How times have changed …

10th March 2017

When it comes to customer care, there was a time when a developer could ‘wing it’! The consumer was less demanding, their expectations were far lower, the product was less complicated and the construction sector possessed a higher proportion of skilled labour.

Certainly with smaller output volumes (<50 plots) an experienced, well organised business may have got away with sharing the duties across a number of existing administrative staff with a modicum of warranty understanding.

But that was then and this is now; here are the reasons why it has changed and, more pertinently when the change occurred. It really began post the economic downturn and the changes were not unique to the new-build sector. Around 2010/12 as markets were in recovery and mortgage products were once more available, the consumer faced a new set of challenges. Securing a mortgage imposed far tougher terms than before. Difficult loan to value ratios and bigger deposits, underpinned by an intimidating mortgage application process meant that those who were successful in securing a loan had jumped through burning hoops of fire.

Having run the finance gauntlet, they now feel wholly justified in expecting the end result – a new home, to reward their endeavours. Similarly in other markets – cars, holidays, household goods, we have all become less tolerant of disappointment and more determined to do something about it. More of that later.

Selling a lifestyle

The new-build industry has embraced the internet as a powerful marketing tool and over the last 20 years have developed the mix of print, web and on-site marketing suite to promote developments. But more than this, the content is no longer just selling homes – it’s selling a lifestyle, and it does this incredibly well.

Web technology incorporates everything to stimulate the senses – fabulous photography, video, a pocket overview of the locality and environment. This extends to beautiful brochures with high production values and lyrical narrative, carefully crafted by experienced copywriters. And marketing suites (we no longer use the term show home) are carefully assembled, utilising the skill of interior designers to replicate a perfect life in exquisite surroundings.  Expensive bath oils, plush furnishings, contemporary high-tech kitchens and the delicious waft of plug-in scent generators. It’s impossible not to be utterly seduced. So seductive is the impact that those who succumb have unwittingly had their expectations raised to a new, all time high. Now, if something goes wrong, even a relatively small something, the sort of something that 20 years ago would never have been reported, now that something represents the face of unacceptable failure, sufficient to prompt a serious complaint – because it has disrupted our exciting new lifestyle.

None of this is in any way a criticism of the industry’s sales and marketing approach – quite the opposite, the new-build sector really does a remarkable job in this regard. Professional, effective and to be greatly admired. But done so well they can fall victim to their own success when later, things go wrong and, without the right kind of support mechanism to handle it.

Skilled labour

The recession, says a recent industry report, pushed out as much as half of the construction industry’s skilled labour. Half … and much of which is yet to return. And the operative word in this statement is ‘skilled’!

Factor in to this startling statistic that a fifth of the remaining workforce is set to retire in the next five to 10 years and we can see how the sector is wobbling when it comes to responding positively to the relentless political pressure to increase output. We can also see why there’s a problem when responding to a consumer complaint when some aspect of their new home has become defective and needs urgent attention. Data confirms that response times have got longer while the standard of workmanship falters. There are said to be 19,000 fewer firms involved in UK building than when the recession struck.

Underlying this is the amount of compensation paid out to homeowners by leading warranty provider the NHBC: in 2015-16 it paid £90m to homeowners affected by problems, compared with only £37m 10 years before (and in 2005 we built around 70,000 more homes than we did in 2015, suggesting that the equivalent claim per property went up almost 4 fold).

Product complexity

Go back a while to the last housing boom (1960s) and compare that product with today. No central heating. A kitchen comprised a sink, a tap, a wall cupboard with sliding dimpled glass doors and a length of Formica worktop. Two or three bedrooms a single reception room with coal fire place and a TV aerial socket.

Today the specification list is almost endless – the technology ever increasingly complex. Man landed on the moon in ‘69 with less computing power than you’ll get today in a central heating programmer that costs less than £100. The world has moved on and the benefits are significant and appreciated, yet equally this means there is far more that can go wrong.

Social media

When the NHBC were handling £37m of claims in 2005, Mark Zuckerberg had only just set-up Facebook and Twitter was still a full year away from its very first ‘Tweat’.

Yet earlier this year the determination of a number of disgruntled purchasers using the power of social media succeeded in getting the attention of one of our biggest housebuilders, to the point that it wiped £100m of their share price. Do not underestimate this [still] relatively new platform. It is a highly-effective weapon at the disposal of all dissatisfied consumers; freely available, easy to use and difficult to ignore. So much so, there are those who automatically resort to using one or another of these devices to air their views over the least important and sometimes irrelevant matters – nonetheless as a complaint it needs managing and so someone has to own it and deal with it.

You will always need a customer care budget

No matter how you view it – there is now a very real cost to new-build customer care and, you will have to pay for it sooner or later (sooner is generally cheaper).

Customer care was once a mere matter of taking the odd phone call from a purchaser who had a minor yet genuine issue. They didn’t report it to all and sundry, but politely requested that something be done. And generally speaking, something was done, within a reasonable time-frame and all were happy. Very often a developer would retain the services of a ‘man with a van’ to help expedite these sorts of issues. A time-served tradesman with a helpful disposition and an air of charm who smoothed the way for most quick-fixes. There are relatively few of these remaining – those who have retired have not been replaced.

Main contractors are very often tied to fixed-price build contracts and don’t favour extensive snagging let alone returning to site up to 2 years later to make good defective workmanship. So the degree of management control required to oversee the rectification process is considerably more resource hungry than it once was. It requires systemisation – and the demands here are numerous. A system that can be accessed by both occupant (to report and track problems) and developer (to keep an eye on what is happening). But also a system that creates a logical workflow for every problem reported, raises professional job instructions when work is required and generates a detailed audit of all correspondence to support the application of retention funds when contractors ultimately fail.

It is pure folly to believe that a part-time administrator picking up phone calls can be called ‘customer care’. Any more than ‘tagging’ the onus onto the Estate Manager’s role or including it in the Sales and Marketing function could be termed ‘customer care’ either.

The cold reality is that professional customer care is a specialist discipline that has a cost associated with it. Flying by the seat of your pants (or some other service provider’s pants) is not a professional response and will ultimately cost you even more.

There are two principle areas where costs arise when a developer fails to provide a proper, programmed customer care response:

  1. Management distraction – this is the inevitable and adverse impact on a developer’s business that requires a senior member of the board or management team to stop what they are doing and become embroiled in a customer care issue that has spiralled out of control (because it wasn’t correctly managed from the outset). These costs don’t appear as a ‘purchased service’ cost would on your P&L – but they are very real and impact in ways that prevent the business from making profit because, the expertise that manager or director is employed to invest in the business’ profitable expansion has been distracted;
  2. Reputational damage – this is the cost of association of a company’s name or brand with a complaint or problem that ultimately leads to loss of business or, as in the case of publicly quoted businesses, taking a hit to the share value.

Either or both of the above can be colossally expensive and against that back-drop, the cost of well organised, professional customer care is frankly, cheap.

Fixed-price service

When After Build launched its service, shortly after email, before reliable broadband and before Facebook or Twitter, we had some specific goals in mind, of which nothing has subsequently altered:

  • Be professional
  • Be cost-effective
  • Be the best

Massive strides in technology have assisted us in achieving these aims, along with the never ending training and development of the people we employ. But of unique value has been our fixed-price approach. We couldn’t have realised then what we know and experience today – and that is …

  • The substantial increase in defects reported
  • The expectation that problems will be resolved more quickly
  • The reality that contractors will respond more slowly

In light of far higher volumes of calls, our fixed-price services are even greater value. It means a developer can budget to provide a comprehensive service to manage warranty issues and know from the outset what it will cost their business.  It also means the spectre of difficult times ahead with often alarming consequential costs can be avoided.

 

 

Times have changed
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