Analysis



Some customers can be “impossible to please” (IP), but keep in mind, when open to the public, a home building company is exposed to all personalities within the public.  After all, that idiot that cut you off on the highway this morning lives somewhere!  This means, on rare occasions you will sell a home to one of these IP customers.  A home builder that builds 20 homes per year statistically should experience an IP once every 2-3 years.  A home builder building 300 homes per year will likely see 8-10 IP customers per year.  The question is: What should be the strat

Many experts have said that it is unreasonable for a company’s leadership to expect their employees to take better care of their customers, than the company does for the employees.  There is a lot of truth in this reasoning, but in addition to customer satisfaction implications there are business operations to consider too.

When the industry tanked, most home building companies felt that if an employee still had a job, they darn well should be satisfied!  The drastic market decline forced builders to 1) reduce staff, 2) eliminate bonuses, 3) trim benefits and even 4) reduce

We can all relate to great leaders, but we may fail to note what makes them so.  Harry Truman is quoted as saying, “Not all readers are leaders, but all leaders are readers.”  Such is the case with last year’s Professional Builder Magazine’s Builder of the Year, DSLD Homes and their leader Saun Sullivan who is a prolific reader.  His reading titles could be classified as the home building industry’s must read list, and he shares these gems with many (thanks Saun!).

I have spoken at PCBC, the big West Coast building conference most of the past 15 years and I always enjoy it. The event has been very well-run, quality of programming is excellent, the staff is great and you can do a lot worse than hang out in downtown San Francisco for a few days. I have been there so many times that I know all of the streets and how to get around, walking or driving. I even have my favorite hotel and off-the-beaten-path restaurants. Yet as PCBC begins later this month, I will be on the other side of the country.

This week's installment of Charlie Scott on Customer Satisfaction in Home Building questions how new houses are delivered to customers.  Admittedly this entry is a bit cryptic, and you will have to study it, but hopefully this cryptic analogy will bring some clarity to your home building company's delivery process.  Clearly, there is no one "right" way to deliver homes to customers, but it is critical that a home building company deliver on all promises and meet (or exceed) the customers' expectations.  Bon appetit! 

My son Tyler (second of 4 children), age 29, is taking a new position with a homebuilder after having two good building industry jobs in the past, both of which vanished in the housing recession. Despite the previous disappointments, he sees this as a great opportunity with a real chance to grow with a good company. It got me thinking about all the work I have done in my career, where I did well, where I screwed up, who I have hired, who I have fired, and all the people I have watched soar and those I have seen flame out.

Years ago, well after the huge productivity gains of the industrial revolution, employers still sought productivity improvement.  In an effort to find these productivity gains, many studies were conducted to find causes and effects of higher productivity.

The most popular study was done at Hawthorne Works between 1924-32, where researchers tinkered with many variables, then measured worker output to see if their tinkering had the desired effect.  The most famous experiment involved slowly increasing the lighting – which resulted in higher output, however, this higher output

Every builder wants to have outstanding customer satisfaction, right?  Our research shows that to accomplish the highest customer satisfaction builders must think outside the box, and I don’t mean the proverbial “creative box,” I mean literally outside the house box!


In our role as the “Voice of the Customer” partner for many of the nation’s leading home builders, we read and analyze thousands of customer surveys.  This extensive multi-market, multi-builder research allows us to  pattern and identify the industry's most frequent customer

During an orientation recently with a room full of suppliers and trades for one of our “LeanPlan Workout” implementations, I was interrupted by a woman who clearly did not appreciate my message. Despite my saying it 6 different ways and illustrating with numerous pictures, she was not buying my story that Lean is not about “dumbing down” the houses.

They say a writer never “makes it” until he gets hate mail. In at least four blog posts this year, I have expressed my frustrations with architects and engineers in this country and those posts have invited a few terse replies, one of which appears below. My rant is that either through lack of care, concern, understanding or education, these professionals rarely recognize the critical link between their work and a builder’s ability to produce a high quality house at any price point in the most efficient, cost-effective, value-producing manner. And that costs us all.

Home building is an extremely complicated business and as such requires very intelligent people and systems.  Think about it for a second.  To build a home, over 400,000 pieces/parts and 2,000 people must be precisely coordinated to bring these pieces, parts, and labor all together at the right time in the right sequence – and often at a remote address that may not have even existed 2 months earlier, WOW!  It takes very dedicated, intelligent people and solid, well planned, processes to pull that off!

While the home building industry is blessed with people of abov

Today, a sharp young guy named Ryan wrote to me after seeing a Keynote Presentation I did at the recent BuilderExchange meeting in Las Vegas. Two-hundred fifty people attended from 60 suppliers and a like number of builders.

A builder would never build, merchandise, and maintain a model without staffing it, would they?  Of course not - this would be abuse of an asset!  The return on this asset (ROA) would be zero, zilch, nada.  No competent manager would ever allow an asset to exist without some expected return on that asset, right?


Most builders expect their model, community, and marketing to return at least one sale per month and cover the bulk of the costs.  Two sales per month break even, and three sales per month make it a profitable community.  The numbers may va

Last fall the president of one of America’s “Top 10” builders who I have known for years corralled me at a conference. Because I travel this industry about as much as anyone, he likes to pump me for intelligence – as I do him. He wondered, what did I see out there? Who was making it? Who wasn’t? Which cities were ready to emerge and which were not?  I gave him my take on things and then he asked a series of bombshell questions, “Who really impresses you? Who truly has the best practices?

The NAHB in conjunction with Professional Builder Magazine launched the National Housing Quality Award (NHQA) in 1993 to encourage and recognize best practices and best builders in the continual improvement of product and process. Modeled after the Malcolm Baldrige National Quality Award, over time the NHQA has become the gold standard of awards in homebuilding.

Let me be straight - I am anti-Net Promoting Index (NPI) in the home building industry and this is why...


When I was a manager/leader/owner of a homebuilding company there was a recurring problem that I often saw (and personally committed).  Too often, we would manage our company by average numbers.  For example, let's say our Willingness to Refer (WTR) declined 5 points from 95% to 90%.  We would become upset and meet with the Sales Team and Builders to tell them "we are better than this!"  We were managing the company and staff by the average number. 

I often wondered why a consulting friend of mine wrote of his miserable air travel experiences, and now I get it.   The airline industry, with its product and personnel scenarios are a reasonable proxy for the homebuilding industry.  How?  Read on.


As a Platinum level patron, I am often “upgraded” to first class.  It is amazing how different the first class experience can be on the same airline, aircraft, and route.  All else being equal, what is the determining factor?  It is the personnel, of course! 


Take for instance

Our business picked up in late 2011, started the New Year off well, and we were deluged at the IBS show, beginning with a standing-room-only presentation on Lean Design. Our first quarter is strong and 2nd quarter looks even better. Builders seem to now have sufficient confidence that they want to get their processes “Leaned-up” to meet current and projected growth. We have a long list of clients who are reporting sales being up way above the  national average of 8% reported for January and on into February. Yet the question persists … is this recovery for real?

Peter Senge wrote one of the best business books of the 1990’s, The Learning Organization. It is one of those on my list to pull off the shelf and read again, if I ever catch up with the stack of unread volumes on my credenza now. I even attended his 4-day workshop in Boston in the mid-90’s and it made a considerable impact on everyone there. What Senge laid out was what constitutes the “Learning Organization” and why those companies invariably do better than those whose primary goal is to replicate and execute their existing business model.

The bottom of the market is clearly in and most builders know it, especially those that attended the International Builder Show (IBS) in Orlando, February 7-11th.  At IBS 2012, there were scores of great programs on red hot topics like Social Media Strategies, Marketing Must Dos, Lean and Green best practices, and much more.

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