In a story, that is, unfortunately, all too common in the world of residential construction and home improvement, a St. Louis doctor and his wife had a very bad experience with a remodeling contractor. In 2004, they initiated a $200,000 room addition and kitchen remodeling project, and trouble signs began to surface almost immediately.
After only a few days of demolition, the project sat unattended for more than a week. And despite serious misgivings, the couple chose to soldier on, pushing the contractor to stay on schedule. The project proceeded, in fits and starts, until many weeks after the original project completion date and much of the work was yet to be completed. Then came an unusually long absence followed by some bad news. The contractor was going under. He was filing for bankruptcy.
In the end, the doctor and his wife lost most of the $150,000 they had already paid. Later, they found a new more competent contractor to finish the job, but by then almost a year had passed and they had been seriously nicked financially in the process. Ultimately, the couple had the means to recover and move on.
Case closed, right? Not really. This one bad experience has had ripple effects throughout the high-income community where the couple resides.
First, there was the serious strain that this mishap put on the friendship between the couple who referred the contractor to the doctor. The referring couple had worked with the contractor on a smaller job and were relatively happy with the outcome. So when their friends asked his name, they were willing to give a recommendation.
Second, both couples say they have told the story as a cautionary tale countless times in the ensuing years. And though the exact dampening effect that this negative retelling has had on the local market is hard to calculate, certainly many remodeling projects were delayed or scrapped on account of this single circumstance. Indeed, management experts at the University of Pennsylvania’s Wharton School of Management who recently studied the effects of satisfied and dissatisfied customers have confirmed the age-old truth that bad news travels faster than good news. They even have put numbers to it.
- The average person who has had a problem with a particular product or service eventually tells nine other people about the bad experience. The research also found that with each retelling of the bad experience, the listeners each retell the story several times but with added embellishments to the severity.
- On the other hand, satisfied customers are much less vocal. On average they tell five other people about their good experience with a product or service. Not wanting to be like the couple who referred a bad contractor to a friend, people don’t want to be held responsible when something goes wrong. Even if their own experience is positive, they are more likely stay silent with that information.
That is why for the third straight year, Qualified Remodeler has partnered with RenovationExperts.com to survey consumers who had recently remodeled their homes. The goal is to set benchmarks for quality service to help remodelers identify the areas where relationships with their customers go off the rails, often silently, at levels that are below detection. In addition to the negative embellishment research from Wharton, other management expert studies have found that smaller business relationship missteps lay in the weeds in the background, until the service provider pointedly asks for feedback. Specifically, they found that:
- only 4 percent of all customers with problems complain to the company about their problem;
- the cost of acquiring a new customer is five to seven times greater than retaining new ones.
This May, we asked a sampling of 1,000 consumers who recently remodeled their homes to rate their contractors on scale of 1 to 10, with 10 being the highest and best score, on overall satisfaction with the job that was completed, the professionalism of their remodeler, the timeliness of their work, the fairness of their price and lastly the quality of their workmanship.
On a year-over-year basis comparing this year with last, the scores were lower, all things considered. The aggregate scores ranged from high 6’s to mid 5’s vs. mid to high 6’s the year before. These lower scores were also reflected in the percentage of consumers who said they would hire their remodeler again (50 percent this year vs. 55 percent last year) as well as those who would be willing to refer their remodeler (52 percent this year vs. 56 percent last year).
And, as we have done in previous years, we continued to see a consistent pattern of much higher levels of satisfaction expressed in favor of remodelers whose customers were willing to buy again or refer. The results show that those who were able to get this basic level of approval from their customer scored in the mid to high 8’s in all five categories measured, from professionalism to workmanship.
So, after three years of conducting this work and reaching the same conclusions three years in a row, we can feel confident in our analysis that remodelers who have made the decision to manage their firms to garner the benefits of highly satisfied customers must first avoid the clear, even predictable obstacles to customer satisfaction.
- Keep the jobsite clean and organized at the end of each day. This seemingly simple detail that requires no more than 15 to 20 minutes before leaving the jobsite has proved to be a powerful differentiator of satisfaction levels. According to the latest survey, those customers who agreed with the statement that their remodeler kept their jobsite clean each day scored in a range of 7.4 to 8.0 vs. those who did not keep the jobsite clean who earned scores between 3.0 and 4.5.
- When possible, finish projects on time. Another predictable differentiator between those who are satisfied and those who are not is timeliness. This year, as in the past, scores of 8.0 and higher are common in all measured categories and are common for those that finish on time. While those who say their project was not finished on time suffered scores in the mid 3’s.
- Set clear expectations about the remodeling process. Also borne out by three straight years of similar results is the importance of giving clients a clear and truthful idea about the likely ups and downs of embarking on a remodeling project.
Clients that said their remodelers did properly prepare them for the process gave their remodelers scores of mid to high 7’s across the board. Conversely, clients were much tougher on their remodelers when they thought expectations were unclear or unmet. They awarded scores ranging from 2.6 to 4.2.
- Be meticulous in your communication with clients. This predictor of satisfaction success has its roots in two questions. The first question was about whether clients felt they were kept informed throughout the remodeling process. The second asked whether clients felt their remodeler was honest. The tendency for any person trying to close a deal is to be positive and upbeat.
This is where much of the problem lies for remodelers. They tend to make overly optimistic projections of timelines, prices and quality of the finished product. This year an alarmingly high number of consumers disagreed with the statement that their remodeler was honest. These clients awarded scores of 2.5 to 4.1 to their remodelers vs. those remodelers whose clients felt they were honest. The latter group achieved scores of 7.7 to 8.3.
This year several new questions were added to begin to probe outward in new directions, searching for new customer satisfaction differentiators. Because of a heightened awareness of global warming generally and green building specifically, we asked: “Did your remodeling project include any earth-friendly or ‘green’ products or materials?”
A surprisingly high 34 percent of those surveyed said their remodeling project did include such products and materials. And, on average, that group was clearly more satisfied with their remodelers’ work. They achieved scores of 6.1 to 7.0 vs. the nongreen respondents who awarded scores of 5.5 to 6.5.
Another new question dealt with remodeling’s perennial challenge, rebuilding someone’s home while they are living in it. In previous years we documented higher levels of customer satisfaction associated with remodeling projects that are nonintrusive. Decks and exterior renovations each get high marks in comparison to a kitchen, bath or room remodel for that reason. Vacations homes, not surprisingly, score the best. This year we asked respondents to tell us whether they were living in their home at the time of their remodeling project, 85 percent said yes, 15 percent said no. The satisfaction results associated with this question were the opposite of what we expected. Those who did not live in the home they remodeled gave scores ranging from 4.6 to 5.3. The 85 percent who lived in their home throughout their remodeling projects gave higher scores ranging from 5.6 to 6.6.
Motivations for Remodeling
Remodeling is not an easy process for any homeowner. There are many important decisions to be made and then there is the upheaval of the project itself. That is why we asked our 1,000 respondents which they would choose to do, move or improve, “if money were no object.” A wide majority, 62 percent, decided that they would rather improve.
From there, we tried to uncover the reasons that ultimately prompted our respondents to embark on their remodeling project. (See the pie chart, “Why did you remodel your home?” on page 38.) Maintenance and repair was the No. 1 reason at 30 percent, followed by a desire to “update the look of my home” at 26 percent. Energy efficiency (6 percent) and life change (8 percent) were lower than anticipated. Also coming in lower than expected were responses that are tied in with an important remodeling indicator, existing-home sales. Only 6 percent said they improved to get the home ready to sell, and only 5 percent said they improved because they were getting ready to move in.
When asked where they first heard about the remodeler they selected, the Internet was No. 1 at 50 percent. This makes sense as the program was conducted through a remodeling contractor Internet referral site, www.renovationexperts.com. The complete list of lead sources is found in the pie chart at the top of this page.
Referrals from friends, at 18 percent, are clearly a critical source of jobs for most remodelers. And referrals only come from satisfied customers.