A QUANTITATIVE APPROACH FOR CUSTOMER SATISFACTION MEASUREMENT OF REAL ESTATE DEVELOPMENT ENTERPRISE

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1 A QUANTITATIVE APPROACH FOR CUSTOMER SATISFACTION MEASUREMENT OF REAL ESTATE DEVELOPMENT ENTERPRISE Jn ZHANG, Dong Mng XU 2. X an Unversty of Archtecture & Technology, School of Cvl Engneerng, X an, Chna, Henan Unversty of Scence & Technology, College of Cvl Engneerng, Luoyang, Chna, Abstract: An analyss on the customer satsfacton mpact factors of real estate development enterprse n terms of prce, tme, qualty and servce s conducted and a quanttatve ndex system and measurement approach s establshed n ths paper. Furthermore, an emprcal case study s descrbed nvolvng a sample of sx typcal real estate development enterprses n X an cty. The results show that ths evaluaton approach s easly appled and can be modfed to adopt specfc regon of chna and also to facltate the evaluaton group n explanng the outcomes. Key words: Real estate development enterprse; Customer satsfacton measurement; Quanttatve approach Introducton The real estate ndustry s growng and becomng a major market for nvestors. Real estate development enterprses are tryng to fnd ways to mprove and provde superor qualty products and servces to satsfy ther customers. Satsfyng customers s an ultmate goal for every enterprse, as customers are the greatest resources, both short-term and long-term survval for the enterprse. Insde Research, a marketng research ndustry newsletter, estmates that the combned US and European customer satsfacton measurement expendture was at more than US$372 mllon n 997 and expendtures are growng at the rate of 20 percent or so every year Svadas and Baker 2000). The characterstcs of real estate are unque and the customer satsfacton s dffcult to defne, descrbe, and measure because of the specfc subjectve nature of customer s perceptons and expectatons to the products and servce provded by the enterprse. Researchers are tryng to defne the concept of the customer satsfacton as well as the way to measure t effectvely. There has been controversy about the concept and the measurement of customer satsfacton over the past decade and the research n ths area s stll beng developed. To measure the customer satsfacton, there have been several models proposed by many authors. P-E Percepton-Expectaton), E-P Evaluated Performance) and N-Q Normed Qualty) are three most popular models. The P-E model measures customer satsfacton by calculatng the gap between what the customers expect and what they perceve Cadotte and Robert 987). The E-P model determnes customer satsfacton by measurng only performance whch Cronn and Taylor clamed would best reflect customers perceptons and the expectatons are not part of the concept Churchll and Carol 982 ). Another mportant model s N-Q. Ths model measures servce qualty by the gap between perceved performance and the deal amount of a feature, rather than the customers expectatons presented by P-E model Fornell and Davd 98). All these models hold a same characterstc of dependng on the subjectve and qualtatve perceptons, whch not only makes t dffcult to collect the data and measure the customer satsfacton, but also decrease the accuracy of the measurement. Consderng the specalty of real estate ndustry and the need of ndustral admnstrator, ths paper wll explore a quanttatve approach. The ndexes of measurement wll be desgned to be objectve and quanttatve. The data wll be able to be collected convenently. Addtonally, an emprcal case study nvolvng sx real estate enterprses wll be appled to ths approach n order to valdate t. 2 Quanttatve Measurement Indexes Customers usually care about four aspects of the product and ts provder: cost, tme, qualty, performance or servce Kaplan and Norton 992). Accordngly, customer satsfacton could be measured from these four ponts of vew. The adopton of the ndexes correspondng these four aspects should base on the

2 characterstcs of real estate and the demands of customers n real estate market. Consderng the practcablty and ratonalty, the ndexes selected nclude: Prce Advantage, Delvery Rate on Schedule, Hgh Qualty Rate and Certfcate Complete Rate. 2. Cost: Prce Advantage The prce of real estate commodty possesses dstngushng characterstcs compare wth other commodtes: change frequently, the changeful real estate market result n the hgh frequency of prce change, whch ncrease the dffculty of prce comparson between dfferent enterprses; dversty, the dversty of real estate commodty type and marketng mode result n the dversty of prce. For example, the spot prce, presell prce and dvded payments prce often exst smultaneously; localty, the locaton of real estate wll greatly affect ts prce; senstvty of customer to the prce, customer wll defntely pay more attenton to the prce than other commodtes because of the hgh payment for ther real estate. Consderng the above specalty of real estate prce, followng prncple should be kept to whle evaluate the customer satsfacton from the pont of prce: accordng to the causal mechansm, evaluate potental change of customer satsfacton through measurng the prce change. The prce advantage s used to be evaluaton ndex of customer satsfacton. Dfferent type of prce should be converted to be spot prce accordng to the tme value. Prce Advantage PA) s defned as the comparson of general average prces between enterprse and ndustry. The bgger the Prce Advantage s, customer tend to be more satsfactory. Because several types of real estate are nvolved n the evaluaton and the prces of them normally are of great dfferent, the prce of each type of real estate should be gven a weght based on the rato of the enterprse s sale and the ndustral total sale correspondng the type of real estate. The real estates were sorted wth fve types: economcal and functonal house, vlla nclude hgh-grade apartment) common house, offce buldng and busness buldng. Supposng that the enterprse s average prce of type real estate s p, the ndustral average prce of type real estate s p, the enterprse s sale of type real estate s d S, the ndustral sale of type real estate s S, then the Prce Advantage of evaluated enterprse s: 5 S d o ) P " P ) = S PA = 00% 5 o P = 2.2 Tme: Delvery Rate on Schedule Tme has been one of the core compettve strengths for modern enterprse. It reflects the respondng speed to the customer demand of the enterprse on the one hand and the ablty of fulfllng promses of the enterprse on the other hand. Further more tme often mpacts the customer s trust degree to the enterprse. Makng a quck and relable respondence to the customer s demand s the key to wn and mantan valuable customer. The competton of enterprses from tme aspect could be measured by Customer Domnant Tme CDT). In the customer s value concept of commodty and servce provded by the enterprse, some customers take much count of shortenng the CDT, whch could be measured by the tme from the sgnature of contract to the delvery of real estate and servces; some customers thnk much of the relable CDT, whch could measured by punctualty of delverng real estate and servces. The nherent regulaton of real estate constructon gves customer lttle chance to gan shortened CDT, so the relable CDT contrbute to the customer satsfacton determnately concernng tme. The delvery rate on schedule ndcates the condton that enterprse delvers the real estate to the customer accordng to the contract on schedule. It can be fgured out by the rato of the area delvered and the area ought to be delvered n the evaluaton perod accordng to the contract. Followng s the equaton: 0

3 area delvered DR delvery rate) 00% area ought to be delvered 2.3 Qualty: Hgh Qualty Rate Nowadays, qualty has been an ndspensable factor n the market competton. Customers take t for granted that the real estate development enterprse should provde them hgh qualty commodtes and servces as per the contract requrement. Qualty s regarded as an mportant mpact factor to the customer satsfacton, and the tght relatonshp between qualty and customer satsfacton has been wdely receved Flynn et al. 995) Ahre et al) Cronn and Tylor 992). However, the consentaneous evaluaton ndex has not been found concernng how to evaluate the customer satsfacton smply and properly from the pont of qualty. Questonnare s a method frequently used whch evaluate customer satsfacton through analyzng the customers subjectve judgments. The hgh cost, long tme and complex procedure make ths method comparatvely dffcult to conduct. Hgh qualty rate presents the qualty condton of real estate developed by the enterprse. It can reflect the customer satsfacton to the qualty of real estate ndrectly. Moreover, the data collecton and measurement s convenent. Hgh qualty rate HQR) can be fgure out by the rato of hgh qualty area of real estate developed and total area n the evaluaton perod. Followng s the equaton: hgh qualty area HQR = 00% total area Hgh qualty real estate s defned as the buldng that are checked up to be hgh qualty grade accordng to the requred standard and regulatons lke Unfed standard for qualty nspecton and assessment of buldng constructonal erecton works, Standard for qualty nspecton and assessment of buldng constructon, Standard for qualty nspecton and assessment of buldng heatng santary and gas engneerng, Standard for qualty nspecton and assessment of ventlaton and ar-condtonng works, etc. 2.4 Servce: Certfcate Complete Rate Servce s an mportant and drect mpact factor to the customer satsfacton. Whether there s a fne servce has been the ndspensable consderaton for the customer to choose a real estate development enterprse. Servce could be dvded nto before-servce and after-servce at the lne of real estate delvery. After-servce s dfferent to the property management. But wth the progress of property management specalzaton, the real estate development enterprse tends to transfer the after-servce to the property management enterprse by makng a contract. In such stuaton, servce relatonshp between customer and real estate development enterprse manly focus on the before-servce. At present n the real estate market, the most essental content of before-servce s the tmely and complete provdng of real estate certfcate. The necessary certfcates nclude: corporate charter, corporate qualfcaton certfcate, land use certfcate, cty plannng permt, constructon permt, presellng permt, qualty guarantee document and use manual. Certfcate Complete Rate CCR) can be fgured out by the rato of certfcate complete area of real estate and total sold area. Followng s the equaton: certfcate complete area CCR = 00% total sold area 3 Evaluaton Approach and Emprcal Case Study Supposng the customer satsfacton s CS; the evaluaton ndex s V = x, x, x, ) ; nonlnear 2 3 x4

4 nondmensonalzaton method [9] ' s used and the nondmensonalzed ndex data s V = s, s, s, s ) ; the ndex weghts are W = w, w, w, ) ; then the customer satsfacton can be calculated by usng the followng equaton: CS = V ' ' W T = 2 3 w4 2 [ v v v v ]' $ LLLLLLLLLLLLL ) & w $ w $ w $ % w 3 4 # " The data from sx real estate development enterprses n X an was collected, table presents the calculated ndex data and ther nondmentonalzed data. Table Customer Satsfacton Index Data Index enterprse BQ JC XH ZQ HH XC Prce Calculated data Advantage After nondmentonalzed Delvery Rate Calculated data on Schedule After nondmentonalzed Hgh Qualty Calculated data Rate After nondmentonalzed Certfcate Calculated data Complete Rate After nondmentonalzed Orgnal data come from X an Statstc Bureau statstc report Severn experts were nvted to mark the weghtness of the ndexes accordng to the 9 degree, and the AHP approach was used to calculate the evaluaton ndex weght. The result s: W= Base on the equaton ), the customer satsfacton of each real estate development enterprse can be calculated: CS BQ = 0.82 CS JC = 0.64 CS XH = 0.48 CS ZQ = 0.39 CS HH = 0.64 CS XC = 0.49 And thereby the customer satsfacton of these sx enterprses can be sorted: 4 Concluson BQ>JC=HH>XC>XH>ZQ Managng customer satsfacton s an mportant strategy for real estate enterprse to run ts busness and for admnstrator to execute ts management, though there s no exstng standard or consstent measurement of customer satsfacton. Even the best and most popular measurement model stll has serous problems that are both conceptual and operatonal. Because of the unque characterstcs of real estate, t causes dffculty n measurng customer satsfacton. Though researchers are stll tryng to fnd a standard and consstent measurement of customer satsfacton, one s not yet avalable n the real estate ndustry. Developng separate approaches to measure customer satsfacton dependng on the purpose and context of the measurement. The real estate ndustral admnstrator confronts a large amount of enterprses, so the measurement of the customer satsfacton needs to be explct to explan and convenent to operate. The quanttatve approach

5 proposed n ths paper makes t possble to measure the customer satsfacton effectvely and effcently. Reference Ahre S.L., Golhar D.Y. and Waller M.A., 996). Development and valdaton of TQM mplementaton constructs, Decson Scences, Vol. 27 No., pp Cadotte E.R., Robert B.W. & Roger L.J.987). Expectatons and Norms n Models of Consumer Satsfacton, Journal of Marketng Research, Vol.24 August), Churchll. G.A. & Carol S. 982). An Investgaton nto the Determnants of Consumer Satsfacton, Journal of Marketng Research, Vol.9 November), Cronn J.J.Jr. and Tylor S.A. 992). Measurng servce qualty: A reexamnaton and extenson Journal of Marketng, 56, pp Flynn B.B., Sehroeder R.G. and Sakakbara S. 995). The mpact of qualty management practces on performance and compettve advantage, Decson Scences, Vol. 26 No. 5, pp Fornell C. & Davd F.L. 98). Evaluatng Structural Equaton Model wth Unobservable Varables and Measurement Error, Journal of Marketng Research, Vol.8 February), Kaplan R.S. & Norton D.P. 992). The balanced scorecard-measures that drve performance, Harvard Busness Revew, Jan.-Feb., 992, Svadas, E., & Baker-Prewt, J.L. 2000). An examnaton of the relatonshp between servce qualty, customer satsfacton, and store loyalty, Internatonal Journal of Retal & Dstrbuton Management, 28 2), Su MngGang and We Y 2000). Study on Nonlnear Nondmensonalzaton Method of AHP Evaluaton Index, Techncal Economcs, 20002).