J.D. Power & Associates, the company famous for rating consumers' satisfaction with their automobiles, is about to do the same for new-home buyers in Florida.
"The home-building industry is a perfect focus for our work in industries where consumer satisfaction is a point of differentiation between highly competitive companies," says the company's founder and chairman, J.D. Power III.
Within the next 12 months, the Agoura Hills, Calif.-based marketing information firm will be asking buyers to grade their builders in nearly a dozen major markets throughout the United States. Surveys already have been sent to people who purchased new homes within the last two years in the Phoenix area. Denver is next on the company's list, followed by the San Francisco Bay area. Soon after that, consumers in Chicago, Washington-Baltimore, Dallas and Florida will be asked to assess their builders.
"Now that our questionnaire has been designed and we have our sample source tied down, we can move pretty quickly," says James Paules, a 15-year home-building veteran who heads the firm's new real estate services division.
After the results are tabulated, the best performers will be announced. All builders who rate above average with their customers will be listed in ranked order. But only the top builder will be licensed to advertise his No. 1 rating.
Those who are below average will be listed, too, but only in alphabetical order. Even at that, though, future home buyers will be able to use the ratings to help them choose a quality builder.
"Our surveys are a process-improvement tool," says Paules. "The only way the process gets better is if consumers know who the offenders are. So, in that regard, we will be thevoice of the new-home buyer."
Builders also will be able to use the information gathered by the company as a diagnostic tool to improve their performances. "Satisfaction is a key differentiator," Paules says. "It has an enormous impact on the bottom line. Builders want the public to associate their names with superior satisfaction."
Because J.D. Power is practically a household name, the company expects to have little difficulty getting people to spend the 20 to 30 minutes it will take to fill out its extensive four-page survey. "Our name recognition gets us past the trash can," says Paules, noting that 20 percent of the packages sent to Phoenix buyers were completed and returned within the first week.
The questionnaire asks buyers to evaluate everything from the physical design of their homes to their builder's sales and mortgage staffs. "From A to Z, top to bottom, we want to let consumers tell us statistically what's important to them," the company official says.
But neither buyers nor builders have to wait until Power comes to their markets to make more informed decisions. They can use information gathered elsewhere as a good starting point.
In the company's first survey, for example, buyers in the five-county Los Angeles region said that after the physical features of their homes, the one thing that contributed most to their satisfaction level was customer service.
Paules says he was surprised customer service has such a huge influence. How builders handle problems was even more important to the 3,200 respondents than price/value and design elements. The message here is clear: If you want to be happy with your new house, you must pay much greater attention to your prospective builder's ability to follow through, and home builders need to do the same. "How well a builder fixes things and how many times he had to come back to do it is a huge driver of customer satisfaction," Paules says. "The ability to solve problems quickly and keep buyers informed during the process is key."
The Los Angeles area study found that only a third of the problems reported by buyers were taken care of on the builder's first visit. It took two visits to correct 23 percent of the problems, and three or more to repair 22 percent of the cases. But 24 percent _ "a significant number," Paules says _ were never resolved at all.
A big mistake many builders make is to assume that when the phone stops ringing, the problem has gone away. But just the opposite is true: As unsatisfied, neglected customers stew, they tend to magnify their difficulties. As a result, fewer than one in 10 of the purchasers sampled in Los Angeles called their buying experiences "truly outstanding," and just 29 percent rated them excellent. The rest said theirs were either "merely good" (40 percent), "just okay" (17 percent) or "poor" (8 percent).
And, based on a question asking previous buyers if they would recommend their builder to others, the Power official says "being good in the home building business isn't good enough."
Consequently, although more than three out of four buyers who rated their experience outstanding or excellent said they would endorse their builders, only one in five who said theirs wasn't any better than good would recommend their builders.
Says Paules: "'It does make a difference who your builder is."
Bigger and growing
The nation's top 10 builders? Here's the list, announced recently by Professional Builder magazine:
Rank Builder Housing Revenues
1 Pulte Corp. $2.48-billion
2 Centex Corp. $2.27-billion
3 Kaufman and Broad Home Corp. $1.83-billion
4 Champion Enterprises+ $1.68-billion
5 Lennar Corp. $1.66-billion
6 Ryland Group $1.53-billion
7 Fleetwood Enterprises+ $1.44-billion
8 U.S. Home $1.28-billion
9 NVR $1.15-billion
10 Del Webb Corp. $1.14-billion
How Suncoast-based builders ranked:
48 Taylor Woodrow Homes $270,533,000
68 Arthur Rutenberg Homes $189,000,000
70 Jim Walter Homes $185,396,218
118 Florida Design/WCI Communitie $111,678,313
Sun City Center
180 Inland Homes $71,011,075
198 International American Homes $66,885,000
222 JMC Communities $59,200,000
245 Westfield Homes USA $52,496,596
294 Jacobsen Manufacturing+ $40,740,000
+= factory-built units