PRESS ROOM

Survey Reveals Uneven Approach to After-Sales Marketing
Compendia Study of Homebuilders Uncovers Current Attitudes, Trends

May 12, 2008 (SAN DIEGO, CA) – More than half (52.7%) of the residential homebuilders, developers and general contractors surveyed indicated they currently have a consistent after-sale marketing and homeowner education program designed to encourage repeat and referral buyers. However, the survey conducted by Compendia, a leader in the development, production and distribution of document and information management solutions for the homebuilding industry, reveals that the execution of such programs is uneven.

Less than half (49.8 percent) of the respondents indicated they have no set timetable for these marketing communications and only 6.9 percent engage their own customers on a monthly basis. This, despite a majority (54.5 percent) saying such efforts increase sales or decrease costs.

"In this challenging market, builders are looking for strategies that will generate revenue," said Compendia CEO Steve Fabry. "The inconsistency between concept and application is just builders doiung more with less and learning as well. They are quickly realizing that focusing on their own customer base is part of an integrated strategy."

Pulte Homes Chief Operating Officer, Steven Petruska agrees. In an earlier published interview, he said that 45 percent of Pulte's sales are influenced by a positive recommendation from another customer. Another national study by the NAHB noted that the conversion rate for referred prospects is double that of marketed prospects.

And seemingly, it is the web that is the preferred medium for homeowners to receive that message. Several studies, including those conducted by the NAHB's Institute of Residential Marketing, show an exponential rise in the usage of buyers and owners becoming more dependant on the Internet as a resource for communication and information about their homes. To this end, according to the survey, builders are beginning to make inroads.

The survey notes about 85 percent of responding builders have some sort of online service. Most concentrate on the sales (70 percent), but 55 percent have some sort of customer service online component and another 42 percent have put their warranty information online as well. Only 30 percent have community or homeowners association information available online.

Another key finding is although builders overwhelmingly indicate the importance of homeowner education in terms of understanding the requirements, responsibilities and best practices of homeownership (90.8 percent rate it as important or very important), less than half (47.9 percent) see themselves as effectively or very effectively fulfilling that role.

"This is a work in progress," Fabry said. "Our industry continues to grow more sophisticated with their messages and marketing approaches. We are recognizing the value of expanding the customer lifetime value by improving not just the homebuying process, but combining communication, education and expectation into the owning experience."

Fabry added that the post-sale approach to strengthening business is not new, and now builders are realizing that post-sale education can also reduce costs.

Compendia's survey also polled builders on customer service call volume, issue resolution costs and warranty coverage. According to the results, the average sized respondent built 182 homes in 2007 and receives 121 customer service calls per month. The average cost per call from reporting to resolution was $225. Annualizing these figures, the poll's average builder spent more than $326,0700 last year to service customer needs. These figures are consistent with an National Association of Homebuilders (NAHB) study done in 2006 which noted the average cost of a customer service interaction was $275.

"If you apply what the builders have said as well as findings from other studies; that three out of four prefer self-service and that self service can reduce the average cost of each customer interaction by up to 25 percent, our average builder recoups more than $81,000 by combining online service and homeowner education." Fabry said.

The savings can be even greater when considering that many maintenance related problems do not occur until after Year 5.

"This is why builders are finding it is important to extend the communication, education and expectation process beyond the first year and even to subsequent owners of the house."

Polling for this survey was done online and administered from March 25-April 11, 2008.

Results and analysis of the survey can be downloaded here.