The customer service mantra: Why?

Marc Thibault, real estate practice leader at the Canadian office of J.D. Power and Associates, presents a plaque to a Monarch Homes representative at the Greater Ottawa Home Builders' Association customer service awards dinner in September. In the J.D. Power survey, Monarch ranked highest in satisfying new homeowners in the Ottawa market, with an overall satisfaction score of 665, with particular strengths in home readiness, service/warranty staff and construction/site team.

Yesterday, I reported on the (to me) surprising fact that word of mouth and referrals are not the first source of information/impression about new home projects, at least in Ottawa. Most people initially discover projects and learn about developments from nothing more elegant nor important than the directional signs to the builders' sales offices.

But word-of-mouth is important in a direct sense (about a quarter find the builder in the first place through word of mouth) and much more important, in an indirect sense.

Sure, potential clients may learn about your business through signs, advertisements, your website, or newspaper and magazine ads. But once they start engaging with your organization, are they more or less likely to sign on the dotted line if your reputation is good?

To answer the question, lets look at some other numbers from the J.D. Power survey for Ottawa
Research

Some 78 per cent of homeowners researched their builder before buying (82 per cent first time home buyers, 70 per cent repeat buyers).

Not surprisingly, most homeowners researched the builder website, but here is where reputation is important.

• 54 per cent spoke to previous purchasers
• 37 per cent checked the Tarion website. (Tarion is a legislated home warranty program in Ontario that provides protection to new home purchasers.
• 34 per cent checked independent websites
• 25 per cent visited magazines
• 21 per cent checked blogs (an increase from 12 per cent in 2008)
• 19 per cent visited newspaper websites

Notably, the truly independent sources of information where word-of-mouth and direct reporting (rather than managed "corporate messages" reach the consumer, represent a significant portion of the evaluation process.

Now for the bottom line. If you screw up (in the new home market, this would include failing to deliver the home on schedule, misrepresenting the product, and requiring the homeowner to return to the house for several after-sales repair and service visits), you pay.

According to the J.D. Power survey, 60 per cent of homeowner say they "definitely will recommend) a builder if there are nine or fewer problems with the home's quality and service. Assuming 200 referrals, and a referral to close ratio, this would generate six referrals that translate to sales (average sale price $345,000) of $2.7 million.

Compare this to a builder whose clients report 20 or more problems with their property. Only 12 per cent would recommend; resulting in a referral close ratio of 1.2 or revenue of $414,000 from referrals.

In other words, referrals count, and your quality/service and the clients' experience -- including whether their reality matched their expectations, are vital in generating the client satisfaction which, in turn, generates the referrals.

The point here is not to rely on referrals, but to be thankful if in good times you achieve these referrals with such volume that you have all the work you can handle. You have in fact achieved one of the essentials of successful marketing -- you are providing such a great client experience that your current and potential clients are encouraging and advocating your service.

Maintaining and enhancing genuine client satisfaction continues to be one of the best ways to drive your business and build it for the future. This information is especially important if you are a larger or more well-established business with a significant marketing budget. Allocating some of your budget resources for client satisfaction initiatives will probably repay many times forward.

But if you are smaller, or have exclusively relied on word of mouth or referral business for your organization, remember yesterday's posting: That signs count more than word-of-mouth in generating initial inquires.

Marketing, whether it be through your website, search engine optimization, newsletters, advertising in print and magazines, flyers, and the like, all have their place in the picture. (I leave out canvassing and telemarketing because I would argue these create a negative experience for most people and while you can win some business these ways, you are likely to alienate many more potential clients than you win.)

Once you find your clients through marketing, then your experience and reputation will carry you through to the "close" far more effectively than any high pressure sales techniques.

Signs, signs, signs

In Ottawa, when you are thinking about buying a new home, how do you become aware of a builder/project?

Marc Thibault, real estate practice leader at the Canadian office of J.D. Power and Associates , provided some tantalizing insights at the Greater Ottawa Home Builders' Association customer service awards dinner on Thursday.

• Magazines, billboards, newspapers, builders' websites. Not really (about 23 per cent for all the categories);

• Your friends, relatives or colleagues (word of mouth). Yes, this is important -- at 24 per cent;

• But the winner hands down at 41 per cent is -- "Passing by sales centre/builder signage".

In other words, where you locate your sales centre and how you arrange your signs will draw more awareness/visitors to your site than any other media.

(Undoubtedly word of mouth and other resources are important in the final purchasing decision -- you don't spend $400,000 for a house just by driving by a sales centre, talking briefly to a representative, and plunking down a deposit. I'll look at these matters in the next posting.)

We of course should be cautious in extrapolating a report for one market area to others, but these numbers suggest to me that anyone doing residential work, whether it be new construction or providing in-home services should consider carefully the use and quality of their signage, and (if appropriate) how they can get around or find loopholes in municipal ordinances restricting directional signs. Signs work, it seems, for the largest number of people.

I'll look more at the broader (negative) trends in customer service tomorrow.

(Detailed breakdown: Source of Builder Awareness 2008/2009: Magazines - 5/4%; Billboards - 5/4%; Newspapers- 8/7%; Builder website - 8/8%; Friend/Relative/Colleague - 24/24%; Passing by sales centre/builder signage; 39/41%)

The customer is (always) right

Last night, as I prepared to check out of the hotel in Nashville, I noticed on my Amex account a charge for one night's stay at what appeared to be my hotel. Nothing wrong with that, I thought, it could have been a prepayment guarantee (in exchange for a lower room rate). But when I asked for an accounting, I noticed the 'prepayment' didn't appear on the statement.

The front desk quickly explained the situation. The Hampton Inn Vanderbilt is not the same hotel as the Hampton Inn and Suites Vanderbilt. They are both part of the Hilton hotel system, but Hampton Inns are independently owned. I called the other hotel -- a few blocks away -- and found I had been debited the one night's stay (purportedly from September) as a "no show".

Woahh. I couldn't find any record of the reservation; the best I could think is that in planning our Nashville trip, I had inadvertently clicked on some 'reserve' box for the other hotel, before deciding on the trip, and selecting the hotel with the rather similar name!

Regardless, I didn't think the charge was fair, or reasonable, and so I complained. The hotel I stayed at, of course, said they couldn't do anything -- they weren't the hotel that levied the charge. And when I called the other Hampton Inn, the front desk simply put me through to the manager's voice mail.

Angry, livid, but fully aware of marketing and branding, I decided to put Hilton Hotels to the test. So I called the 800 number on my Hilton Honours Gold Card, and the person who answered forwarded me to 'customer service'.

Janet Osburn, a Guest Assistance Specialist, took my call, and without hesitation, 10 seconds after I explained the problem, she said: "Don't worry, you will not have to pay the bill. We will refund your money."

No questions asked, no bureaucratic run-around, just a quick and rapid resolution....
Well, actually, she said, "we need to give the hotel a chance to make good; three days, if they don't we will issue the refund." And today, the manager of the second Hampton Inn called back, and after explaining the problem with no-shows, he accepted the decision to return the money to my bank account.

We can all learn some lessons from Hilton's approach to customer service. In this case, you have a chain with hundreds of properties, operating under specific rules, but different brand identities (and ownerships). How do you hold everything together and not risk one bad experience blowing your brand, or client relationships?

In Hilton's case, they provide a number, and a contact point, and trained personnel who can quickly assess the overall client value and experience, and make on-the-spot decisions to fix things to client satisfaction. When someone like me spends thousands of dollars each years on hotel stays, a $150 or so refund isn't going to mess up too much with the profit picture. I explained to the Hampton Inn manager today who accepted the refund request that I realize some clients mess around and try to cheat the system, but quick response systems are absolutely essential to protect the brand and preserve client relationships. The weakness, if anything, here is that I needed to make two calls before solving the problem -- in the perfect customer service picture, the front desk clerk would have been able to respond in a forthright manner, and corrected the problem, rather than leave it for another day. Fortunately, Hilton has a fail safe with an after- hours call centre response capacity.

How do your front line employees handle customer complaints or apparent dissatisfaction? Do you give them discretion to correct problems on the spot, without requiring management approval or permission (or do you have a system where clients can immediately access managers with the capability and authority to resolve the problems?) If not, why? Can you afford client discontent, bureaucracy, or strict adherence to 'policy' in times where clients have other choices, and may be scarce to find and replace? You don't want to blow your brand and market position that way, I hope.

In this case, Hilton gets an eight out of 10. In the Perfect 10, the minute I complained, the front desk clerk at the Hampton Inn where I stayed would have resolved the issue, or taken it up, in my presence, until he could resolve it. But when I reached the right person, indeed, I found the solution. Always give your clients that satisfaction. They will remain loyal.

Real customer satisfaction -- two simple solutions

Marc Thibeault, of J.D. Power and Associates (right) presents a plaque recognizing Mattamy Homes as the best 2008 Ottawa area builder for customer satisfaction to Troy van Haastrecht, president of Mattamy’s Ottawa operations, at the Greater Ottawa Home Builders' Association (GOHBA) Customer Service Awards evening.

Here are two simple things you can do to really increase your client satisfaction -- and your genuine brand/market effectiveness -- without paying much, if any more than you are presently spending on marketing.

1. Keep your job sites clean, every day.
2. Communicate the job's progress through regular reports to your clients.

Marc Thibault, real estate practice leader at the Canadian office of J.D. Power and Associates, communicated these suggestions at the annual Customer Service Awards dinner at the Greater Ottawa Home Builders' Association last night. J.D. Power conducts a 62-point survey of home builders each year, and compiles a report with observations that could put fear or pride in the heart of local builders.

Many of Thibault's observations are local in nature and appropriately will be reported in detail in The Impact!, the GOHBA newsletter we publish under contract, rather than this blog. But I found his observations and suggestions about communication and cleanliness to have widespread and easy-to-implement effectiveness for your business.

"Job site cleanliness is the number one driver of the metric" of the second most important aspect of client satisfaction -- the work of the construction/site team, Thibeault said. (Other important elements on the construction site include speedy resolution of problems, the thoroughness of he pre-delivery inspection, contractors appearance and dress, and their courtesy and patience.)

The most important metric for client satisfaction is "home readiness" -- that is, when the project is handed over to the purchaser, it is really finished and defect free. Thibeault suggested many problems are occurring in client satisfaction when, in the rush to complete the work and hand it over to the purchaser, the project isn't totally complete. The site and home readiness aspects combine to produce 47 per cent of the client satisfaction indicators -- suggesting these two elements are vital to a successful project.

But what about communication? Thibeault said the survey data shows a truly marked increase in performance and client satisfaction from clients who receive regular progress reports from their builder, implying that it may be better in some cases to communicate well and complete the project late (and complete) than rush it to stay on schedule. (I didn't ask Thibeault this question, but it might have been a good one to check; whether, if you know you are running into delays, to give the consumer a choice -- accept occupancy on the original schedule, with the possibility of a need for increased call backs and fixes -- or delay and deliver defect free. Presumably some consumers, knowing in advance the situation, might tolerate or even embrace the post-completion problems if they are given the choice because they absolutely need to obtain occupancy and make the move, while others would be willing to wait a while for a higher level of perfection.)

At the GOHBA dinner, 28 employees received recognition as nominees for customer service excellence. Independent judges selected George Jacques of General Repairs and Renovations as the Trade Supplier Customer Service Leader and Jan Coulis of Minto Homes as the winner for Builder Construction Leader.

Thibeault said the Ottawa-area home builder satisfaction ratings overall remain flat from last year, with some builders running into problems with incomplete and unresolved problems on home completion -- presumably because they were rushing to meet delivery deadlines. Mattamy Homes ranks highest for client satisfaction in the Ottawa market.

See the J.D. Power news release here.

Living for a fortune

Keith Walsh sent me a news release announcing his appointment as National Sales Manager of Starlight Skylights. What I liked most was the tag line to the signature on the email he presumably sent to countless media outlets.

"If you make a sale you make a living. If you make an investment of time and good service in a customer, you can make a fortune." - Jim Rohn

True, indeed.

Admit it!

Craig Galati is a principal of Lucchesi Galati, a LasVegas consulting firm practicing in the areas of architecture, sociology and sustainability.

Yesterday's mail included more books (by now you probably can tell I read a lot), including Architect Craig Galati's little gem: Admit It!: 21 Things You Already Know But Apparently Have Forgotten Regarding Client Service.

His self-published booklet-- at 43 pages it is too small to be regarded as a commercial book -- is a useful resource and reminder of the basics that we easily forget: Return your calls, keep your promises, accept responsibility, and be flexible, among others.

Here are the 21 'things' reflecting the book's chapters:

1. Treat clients the way they want to be treated
   
2. Make repeat business and referrals your goal
   
3. If the client looks good, you look good
   
4. Get to know who the 'real' client is
   
5. Make it easy for your clients to describe you as excellent
   
6. Never say 'no'
   
7. Go out of your way, all the time
   
8. Never forget that all of your actions contribute to the customer experience
   
9. Don't return calls during lunchtime
   
10. Make your clients feel at home
    
11. Give more than clients expect
    
12. Customer service is not an act or time of day; it's a lifestyle
    
13. Return the routine phone calls promptly; return the difficult ones sooner
    
14. Keep your promises
    
15. Thoroughly understand what value means to your clients
    
16. Tackle the tough issues face-to-face
    
17. Tell the truth always; own up to your own mistakes
    
18. Don't blame someone else
    
19. It's not aboout who's right or wrong; its about resolving the issue at hand
    
20. Be flexible. Each client's needs and projects are different
    
21. Don't lose touch after the job is done.

These, indeed, are common-sense basics of client service, brand harmony, and solid business relationships.

Craig's The Heart of Business blog is worthy of bookmarking.

Customer service -- getting it right

An image from TD Canada Trust customer appreciation day. But read the linked blog entry's comment for another observation about why little things sometimes mean a lot.

This blog's core theme is that your best marketing is recognizing the importance of your current clients. I look for exceptional outbound marketing initiatives, of course, but focus most of my energies on the importance of getting it right with your current customers. For example, if you haven't already read the report, you should review our article on Reid and Deleye -- a successful smaller-market general contractor, growing year after year.

Then there is the bank. Banks are usually painful. But my, TD Canada Trust, understands customer service. I saw this first-hand yesterday with the work of two employees, a front desk receptionist (whose name I didn't get, but clearly deserves recognition) and Mark Menzies, a Financial Services representative at the Merivale Mall branch.

This is my third year as manager of Eric's minor house league hockey team. I need to collect money from the parents and pay for things like tournaments and parties. For the last two years, I simply used my personal bank account for team business. I briefly considered opening a team hockey account. A somewhat cold receptionist at another TD Canada Trust branch told me I would need to get special letters and authorization forms before they would even consider the account.

This year, I decided that even if I needed to go through some hell, I would open a separate bank account. But maybe I was lucky (the branch was quiet) or maybe someone had been reading the customer service books, but the receptionist referred me right away to Mark, and we got down to business.

He said I might need a form or letter from the hockey association convener, but we could still open the account. Even for a small thing like a minor hockey group, account opening is not that simple -- there are lots of legal forms, but Mark kept it light, discussing hockey as he printed and had me sign the documents.

At the end, after saying he would issue free cheques from the cheque service because they didn't have the starter cheque kit in the branch, he said "there is a freeze on this account" until it is reviewed by a compliance officer -- and I might indeed need to get some additional paperwork. But this should not be a problem, he said, and if that is the case, we would be all ready to go as soon as I had the letter. But if that letter is not necessary, the bank could open unfreeze the account within a day or two. I felt relieved. A theoretically painful ordeal had been made, well, almost pleasant.

On Mark's desk were cards with words -- I wish I kept one with me -- that said something to the effect "We would be pleased if you referred a friend". No other message, no words, no phone numbers, just the simple message.

Hmm, have managers at TD Canada Trust been reading Fred Reichheld's "The Ultimate Question" book? Maybe. But the interesting thing here is tat unlike my experience at Enterprise Rent a Car in Toronto, the process did not appear forced, artificial, or with not-so-hidden sales or revenue-generating agendas.

Then, I remembered my first experience at the former Canada Trust before it successfully merged with the Toronto Dominion Bank. As a surge of customers entered the branch, the line started growing -- then I noticed (for a bank) a strange thing happened. Everyone behind the counter, no matter what they had been doing previously, stepped up and opened all the tellers' windows. Common sense procedure, perhaps, but good business nonetheless.

Is there even more behind the scenes here? Look at this site for Serviceplus Rewards. Presumably not designed for the general public, and not wearing the TD Canada Trust identity, appears to be part of a trade-centric referral incentive program.

Success, again, is in your current client relations
I'm travelling today and tomorrow -- today I visited a successful general contractor in a relatively rural area of Southwestern Ontario; then travelled to a resort north of Toronto to attend part of the Ready Mixed Contractors Association of Ontario convention. Research and writing for these events will consume my energies for the next couple of days, so blogging will be lighter than normal (at least until Sunday).
But I want to share with you right now the powerful impressions I received at that general contractor -- where they are ready to take risks and expand their knowledge in areas of specialized expertise, but where they thrive because of their solid and natural client relationships.
When you work out in a relatively rural area, and want to do most of your business within a 100km radius of your office, you are not going to thrive by specializing in a narrow type of business niche -- you need to be a 'generalist' within your geography. And this means doing stuff that is often done by specialists; like water treatment plants, multi-story condo buildings, hospitals, and the like.
Now this diversification of course contains the seeds of both risk and opportunity -- risk in getting over your head in areas where you don't have competence; and opportunity, because you become relatively immune from market downturns because even in the most difficult times at least some of your knowledge/services will be in demand.
But how can you manage the risks effectively? Great relationships, is the answer.
For example, your project superintendent is so well liked on a conventional low-bid-wins-the-job project that the client, to avoid having to work with anyone else, accepts your proposal for a design-bid initiative.
Then your client has a job that requires expertise not in your normal range of skills. But you have an inside track; you can explain frankly to your client how you will overcome your lack of previous experience, and assure the client that if anything snags along the way, you will fix it. Your client trusts you, and gives the go-ahead.
So, next problem, you really don't know much about the specialized function. But you've conducted yourself properly previously with designers, architects, engineers, and consultants. Would they be willing to help guide you through the first job -- which, as it progresses, you can co-ordinate with your own understanding of the contracting business?
In other words, by really treating your clients right, you will understand the single most construction industry marketing lesson you can learn here or anywhere else. Great relationships, really incredible service, absolute integrity, and true sensitivity to the needs of your current clients will give you the edge in jobs and projects that, in a purely hard-ball environment, you wouldn't have a chance in a million to win.
And so the rural contractor grows at a comfortable, planned rate, year after year, and 'markets' through respect and integrity.
P.S. To write my story, I asked for testimonials. Within two minutes, the administrative assistant had brought out an inch-thick stack. This company has obviously earned its clients' respect -- and also knows that it is important to ask for testimonials when the job is well done.

The power of J. D. Power

I first learned about J.D. Power and Associates two years ago when home builders began observing that this market research and surveying organization (now owned by McGraw-Hill) would soon start its customer satisfaction surveys of Ottawa home builders among consumers. The impact of Power's unbiased and self-funded surveys became crystal-clear to me this week, when hundreds of people packed a meeting hall to recognize Ottawa-Carleton Home Builders' Association (OCHBA) members who had achieved customer satisfaction success -- and Darren Slind, J.D. Power's senior director of the new home builder and performance practices, outlined some of the consequences -- both positive and negative -- of great -- or poor -- client service.

Power's ability to rate builders (it also surveys automakers -- its original market -- electronics, and other consumer-based services, as well as certain business-to-business services) creates a fascinating and dramatic dynamic in the marketplace -- the possibility of a positive rating spurs builders to improve client service -- and the fear of a negative rating causes angst and anguish among the companies who don't make the grade.

Not all so-called customer satisfaction surveys are honest. Some, essentially, give you a reward and the right to use their image in marketing collateral in exchange for a substantial fee. The survey results are cooked to ensure that the businesses who pay the fees can claim to be providing 'client satisfaction' and the whole award then becomes part of a somewhat scammy marketing ploy.

J.D. Power succeeds largely because it plays it straight. You can't buy in or influence the results of the surveys -- but of course for a substantial fee you can purchase the comprehensive survey report and engage in consultancy services to actually improve your customer satisfaction results. J.D. Power's perspective is that while the marketing value of a 'win' is of course important, what really counts is the impact of great client satisfaction on your bottom line -- the survey just measures what is actually happening in the marketplace.

Slind says truly satisfied clients are far more likely to refer and recommend friends and acquaintances to you than clients who are merely feel things are okay.

"You can't hope to meet or exceed customer expectations if you don't understand them first," he says. "Discovery of home buyer needs is critical. What opportunities do you have to adjust your message and/or process to more clearly match the expectations of your customers?"

Here is my original report on Slind's observations, originally published in The OCHBA Impact!, the OCHBA's internal newsletter.