Part of the foundation
Editor's note: Lucy Klausner is vice president of Polaris Marketing Research, Inc., Atlanta.
Ever since Alcoa Aluminum founder Arthur Vining Davis took the first two letters of his three names to create Arvida in 1958, the Boca Raton, Fla.-based real estate development company has focused its mission on planning, developing, building, and operating master-planned residential and resort communities for customers seeking a superior lifestyle. Arvida's first undertaking was the renowned Boca Raton Hotel and Club. Since then, it has developed more than 60 master-planned communities in five states. These communities serve individuals and families with varied income levels, from first-time buyers to retirees, providing amenities, services and programs aimed at addressing the needs of all residents.
Now owned by the St. Joe Company, Arvida is known for its commitment to quality and excellence, with a goal of making every facility and service the finest of its kind. To reach that goal, Arvida's management began conducting in-house satisfaction surveys of its home buyers at closing, starting in 1992. In 1995, Arvida established infrastructure groups charged with maintaining the company's five core strengths:
- master planning, for creating exceptional communities;
- recreation and leisure, for rejuvenating residents through programs and facilities;
- education, for enriching residents through onsite lifelong learning opportunities;
- community safety, for connecting and protecting residents; and
- customer relationship, for caring for customers through strong communication and feedback.
In 1998, Arvida hired an independent consultant, Lee Harkins of Harkins and Associates, to work full-time on improving Arvida's processes as they impact customer relationships. Harkins, in turn, brought in Atlanta-based Polaris Marketing Research, Inc. in 1999 to develop a feedback program that would give Arvida the data it needed to help develop positive, lifelong relationships with its customers.
Ample opportunities for customer feedback
Polaris surveys each Arvida home buyer throughout the sales, construction, and ownership processes to provide Arvida with a full understanding of the entire home buying experience from the customers' perspective.
When they first contract for a home, customers fill out a written buyer's profile that tells Arvida who they are and what they want in a new home and community. A second questionnaire addresses their experience with the sales process and design selections. Arvida first offered customers the option of responding to subsequent surveys via e-mail or interactive voice response calls, but now uses only telephone interviewing because it provides the extensive probing necessary for uncovering hidden complaints.
After closing, home buyers answer questions on the construction and closing process. About 90 days after closing, they complete a survey on warranty service. Finally, one year after their purchase, customers are asked to rate their home on topics such as satisfaction with the floor plan and their community on such issues as quality of life and amenities.
This comprehensive program allows Arvida to track each customer touch-point so that opportunities for major and incremental improvements can be implemented and tracked.
Critical to the feedback program are Polaris' action reports. These allow Arvida to intervene promptly with homeowners who report serious problems and ask for direct contact. "We have learned by reading action reports and listening to our customers throughout the home building experience that setting clear expectations throughout each process is key," says Lee Harkins. "By tracking home buyers across the entire experience, we can better pinpoint inconsistencies in our communication process. As we have oftentimes learned the hard way, inconsistent communication creates home buyer remorse."
Align internal processes with what matters to customers
Customer ratings on specific issues provide Arvida with crucial intelligence needed to make timely business decisions, and allow Arvida to maintain a customer-focused environment by holding employees accountable for client feedback. Under the leadership of Harkins and Arvida Vice President of Sales and Marketing Dick Larsen, Arvida's customer relationship core group meets regularly to study Polaris' monthly and quarterly reports, as well as periodic driver analyses so they can identify ways to improve the issues that have the highest impact on customer satisfaction. Core group members include key managers for each property and function relating directly to home buyers (sales, design selection, home financing, construction, warranty service and community service).
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Before Harkins became involved, Arvida had few structures in place to analyze the results of the admittedly belated data it received from mail surveys, and it had no system for addressing improvement opportunities that the information might have indicated. "You can collect all this data, but if you don't do anything with it, it's wasted," Harkins told Arvida's management team. "You've got to take what you've learned from that data and align it with your internal process measures. For example, in the sales questionnaire, we found that explaining features of a home is a key thing to our customers. We are focusing on putting a process in place that motivates sales personnel to communicate features more effectively and makes home buyers feel comfortable with decisions made during the feature selection process. We have been able to better satisfy home buyers in this particular area by working with our salespeople and bridging the gap between what customers say they need from sales reps and what sales reps actually provide."
Arvida has found the stronger connection between its research and its internal processes to be good for the bottom line. "We felt that if we could improve our processes, our customer satisfaction levels would improve dramatically, and they have," Larsen says. "We knew that, if we got them high enough, there would be significant financial benefits. Our referral rates would go up, and word of mouth would have far greater impact on our sales, so fewer marketing dollars would need to be spent. And most importantly, if we could improve our processes, customers would enjoy living in our communities even more."
Give employees the power to resolve issues
Early driver analyses told Arvida that good communication was the most important quality to highly satisfied customers, while poor communication was strongly impacting customer evaluations of every aspect of the home-building experience. Since the longest part of the building process is the actual construction, Arvida developed a special communications plan for that portion of the process. "The customer relationship core group decided that the construction supervisors should call the customers once a week, every week, to report on the progress of their house. The supervisors resisted, saying they'd be on the phone all the time. But we made them do it anyway," Harkins says. "The only thing we changed that quarter was the communication, but every single measure improved over that quarter. It had a dramatic effect on everything, including the customer's perception of the quality of workmanship and materials. Now we have the supervisors at every property call their customers once a week."
The improvement in customer satisfaction was so obvious that supervisor resistance disappeared. The weekly calls were welcomed particularly by the many out-of-town Arvida customers buying investment, vacation, and retirement homes. Ted Watts, a senior vice president with Bank of America in Charlotte, N.C., and his wife had built three custom homes over a 20-year period before purchasing an Arvida home at Hampton Park in 2001. "In each case we lived in the city in which the home was located and were able to inspect the progress on a routine basis. Because we were not currently living in Jacksonville, as we began the process for the fourth time with Arvida, I was very concerned about how the construction process would go and the quality of the product that would result," Watts said in an e-mail letter to Arvida. Not only was Watts impressed when the construction superintendent said he would call every week (and then kept his word), but Watts said he was gratified that the superintendent "spent the time required to patiently answer my sometimes very detailed questions. My concerns as a 'remote' homeowner quickly disappeared."
Carefully tie pay to performance goals
With the communications bear under control, Arvida's management continues to focus on quality improvement. Process management teams for each individual community meet monthly to look at issues found in customer comments and to implement change before problems actually occur. Process teams consist of a cross-section of employees representative of several areas (sales, design, construction, closing, warranty, land development and marketing). Ideas are generated in a team environment focused on sharing ideas and best practices.
Using the reports provided by Polaris as benchmarks, Arvida has developed annual goals, initiatives and commitments for land development, sales, design, closing, and warranty. The goals involve target ratings on specific questions in the Polaris questionnaires, and management compensation is tied to customer satisfaction in each area. The key to success is that the staff sets the goals it expects to achieve. Annually, the various core group members present their goals to management in a formal setting and talk candidly about their successes as well as future opportunities for improvement.
The research program has triggered "a dramatic cultural change within Arvida," Larsen says. "Our training of employees has expanded extensively and most of it is directly related to the customers. The whole organization is far more engaged in serving the customer than it was five years ago. All these goals continue to put the focus on the customer and we've seen dramatic improvements in their satisfaction levels."
Continue to live the Arvida vision
As Arvida continues to build world-class homes, its infrastructure relies on customer feedback throughout the process. "The process that people go through to buy a home in an Arvida community provides them with a clear understanding of what we're trying to do, thus enhancing the livability of their home and the community," Larsen says. Arvida is able to meet its vision of creating a superior way of life for customers by providing multiple opportunities for customer feedback; aligning internal efforts for improvement with the issues most critical to customers; giving employee teams the power to drive improvement, and letting employee teams set their own performance goals.