About 18 months ago, when the financial crisis sidelined the American consumer, phones stopped ringing for many, if not most, remodeling firms. This was true across the board, even those well-established firms with sterling reputations. So it is hard to imagine that the impact on newer companies and those with questionable reputations was anything but harsh.
When the dust settles and we begin to assess the impact of this recession on remodeling firms, a good analogy is likely to be that of a fire in an old-growth forest — only the strongest will have survived while much of the underbrush (less established firms and those with poor reputations) were swept away. Ironically, the numerical loss of firms will ultimately make the surviving firms stronger. Now, with the results of Qualified Remodeler magazine’s sixth annual Remodeling Customer Satisfaction Survey, we are beginning to see those effects.
By asking remodeling customers about their experiences, post-remodel, over the past six years, we’ve been able to develop a time series of data that demonstrates three conclusions. 1.) Remodelers in the aggregate tend to get low to mediocre grades from their customers. 2.) Remodelers who are seen as exhibiting a certain set of positive behaviors (timeliness, etc.) tend to get much higher customer satisfaction scores. 3.) Remodeling firms tend to satisfy their customers at higher rates when market activity is lower as it was in 2009.
The first two points have been well established over each of the past six years, but the lessons learned are no less critical now as they were then. The third conclusion, that remodelers do a better job at satisfying customers during recessionary times, stands to reason. With fewer jobs to go around, established firms, with better systems and processes, are getting the jobs. It also suggests that each customer is getting more time and attention focused on their needs. Our goal with this analysis is to examine the underlying reasons and to see if reproducible patterns emerge and with those patterns offer constructive ideas on how to incorporate them in your remodeling and/or home improvement business.
Group grades low, but better
Each year we ask homeowners who recently remodeled their homes, or embarked on some type of renovation project, about their experience and to offer grades across several areas of quality. (See sidebar, The Survey and Methodology, on pg. 36.) After gathering information about the price range of the job, the type of housing unit, type of project (kitchen and bath, whole house, basement, etc.) and other objective data, we asked remodeling clients to grade their remodeler on a scale of 1 to 10, (with one being the lowest and 10 the highest grade) in terms of overall quality, professionalism, timeliness, price, craftsmanship and a low number of “punchlist” items remaining during final walkthrough of the project. This year, the scores ranged from 6.93 for overall quality to 6.31 for timeliness — not necessarily a resounding endorsement of customer satisfaction, even when considered in the aggregate, but higher than each of the previous five years. Here are some top-line results from this year’s survey.
- Willingness to “hire again” and “refer to a friend” remain key indicators of satisfaction. Measuring customer satisfaction can be boiled to down to two key questions when asked by a third party: “If you were to undertake another remodeling project, would you call the same remodeler again?” and “Would you be willing to refer your remodeler to a friend?” For each of the past six years, the satisfaction scores expressed by the groups answering in the affirmative to these two questions have been much higher than the group that answered in the negative. This year we found that 53 percent would be willing to hire their remodeler again and 57 percent would be willing to refer their remodeler to a friend. Across our sampling over the past six years, these are the highest percentages of remodeling clients to answer these questions in the affirmative.
Analysis: There are nuances to the information that can be gathered through a longer customer satisfaction survey. These nuances can isolate specific behaviors the remodeler where process improvements can be made, but a scaled-back, two-question survey addressing “willingness to refer” and “willingness to hire again” remain highly indicative of overall satisfaction.
- Key behaviors remain important factors in gaining satisfaction: Setting proper expectations of the level of disruption caused by remodeling activity, keeping the jobsite broom-clean at the end of each day, being seen as accessible and available, and being seen as “honest and trustworthy” are key behaviors that lead to high satisfaction scores. This has been true for each of the past six years and remains so this year when a higher percentage of remodeling clients tended to see more of these attributes in their professional remodelers.
Analysis: Make sure that your remodeling process specifically addresses jobsite cleanliness, timeliness, availability/accessibility to client needs, and be sure to set proper expectations about the level of disruption caused by remodeling activity.
- The impact of ARRA tax credits on satisfaction: A new question was asked in order to gauge the impact of the American Recovery and Reinvestment Act of 2009 (a.k.a. The Stimulus Package), specifically, the tax credits associated with new windows, roofing products, solar systems and energy-efficient water heaters. We wanted to know if respondents whose projects do include tax-credit-worthy items experienced any higher level of customer satisfaction. To that end we asked: “Will you or did you receive any government tax credits for your purchase of qualifying windows, roofing or energy-efficient upgrades?” We were surprised to learn that 77 percent said they had installed qualifying products. Furthermore, those same respondents registered a noteworthy increase in all categories of customer satisfaction from with scores ranging from 7.51 for “Overall Satisfaction” to 7.02 for “Craftsmanship.” The category with the greatest spread when comparing aggregate scoring to the tax-credit group was “Professionalism” where there was a full point advantage registered by the tax-credit group (7.49 to 6.50) between the two.
Analysis: Add customer satisfaction to the number of benefits. It makes sense to tout tax-credit products to your customers until they expire at the end of this year and to be up-to-date on how your customers can qualify for the rebates in the proposed HomeStar or “Cash for Caulkers” legislation.
- Moving out did not improve level of satisfaction. In fact, the 12 percent of remodeling clients surveyed who moved out of their homes during their renovations registered slightly lower scores for their remodeler’s performance than those who stayed and lived through the inconveniences of remodeling. This debunks a theory that the disruptions of remodeling, even when performed in a professional and timely manner result in low satisfaction scores. Or, to put it another way, that remodeling, in and of itself, carries extra baggage that makes satisfaction tougher to achieve.
Analysis: Other pressures, like higher prices and weeks away from home, tend to offset the satisfaction gains made when clients move out to avoid inconveniences.
- Improvement-motivated clients scored lower than maintenance-motivated clients. The results of this survey and those of each previous year have shown lower satisfaction scores for higher-priced remodeling projects. And because maintenance-based projects are typically lower in price than improvement projects, this result is a continuation of that trend, though the marginal difference is small. About 75 percent of our survey respondents were improvement motivated.
Analysis: Smaller maintenance-based jobs may offer a lower threshold for achieving customer satisfaction.
- Expertise matters. Remodeling customers who saw their remodelers as “experts on all matters relating to design and construction” tended to generate measurably higher satisfaction scores than their counterparts whose clients did not agree with that statement. The difference was stark with “experts” scoring near 8 and above for all categories of satisfaction, while “non-experts” only scored in the 5 and above range.
Analysis: For many reasons, including greater customer satisfaction, it pays to make sure that your credentials and designations are presented as benefits to remodeling clients and prospects.
- Serial remodeling clients gave lower scores. Among the 53 percent of respondents who said that they “anticipate hiring a professional remodeler again” in the next 12 to 24 months, grades for their remodeler were lower, in general, than those who did plan to embark on a project again soon. Overall satisfaction for the group was 6.54 vs. 7.14. Timeliness and “few remaining punchlist items” were less of an issue for this group as the scores for these categories were slightly higher when compared against similar scores for those who did not plan to remodel again soon.
Analysis: About half of the people who hire a remodeler for a project will remodel again soon. This shows the size of the opportunity for repeat business when customers are satisfied at the end of a project.
- Scores are the highest in six years. In every category of quality, from “Overall Satisfaction” and “Price” to “Professionalism” and “Craftsmanship,” remodeling clients awarded their highest scores this year — about 9 percent higher on average than in 2009. There are several reasons why such a jump would make sense and all are related to the impact of the recession, a time when most of the remodels at the root of this survey were being completed.
Analysis: The recession has removed some bad players from the market.
The higher scores awarded to remodelers by their clients in this recessionary year, when there are fewer jobs to go around, is not surprising. Remodelers are working harder to acquire and retain customers. And clients are taking note. A silver lining in this recession is its reinforcing effect on the importance of customer satisfaction.
The Survey and Methodology
Qualified Remodeler’s annual Customer Satisfaction Survey is conducted in partnership with RenovationExperts.com, a Web-based resource that connects remodelers and homeowners. The company surveys its homeowner users to find those that have recently remodeled their homes. That group completes a 27-question survey that gathers information about the type of job, type of property, etc. From there the respondents are asked to grade their remodelers in six key areas of quality and satisfaction. The scoring is based on a 1 to 10 scale with 10 being the most favorable response indicating a high level of satisfaction and 1 being the lowest level of satisfaction possible.
Six categories of satisfaction:
- Overall Satisfaction: This is designed to get a gut reaction to the success of the project. “On a scale of 1 to 10, with 10 being the highest and best rating and one being lowest, how would you rate your overall level of satisfaction with your remodeler?”
- Professionalism: “On a scale of 1 to 10, with 10 being the highest and best rating and one being lowest, how would you rate your remodeler’s overall level of professionalism?”
- Timeliness: Timeliness is the lowest scoring category over six years. “On a scale of 1 to 10, how timely was the work completed, with 10 being slightly early or ahead of schedule?”
- Price: We have found that price is usually not a key indicator of overall satisfaction. “On a scale of 1 to 10, how fair was the price charged by your remodeler, with 10 being the most fair and one being unfair or overpriced.”
- Craftsmanship: “On a scale of 1 to 10, how would you rate the quality of the workmanship for the finished product, with 10 being the highest quality craftsmanship?”
- Remaining Punchlist Items: Low remaining punchlist items are predictive of overall satisfaction. “On a scale of 1 to 10, how would you rate the completeness of finished product, with 10 being no missing items or punchlist items remaining at the end and 1 being many items remaining to be completed?”