the critical role of suppliers & trades in customer satisfaction Scott Sedam TrueNorth Development Northville, MI NAHB International Builders Show 2007
Anyone remember last year? Presentation: Looking for love in all the wrong places A lament on back-end, fix it after its broke strategies. Oops! You call that a strategy? Throwing people, time & money at the back end, Build em up! Fix em up! Buy em a puppy! See The Cost of Puppies PB column by Scott Sedam
Customer Delight Pyramid? Direct Contact Activities or elements involving face-to-face customer contact Support Activities Actives & elements usually not requiring face-to-face customer contact but having an otherwise high impact that is easily seen and understood Foundational Elements Elements that are often more subtle, sometimes not seen as tied directly to customer satisfaction, but having a profound impact nonetheless.
(more like) Iceberg! Customer Delight Hazardous Area (Thar be dragons!) Direct Contact Support Activities Foundational Elements
DIRECT CONTACT 1. Written Comm. strategy 2. Sales office strategy 3. Design center strategy 4. Pre-construction meeting 5. Construction process strategy Weekly call? e-mails? Initiated by sales? construction? 6. Pre-drywall Orientation 7. [QA hand-off walk *] 8. Homeowner Orientation 9. Closing Strategy 10.Closing survey 11.Service strategy & system Call? Write? E-mail? 12.Two-week mgt. contact 13.30-day walk 14.6 week survey (3 rd party) 15.6 month walk 16.11 month walk 17.1 year survey (3 rd party) 18.and the Gotcha! Gotcha!
DIRECT CONTACT 20 Presentations guess how many got #18? 1. Written Comm. strategy 2. Sales office strategy 3. Design center strategy 4. Pre-construction meeting 5. Construction process strategy Weekly call? e-mails? Initiated by sales? construction? 6. Pre-drywall Orientation 7. [QA hand-off walk *] 8. Homeowner Orientation 9. Closing Strategy 10.Closing survey 11.Service strategy & system Call? Write? E-mail? 12.Two-week mgt. contact 13.30-day walk 14.6 week survey (3 rd party) 15.6 month walk 16.11 month walk 17.1 year survey (3 rd party) the Gotcha! Gotcha! 18.and the
One! (and he cheated!) How is this possible? Despite the fact that 95% of the people who do the work for builders, don t work for the builders, no one gives them much thought when it comes to customers?
Support Activities Behind each & every customer interface lies internal communication, systems & structures. Internal Communication is nothing less than critical Hal Peller, TND facilitator extraordinaire, is a genius! Wherever he goes he asks, I ll bet you have communication problems here! Huge, messy, complex, often ugly problem
Marketing Land Dev. Sales Support Activities Purchasing Estimating Architecture / Design Design Center Construction Suppliers & Trades etc. Finance Accounting Service etc. etc.
Support Activities Internal Communication Bottom line: Once you build more than 100 homes/year, you can t leave communication as an ad hoc system The Default Option for organizations is lousy communication You must build in the systems & structures to enable and everyone is accountable: e.g. Weekly sales & construction meeting on site at a minimum Month community reviews in the field
Support Activities (cont (cont d) a small sampling of indirects New community Start-up System Home Start-package System Plans, Options & Selection System bulletproof Corrective Action Systems (e.g.) Plans current Plan correction & update Trade Development Strategy Who gets the best trades and the best crews? Recruiting, Hiring & Orientation Strategy Training Strategy Advertising strategy
Support Activities Q: How many support Activities involved suppliers & trades? Q: Do you think this impacts customers?
Foundational Elements Regarding Plans, Options, Colors & Selections: (multiple choice test, pick one. a) Have bulletproof systems b) Keep it very simple c) Drive yourself, your trades & your customers crazy Most Builders have unnecessarily complex product, messy systems & convoluted processes The definition of a good system/process Complexity curve
Foundational Elements (cont d) Clear business strategy Product focus Market segment Business model Option, colors, selection process defined, maintained PAY ON TIME Service Tracking Data system Manual or automated
Foundational Elements (cont d) Schedule, schedule, schedule Most Builders say Most suppliers and trades say Electronics will solve this once and for all! (lol) The handheld & otherwise automated schedule nightmare. Field personnel runs two systems ISD staff is contemplates hari kari VP s are being fooled, in denial, or looking the other way.
Foundational Elements Q: How many foundational elements involved suppliers & trades? Q: Do you think this impacts customers?
The Letter Dear Mr. President, Does it look a little different now?
A huge factor few understand* The impact of TIME Conceptually, its so simple its frightening In practice its astoundingly difficult but Does it have to be???
Caution You cannot build your organization on the backs of heroes. The role of a hero is to do astounding things in times of: War Major Accidents Natural Disasters So unless you define your company as one of the above But when they are needed will they, can they, step up?
Regarding the Hero Strategy: So how s s THAT workin for ya? Dr. Phil
In 1992, James Carville s s sign said IT S THE ECONOMY, STUPID! 5 years ago my column said IT S THE CULTURE, STUPID! And 5 years later, nothing has changed IT S STILL THE CULTURE, STUPID! And your culture includes your suppliers & trades!
The TrueNorth Award for Excellence in Builder/Supplier/Trade Relationships National or Regional Builder: John Laing Homes, Denver Division Grayson Homes, Baltimore There is a tangible difference in culture If you can t see it, you don t get it!
Culture in its simplest form No Fear --Any and all news up and down* A shared commitment to do the right thing. With associated folklore Prevention mentality Always seen in house complete Understand the concept of 1-10-100 Truly open communication Up down / down up. (most people get that.) Often the biggest problem is peer level, especially on the management. team A bias for execution
What Culture says about Customers Customers First? Second? Perhaps a very close Third!
Customers Come Third? 1 st your employees 2 nd your suppliers & trades If you do that well, your customers will do better than those builders who place them first! Caveat: 1 st, 2 nd & 3 rd should be almost impossible to distinguish among the people within the groups! They will all feel like #1.
Just how do we get our suppliers & trades to join with us in the goal of creating customer delight? So we asked the experts, And they All said
The bottom line I am a HUGE believer in the creation of a robust system to manage the Total Customer Experience Without the organizational culture to support and sustain it, you are wasting your time. It takes BOTH the System & the Culture. But if your suppliers & trades don t buy in, forget about it!
The meeting that changed everything! March 1989 Fire up the wayback machine, Sherman
The speech! March, Bloomfield Hills, MI Harriet ups the ante! October, 1989, Chicago Mike has the epiphany
You think you are doing it? So Prove it! Example: The $1,000,000 question. Ask you purchasing managers Ask your field superintendents. & customer service managers You say you have the best trades? Let s see your evaluation criteria And what about the best crews?
More Prove it (2/3) You say you know how to choose trades? Show us your selection criteria? What about the mystery factor You say get Supplier Trade Feedback? Show us your system? Do you put 1/10 the effort into it that you do getting customer feedback?
More Prove it (3/3) You say you develop your Suppliers & Trades? Show us your training schedule! Both ways! You involve your Suppliers & Trades in continual improvement? Show us your supplier/trade council Show us your monthly plan review Show us your VA/VE
It s s all about the Culture, baby, its all about the Culture!! Steve Petruska, Pulte COO, during Q & A at the end of the quality training workshops that all 12,000 employees and hundreds of suppliers & trades are required to attend, and without your suppliers & trades on board, your culture is nowhere Scott Sedam, after two decades of trying to crack the code.
All I have to offer you is Profit! Dr. W. Edwards Deming
Scott Sedam, President TrueNorth Development, Inc. 141 N. Center Suite 201 Northville, MI 48167 248.248.6011 scott@truen.com www.truen.com www.truenorthconference.com CONTACTS www.probuilder.com Click columnists, then Scott Sedam Lesson s Learned Current Professional Builder Columns 8 years of column archives