point (5 or 6 month) contact which sends a message that you
expect a lot to go wrong with the home and is highly inefficient for all concerned.
Set the first of these two appointments before the home buyer closes on the home.
This sends a clear message that you intend to stand behind your product and that you
still care about customer satisfaction. “We would like to review your home and confirm it
is living up to the standards we promised you.”
Show up with a warranty visit checklist and look for things that might need attention.
These can include safety and security items (such as locks, smoke detectors, GFCIs, and
so on), known trouble makers (down spout extensions in place? how is concrete flatwork
doing?), and general functionality of doors, windows, fixtures, and so on. Review key
maintenance points–and bring a clean furnace filter as long as you’re going!
Between these two appointments, graciously accept interim reports of items. While you
can offer to hold non-emergency items until the next routine visit, ultimately it serves your
purpose best to leave that choice to the homeowner. This combination of two planned
visits and a gracious interim request item policy gives all parties the best of both worlds in
terms of procedures.
Ensure that work appointments are effective and efficient so that repairs occur in one visit
as often as possible. This requires an informed inspection to accurately identify whom
you need to send, anticipate the details those technicians will need to know, and consider
whether follow up attention might be appropriate (such as the cleaning crew after a major
Trade Agreement Details
Document your warranty service practices in your trade agreement. Start with the date
the warranty coverage begins–the date of closing. Add response time expectations and
consequences of slow or no response. Detail the service behaviors you expect as well,
right down to “park in the street rather than on the homeowner’s driveway.” Host a trade
contractor service orientation and discuss all of these points.
Rigorous Follow Up
Make follow up contact with homeowners requesting any feedback on the repair process.
Start with emergency items, then address work orders that have not been scheduled yet
and those nearing their expiration dates. Next, contact homeowners whose work orders
came back without the customer’s signature and finally check with homeowners who
signed their work orders. Use email, phone, mail, or in person visits to make this follow
Once the documentation habit is in place, it blends into daily operations and generates
impressive benefits: Quality analysis is possible, costs can often be reduced, and
information that may be needed for self-defense accumulates.
An effective warranty management system like our patented HOMsoft system
makes this easy. It tracks every communication and codes each item to generate
useful reports. The dashboard lists the follow up contacts you need to make each day.
As Tracey Gundersen of Homsoft says, “Inevitably the builder who is in trouble with a
homeowner is the builder who lacks an effective system and thorough documentation.”
Internal reports should track items rather than “lists” to identify recurring issues. Look for
design, product, and workmanship issues. Circulate this data back through all systems
such as architecture, purchasing, trade selection, supervision, and delivery. Watch
for issues stemming from choices available in the home buyer selection process that
consistently cause problems later, or errors in setting expectations.
Ensure that your warranty personnel understand how and when to ask for referrals.
For example, imagine a homeowner says “Thanks for getting out so promptly. We love
the house and appreciate your help with these few items.” Your warranty rep should
recognize the cue to respond “Thank you, and we’ll give the same care and attention to
anyone you refer to us.”
Then sit back and enjoy the benefits of putting warranty service in its proper place
beside your other marketing campaigns.