The warranty phase is arguably the most crucial and challenging part of a new home buyer's journey. And it can get ugly when things go wrong. Most builders refer to their warranty departments as Customer Service or Customer Care – names that put the customer first. Yet when the interests of the builder override those of customers, it can pose a problem for homebuyers today. Here's why.
One could say the auto industry is at fault. Most people are familiar with the bumper-to-bumper warranty. This covers almost everything that happens during the first several years of ownership. It gives the customer complete confidence that the car company stands behind its product and workmanship. Homebuyers today expect something similar from builders. After all their house cost ten times as much as their home. If they can get it for the 2nd most expensive purchase they'll make, why not the first?
Although everything up to this point might have been great, the warranty experience is what they will remember and possibly write negative reviews about.
If the future of selling homes is online, then customer reviews and the product warranty are critical trust-builders to help ease the doubts of anyone looking to purchase online. Look at companies like Carvana and Amazon. They recognize how important trust is to the self-service model. Without it, there's no way they would still be in business.
I was once told by the CEO of a top 50 builder "we can't afford to invest any more money in warranty than is absolutely necessary." This makes sense considering the current business model positions warranty as a cost center. To maintain profitability, it is important to minimize the cost of repairs. This makes warrantability a contentious issue between buyer and builder.
This isn't something that all buyers understand when they purchase a home. Especially if their salesperson haphazardly used the warranty as a tool to overcome objections about quality early in the selling process. Poorly set expectations are almost always the reason builders' survey scores drop shortly after the home has been delivered.
Still not convinced warranty drives the customer experience? Take into account the difficulties of managing trade partner schedules.
This story probably sounds familiar: A homeowner is planning her first get-together in her new home and notices nail-pops in the dining room three weeks before Christmas. This leads to frequent service requests, which can mean multiple visits by different trades at different times. It may end up taking several months to fix. It's something we have all witnessed. The customer has no idea that the painting subcontractor had 30 homes in his schedule, and her minor repairs got lost in the shuffle. All she knows is that her guests are looking at the unpainted drywall in her newly constructed dining room.
Customers are often forced to fill out non-user-friendly forms or use clunky back-office systems or websites that complicate the process. When something goes wrong, the last thing your customer wants to do is figure out how a system works. Most of the time they just want to pick up the phone and call someone.
Act like your customer and go through the process for yourself, to see if there's friction. Your goal should be to get a response within minutes and not hours or days. . Be aware that not everyone is comfortable using your technology. Find out what is easiest for them. This can be measured using the Customer Effort Scoring (CES). Ask the service request team: "How easy was it for you to resolve your issue?" The best warranties make it seem effortless.
A person who bought a house from you wants to believe that it was a wise decision. They want to feel that the person answering the telephone has their back and will do whatever it takes to resolve the issue. The majority of customer service reps I have met are eager to help but not empowered to. Do not assign inexperienced "admins", who are responsible for data entry, to the frontline. They must be held accountable for following up and resolving issues. Customer service reps who went above and beyond to help customers fix their towels or touch up paint were some of my favorite reviews.
Builders who are willing to look at how warranty fits in with their overall business plan have the best opportunities.
Reframe your program to be a delighting opportunity, not a cost center. What is the difference between a satisfied customer and a disgruntled customer? This should be considered when you are designing your business model. This will make your warranty program stand out and increase your market share.
Instead of viewing houses as products, think about the experience of living in your home. This is why you should consider long-term service strategies that will create new value for buyers long after the closing. This can lead to new revenue opportunities and customers who will stay with you for the rest of your life. Virtuo, for example, partners with builders to provide concierge services such as moving, lawn care, and cleaning, among others. For new buyers.
Another way to look at it is the "Dollar Shave", which involves selling a first product at a low cost (the razor), followed by consumables and subscriptions (the blades), where real profits can be made. This strategy is being used by builders with great success. We're only scratching the surface of the multibillion dollar home services market.
If done right, living in a new house should be one of the most enjoyable parts of the customer experience. It is in most cases. However, the builder does not usually get credit because of the bad execution (or lack thereof) of the warranty program. We need to change the status quo, and set new standards for customer service.