Demystifying CRM

Any remodeler who has dutifully plumbed the depths of current sales and marketing theory has no doubt heard of CRM — which, for the acronym-challenged, stands for customer relationship management — and worried that perhaps he or she is missing the boat by not having something that polysyllabic as part of his business process.

The good news is that he or she probably does have CRM; they just don’t call it that. Before we had CRM, opined one blogger with unexpected insight and clarity, we had rapport.

One of the problems in applying CRM to the remodeling industry is that much of the literature references industries and business models that have different requirements than the average remodeling business. Most writers — if they agree on nothing else — concur that CRM means different things to different people.

Still, at the core of the concept are ideas that remodelers can, should and do incorporate into their business plans. One of the most basic things CRM does in any setting is collect accurate and relevant information about customers. That’s a starting point for managing the customer experience, assessing quality and measuring satisfaction.

One of the things advocates claim CRM will do is develop a “corporate memory” that will help businesses identify, anticipate and address common customer concerns in a consistent and professional manner, which in turn builds customer loyalty and referrals. Most CRM proponents agree that cultivating long-term customer relationships and loyalty is a key goal of any system.

Another key point to remember is that CRM, whatever it is today, most likely had rather humble beginnings as contact-management or lead-generation software with less emphasis on building long-term customer relationships.

A consequence of CRM’s lead-generation roots is the tendency of some remodelers to think that, except for the actual installation, their job is done once they get a customer, says Tim Musch director of business development for Market Sharp, a developer of lead tracking and contact management software.

“So you got a customer. Now what?” he asks. “You choices are two: You can go get another one and forget the one you just got, or in addition to getting another one you can maximize the revenue and profitability of your business by turning every single one of your customers into lifetime customers,” he says.

To do that you should put in place some form of customer relationship management or whatever else you may choose to call it. Regardless, it’s all about how to properly follow up with customers to make them happy and to give them mechanisms to offer you information as to what other products or services you might offer them in the future, Musch says.

“The days of just spending money on leads and buying business are pretty much over. We have to maximize the relationships we have with our past customers and make sure the customer relationship that began with a gutter job turns into a sunroom job down the road and into additional referrals as well,” he says.

As tempting as it may be to look for an out-of-the-box solution, CRM software is unlikely to be that solution in and of itself, although it may be a component. The CRM process needs people, technology and systems, says Musch.

The systems part is the part that gets broken down, he says. Many people think the software is the system, and it’s not.

People will install software and say “go.” If the software could talk back, Musch says, it would ask “where?”

Remodelers need to have a process in place so that when a job is sold a thank-you letter goes out. When it’s finished, a survey follows and information is collected on what other products the client might have an interest in. This is recorded someplace — most likely software — so that at some time in the future some very targeted marketing can be directed at people who have essentially given permission to sell them additional products, he explains.

Musch says that remodelers might want to think of software less in terms of customer relationship management as in terms of what they’re really trying to accomplish with it — business process automation.

In the Beginning

Successful remodelers know that their job, and especially their relationship with their clients, has only just begun with a signed contract.

Like remodeling jobs, no two customers are alike, Bill Croghan of Boa Construction Co. in St. Louis says. Client management, therefore, is a continuing challenge and a huge part of the project. Some clients require a lot of hand-holding, while others don’t, he says.

Croghan developed a project manual that specifically addresses client relationships. We teach our employees that “the client is put into an uncomfortable position the minute we step in the door, and we have to recognize that.”

To that end Croghan stresses the importance of building client relationships early in the process. We stress that trust is the most important part of the client relationship; we treat it as a team, he says.

Part of that team-building is making sure everyone is on the same page and knows what to expect. Croghan draws up a preliminary schedule that incorporates a timeline for architectural design work, client selections and construction. Clients understand they need to pick things like roofing color early on in the process, and “fun” choices like interior finishes need to be made later in the process so the project can proceed on schedule.

As important as building trust and establishing communication channels early on is something David Lupberger, Qualified Remodeler columnist and author of Managing the Emotional Homeowner, likes to call managing client expectations.

“The biggest part of a remodeler’s job is managing expectations,” he says. “When a project starts, we can only guess what a homeowner’s expectations are. Home improvement shows make remodeling look like fun. They make it look easy; people are laughing; they’re making it happen; getting it done.”

Part of what a remodeler should be doing is not only assisting the homeowner with the project but preparing them for the process — and that really means helping them prepare emotionally for the ups and downs, Lupberger says. He’s even charted some of the highs and lows of a remodeling project. (See chart)

Homeowners should be made aware that the remodeling process itself may be trying. “There are strangers in your house every day; it’s dusty and there are materials piled up. It may be hot or cold. It’s a big part of the remodeler’s job to prepare clients for these kinds of experiences,” Lupberger says.

A remodeler has to engage clients from the first visit and make them understand that he’ll be there to guide them through the process, he adds.

During the Job

Communicating to clients about the status of a project starts with carefully tracking the progress of that job internally. Boa Construction tried a system from one of the top-rated estimating and project management software firms but found it too limiting.

“It really didn’t work because people change their mind on a whim; there were too many changes and the program was confining. Ultimately we hired our own computer programming group and they built a proprietary system for us over a period of several years,” Croghan says.

“The change has been fantastic,” he says. “Clients like it; it’s better than what’s on the market; and it doesn’t limit you. When you need to make a change, you can call your programmer.”

When a client gets a proposal, there’s a short breakdown of the project on the first page. They immediately know what their bottom line is, but then there are six divisions. They know exactly where they’re spending their money, Croghan explains.

Constant management of the expectations of both the contractor and the homeowner is our top priority,” Croghan says
Monitoring those expectations is accomplished through a monthly survey as the project proceeds. It takes some of the emotion out of the process and seems to help smooth out the process, he says. People may have a month when they’re just down — bummed out by one thing or another, he explains, and they often take it out on the contractor. Having someone listen to their concerns about their remodeling project may remove some of the pressure, Croghan says.

Dave Lupberger, likewise, concurs that it is essential to put procedures in place so the remodeler and homeowner are consistently communicating clearly and addressing concerns and questions as they come up.

Creating a good paper trail; having a regular weekly homeowner meeting to discuss progress on the job; and putting a jobsite notebook or a big white board in place where the homeowners can write comments and questions to which the remodeler agrees to respond in 24 hours are measures that Lupberger recommends.

Weekly process meetings are a great customer management tool, Lupberger says. He recommends a preset time, say on a Tuesday, Wednesday or Thursday morning at 7 a.m. He notes that such meetings rarely lasted more than 40 minutes, because everyone had someplace else to be at that time of the morning.

An important goal of the weekly progress meeting, aside from keeping the homeowner informed, is making him part of the process — part of the team.

“Without communication homeowners assume the worst,” Lupberger says. “So be proactive. Make sure the weekly meeting is in the schedule.

“Scheduling itself is a good customer management tool,” he says. “Again, you’re setting expectations.” Schedules, or course, do change, but the weekly progress meetings can be used to talk about change orders and their effect on schedules.

Lupberger relates that as a remodeler he used carbonless memos at every homeowner meeting, writing down what was discussed, what would happen next and who was responsible. Both he and the customer would initial the memo, and the customer would be given a copy.

“I created a clear communication and once they initialed it, there’s a certain level of honesty. We both agree to agree,” he says.

The meetings also allow the remodeler to manage his clients’ expectations, which should be one of his central goals, Lupberger says

“If I can manage the homeowner’s expectation, then he becomes my partner. Not only do I have a willing participant that will work with me, but I now have a referral resource that should be giving me jobs if I follow up with them.”

BOWA Builders of McLean, Va., likewise, has weekly status meetings, says CEO Larry Weinberg. It’s all documented in a weekly memo that goes not only to the client but to the architect, designer, production supervisor and anyone else on the team, he explains.

Matthew Wendorff, CGR, CGB, founder of RPI design build LLC in Morris Plains, N.J., finds he’s more frequently using e-mail to communicate with customers. Even if he has a phone conversation, he says he will follow up with an e-mail to confirm what was agreed upon in the conversation in order to have a means of tracking the communication.

Regular communication is important to Wendorff, but as reflected by his increasing use of electronic communications, face-to-face meetings are increasingly difficult to fit into the schedules of some homeowners.

“It depends on the client. I have one client who leaves at 4 a.m., and I haven’t seen her since the day she signed the contract. But she’s a ‘Blackberry person,’ a high-end client with a lot of things going on. I’ll send her an e-mail and photos of things she needs to decide on, and she replies.”

Conversely, he tells the story of an older client who got upset if crews weren’t on the job exactly when they said they would be.

“It’s very important for customers to know where you are — even if you need to be at somebody else’s house, they need to know you’re still looking out for their best interest. They’re OK with that as long you tell them the truth.”

There don’t seem to be systems available, Wendorff says, that can manage both the customer and the jobs themselves, so it’s really up to the remodeler to devise a system — even if it’s only pen and paper — that works for his business.

Like many successful remodelers, Wendorff has internal systems and procedures in place that cover customer relationship management. “Some of those systems are as simple as putting a note in our agenda or calendar to call the client six months after the project is finished to ask: “How do you like your house? Is there anything bothering you that you need us to come out and address?”


Follow-up is another part of customer relationship management. Lupberger suggests calling after 90 days, again after 180 days and visiting after a year. “There are going to be some nail pops or caulk pulling away as a result of drying wood,” he says.

Remodelers may refer to it as a warranty call but it’s really marketing. “You re-establish that relationship. You end up talking to them about their house, their neighbors and their life. You re-establish those good feelings,” he says. “Do it three times in the first year and it’s gold; it exceeds people’s expectations,” he concludes.

BOWA Builders follows a similar procedure with six-month and one-year walk-throughs. “There are times when we’ll see something to recaulk or touch up,” says CEO Larry Weinberg, “and there are times when we find other projects in the house. Sometimes we’ll generate some billable work.

“For us, 90 percent of our work comes from referrals or repeat clients, so keeping our name on the tips of our clients’ tongues is important. Four years later we want them to still be talking about BOWA Builders,” he says.

BOWA Builders and other remodelers also regularly employ surveys to gauge customer satisfaction and identify customer service areas that may need improvement. Weinberg calculates his Net Promoter Score, a concept introduced in 2003 in the Harvard Business Review and promoted by Fred Reichheld and others. Reichheld has trademarked the name, has written books on the subject, and maintains a Web site.

Customers are asked a simple question: Would you recommend us to a friend of colleague? Customers are classified as promoters or detractors, and the difference is a firm’s Net Promoter Score (NPS).

While there is some discussion surrounding Reichheld’s theory and its ability to accurately predict company growth, the concept of surveying one’s customers and analyzing the data for ways to improve customer satisfaction is a practice followed by many leading remodelers.

Most remodelers, too, keep in touch with previous customers in a variety of ways. Boa Construction is one of those that has a monthly newsletter and sends greeting cards as well. Follow-up phone calls are another method the company uses to keep communication lines open. “It’s good business practice to let people know you care about them,” Boa’s Croghan says.