Quantifying the Customer Experience ROI for Home Builders

Is it worth it for home builders to invest money to improve the customer experience?

Most builders would answer the above question with a “yes.” In an ideal world, every builder wants to provide a great experience for his or her buyers, and many believe it’s an important part of doing business. But what exactly does that mean? How do we measure customer experience? (Hint: here are a few ways.) And what size investment is required to make a significant difference? Because saying, “we provide an industry-leading home buying experience” and actually doing it are very different things. And doing it (aka treating it as a business discipline) can be a significant investment for builders.

The Cost of Getting the Customer Experience Right

The number of interactions a customer has with a production home builder (medium-size+) during the researching, buying and building stages of the customer journey could be measured in hundreds. Let’s say you have a rock star sales program and the home doesn’t get completed on time due to a trade partner problem. What does this do to your customer satisfaction scores?

Or suppose the entire buying and building process goes great, but the basement floods after move-in and warranty is unresponsive. “Willingness to refer” gets a zero. Of course, fixing either of these 2 examples can be easy.

But measuring and improving the experience at every customer touch point (Read: Marketing, Sales, Field, Warranty & beyond) – isn’t such a simple undertaking. There are certainly companies in the home building industry that measure customer satisfaction, enthusiasm, etc. usually in the form of post-close surveys. And this is a great start, but with so many moving parts (requiring efficient processes to maintain healthy margins) – it requires more than just a recalibration to do it right.

It requires putting the customer at the center of the entire organization.

So this brings us back to the question “is it even worth the investment?” To systematically change a builder’s internal and external processes could potentially cost tens (if not hundreds) of thousands of dollars. And any CEO worth his or her salt would question the return on that investment. How many more homes will you sell if you make that investment? There’s no precise answer. But research in other industries proves companies are reaping rewards far beyond the cost of the investment. Following is a recent example.

Customer Experience Leaders Outperform the Market

Research firm Marketing Sherpa, published an article in April 2015 showing how the customer experience really affects business success, and shared the chart below (courtesy of Watermark Consulting). It compares the top ten and bottom ten rated public companies in Forrester’s Customer Experience Index Studies alongside the S&P 500 index.

• Leaders outperformed the broader market, generating a total return that was 26 points higher than the S&P 500 Index.
• Laggards trailed far behind, actually posting a negative return during a period when the broader market rose sharply.
• Research giant Forrester also has shown the profitability of customer-centric companies. According to Forrester’s Customer Index, customer-centric companies gained 43% in performance compared to a 33.9% decrease for companies who have neglected customer experience. They went on to write an entire book about it.
• Customer Experience is an Investment in the Future for Home Builders

Investing in a great customer experience is a long-term goal with tremendous value, both strategic and economic. The competitive advantage alone will provide gains that justify the investment. And the economic benefits are also far-reaching, including increased revenue (improved retention & referrals, less price sensitivity, increased spending by happier customers) and reduced expenses associated with detractors and PR crises. And in many cases, investing in great experiences can actually end up costing you less. [For stats, check out these Customer Experience Statistics You Should Be Aware of in 2022]

So is it worth it for home builders to invest in the customer experience? Yes. In fact, you’re already investing in it whether you realize it or not. It’s just a matter of whether you choose to do it proactively and systematically as a business discipline. The builders that do become industry-leaders, and are ready for the next wave of Millennials buyers (that demand a superior experience).

At the Bokka Group, we believe that the current home buying experience is unsustainable. We believe this so strongly it’s become our mission to improve the new home buying experience in everything we do. From researching what causes customers to buy from a specific home builder to evaluating the home buying (and selling processes) for the top builders in the country, we’re in the business of changing the customer experience strategy for the better. Contact us to find out how we can do this for you.

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