The Smart Customer
To have a truly customer-driven company, you have to know what questions to ask and what to do with the answers. Here's how one CEO's customer survey transformed his company
For years founder William J. Berkes groomed Michael Harris to take over as president of Deck House Inc., a home designer and builder in Acton, Mass. After working his way up the ladder for 18 years, Harris took the helm in 1989. His first presidential move was not exactly the gutsy directive one would expect from a newly minted president putting his stamp on a company, but it was a shrewd one. He conducted a customer survey. "You'll rue the day you did this!" Berkes warned. "You'll get so many outrageous customer demands you won't know what to do with them all." Harris stuck by his guns. The company hasn't been the same since.
Harris sat down with key managers and hashed out what kind of information they wanted to gather. The sales manager wanted to know how well salespeople followed up with customers. The marketing manager wanted more testimonials about how customers liked their houses once they were built. Designers wanted to find out which features customers liked and which they could do without.
The general tone running through the initial responses was that while the houses were wonderful, the designing-and-building process was a nightmare. "Common complaints were that there were too many choices, it took too long to plan the house, it wound up costing more than customers thought it would," Harris says. Many questionnaires came back loaded with tips on other, more specific problems Deck House needed to address: the product line was lacking, estimating costs was difficult, drawings were inaccurate, salespeople weren't around after the sale, builders were difficult to work with, windows were leaky, and making a warranty claim was a pain in the neck. "We didn't realize how far-reaching the implications of this questionnaire would be," Harris says. The customer feedback called Deck House's central strategy into question: "During the 1980s the mantra was 'The choice is yours!' " he recalls. "We felt that forcing standardized homes on customers was infringing on their freedom. But in reality the variety of choices was overwhelming. Also, we were trying to sell '60s housing in the '80s. Those houses didn't possess the features our customers wanted, so we ended up doing a lot of custom work, which is costly and a hassle."
As a result, the Deck House staff designed a new line of standardized homes that met most customers' requirements without needing a lot of customization. The company also improved the quality of its service before, during, and after construction. Today only about 25% of Deck Houses are custom-built homes, compared with 75% a year ago, and the time it takes to process a piece of business has gone from 549 days to 370. "We are seeing an uptick in business even though the housing market is still flat," claims Harris, who reports that revenues have held steady at about $10 million annually. "We can now handle up to 250 homes per year with much lower overhead because we aren't reworking the designs."
Harris and other key managers now let customers' wishes lead the company. He is already working on a new survey to get feedback on the changes the company has made as a result of the first one. On the following pages Harris explains how his original customer questionnaire motivated such extensive changes within the company.
"I found out a lot about my sales force from this section [satisfaction of preconstruction expectations]. It turns out they were around plenty during the preconstruction phase but were inattentive during construction, when customers can really feel lost. Now we withhold a percentage from sales-people's commissions until they make their final site visit. If they want that money, they have to send us a roll of film with pictures of the house on it. That gives our headquarters more feedback about the house and serves as proof that the salesperson actually visited."
Fine-Tuning the Product
"About a year ago we realized no one was ordering from the brochure, because we were trying to sell people '60s-style housing. Now we have a new line of homes that incorporate the most frequently requested custom features of the '90s. As a result, we've gotten back to our original focus -- preplanned housing that anticipates and incorporates popular features and needs little or no customization."
"We found out one of the things customers liked most was our manufacturing tour. So last year when we were conjuring up sales incentives, we designed one around it. If prospects build a Deck House after taking a tour, we'll give them roughly $1,500 off their house price to pay for plane fare and the time they took to visit. We put the tour on video for people who aren't able to come in person."
"Customers pick out their own plumbing and kitchen fixtures, and we build them in. This was a source of confusion for them. People would comment, 'I had no idea we were going to have to spend $5,000 for countertops; our salesperson said it would cost only $2,500.' Now, to make budgeting easier, we provide detailed sample cost estimates for bathrooms and kitchens. On a more basic level, others complained that the case of sample materials we sent them prior to beginning work on their house had been confusing. So we created a service handbook. It's inexpensive to produce -- an 80-page photocopied book that answers most of the questions our customers kept asking and eliminates much of the confusion that made the process of building a Deck House difficult. We also found out we were not providing enough details on our invoices. The line items and totals were often a mystery to customers. Now we describe right on the invoice what the charges are for and what changes in the building process they might reflect."
Grading the Builder
"In this section [satisfaction with builder] the cleanliness of the house on moving day and the timeliness of billing and work orders have gotten the worst ratings. We now have a newsletter for builders, and we keep harping about how important it is to clean up the work site. We also include quotes from customers saying how nice it was to move into a clean house. To make billing easier, we now offer our builders standardized work orders. We have a list of 250 builders we recommend. About 60% of customers use a builder on our list. We've taken builders off our list because of feedback we've gotten from the questionnaire. The first time we get a really angry remark, we just make a note of it, but the second time it happens, we start to feel this person is really slipping. We don't wait for the third complaint."
"Hardly anybody recommended prospects to us, so we'll drop this [section] in the next edition. However, we've found that when we ask for a referral from someone calling our Owner Assistance Center, we almost always get one. Our service manual has eliminated much of the confusion in the designing and building process that surfaced from this questionnaire, so our next edition will ask more questions about the handbook and about how customers like our new line of standard homes."
"This is the heart and soul of Deck House [satisfaction with product]. Feedback from this section has alerted us to a number of weaknesses in our products we would have not known about otherwise, such as oceanfront homes having leaky windows on the sea side. This customer writes about how nice it would be to have a sliding door that you could lock but still leave open six inches or so. We now offer that type of door. Any comments made in this section I respond to in detail in a follow-up letter to the customer."
"This questionnaire helped build our confidence in our product and prompted us to change our warranty process. The claims procedure had required too much information from the customers, and it was pretty frustrating for them. Now we make it easier, giving them a simpler claim form and asking them to take pictures of the problem so we know better how to fix it."
The Follow-Up Letter
"The letter I write to each person who sends in a questionnaire gives more detailed answers to their concerns about our product. This gives us one more point of contact with our customers and lets them know their comments and concerns are taken seriously. Also, anytime a customer mentions a specific employee by name, I make sure to get back to the employee about it. That's a great morale booster and gives recognition where it's due."