1. Dealing with customers’ issues
Answering the Phone
It goes without saying that you want to keep your homeowners happy. Referrals from satisfied customers are essential to running a thriving construction business. So you know that someone has to be available to answer homeowners’ phone calls, day and night, during the week and on weekends, workdays and holidays. But helping a homeowner diagnose the difficulty they’re having with the furnace in their new home is not what you want to be doing on a Sunday afternoon or at 3 o’clock in the morning!
A warranty management partner will take on the job of providing a 24/7/365 phone service to your customers. But they don’t only answer the phone (that’s the bare minimum!). They should also triage homeowners’ problems, provide homeowner education, make warranty determinations, and schedule your subs to perform warrantable repairs.
Making determinations and doing repairs
You’re keen to move onto your next build. Spending more hours — either yours or your employees’ or subcontractors’ hours — on a previous build increases costs and reduces profit on that build. It also decreases how much time/money you can invest in your new builds. If you or your construction manager are traveling out to previous builds to make warranty determinations, that’s time you’re not investing in new projects.
Once you’re in a customer’s new home to make a warranty determination, we know how it often goes. They produce a list of other ‘little things’ for you to look at while you’re there. They may or may not be covered by your builder’s warranty, but you don’t want to seem petty and argue with your customers, so you simply agree to fix them. The unpleasant choice seems to be between saying no (and upsetting your customers and risking a poor review and no referrals) or accepting the expense of doing work that’s not covered by warranty. You don’t want to upset your customers, so you accept the expense — instead of focusing on moving forward with new builds.
Having an explicit written warranty (which can be customized to the homes you build), backed by a neutral third party who can make determinations, eliminates this headache. Homeowners appreciate a neutral party being able to tell them, “Yes, this is covered by warranty” or “Sorry, no, this isn’t covered by warranty”. You don’t have to be the ‘bad guy’ and deliver unwelcome news to your customers. And you don’t have to feel pressured to cover the cost of doing non-warrantable work. (Of course, in some circumstances, you might decide to perform good faith repairs because you judge it’s worth the expense in those specific cases.)
When you work with a warranty management partner, you eliminate hours of educating homeowners, triaging their problems on the phone, visiting their homes to make warranty determinations, and scheduling subs. You eliminate the stressful role of saying ‘no’ to a customer and telling them something isn’t covered by warranty. And you eliminate the hassle and expense of doing unnecessary repairs.
2. Keeping track of stuff
When you don’t have an explicit written warranty, it’s not always clear to your customers whether something is covered by your builder’s warranty. Especially for smaller items, you judge it’s easier to simply cover the cost and do the repair, whether it’s covered or not.
When you have an explicit written warranty, backed by a neutral warranty management partner, you can rely on your partner to know the ins and outs of every detail of your warranty. At ProHome, each builder we work with has a dedicated account manager who is familiar with that builder’s warranty and the homes that builder builds. You don’t have to agree to the expense and hassle of doing repairs that may not be covered simply as a way of avoiding the bigger hassle of coming to an agreement with homeowners about whether something’s covered or not.
Once you’ve agreed to do repairs, it can become a huge headache to keep track of what’s been done and finished, and what hasn’t yet been addressed. Depending on the size of your company and how many builds you complete, this can be more like a migraine! A warranty management partner will keep track of all this, ideally using software designed for the purpose — which you and your homeowners can access to confirm what’s going on. (At ProHome, we’ve developed proprietary warranty management software and we have tech staff who ensure it’s always running smoothly.)
Finally, you need to keep on top of the paperwork. What began as a note scrawled in the semi-darkness at 3am, when you answered a customer’s phone call, has to be attached to that customer’s file. The paperwork that proves any warranty work was completed also needs to be maintained in that customer’s file. Your legal protection depends on it. (If one of your customers from nine years ago claims the black mold in their basement is due to a leak you failed to fix when it was covered by warranty, do you have the paperwork available to prove in a court of law that you did fix it?)
A warranty management partner will take care of all the record-keeping regarding your warranty work. At ProHome, we protect our builders by maintaining all their warranty records for eleven years.
When you agree to do pretty much every repair a homeowner asks you to do — whether it’s covered by warranty or not — your expenses on each build are at the whim of that specific homeowner. Some homeowners may never call you, while others will call multiple times. This means you have no way of predicting what your warranty expenses will be on each home.
In addition to the time you spend on the phone with customers, you also spend time either going out to their home yourself or contacting and arranging for your superintendent to do so. It also takes time to arrange to have the subcontractors make the repair. All this time is a cost to your business — both because it reduces your hourly rate (and profit) on that previous build and because it takes time away from a new build. And it’s unpredictable time. On any particular build, you can’t predict how much time those homeowners will request of you.
In addition to the unpredictable time costs, you also have unpredictable dollar costs even if you do only work that’s covered by warranty. These include:
Travel expenses (for you or your superintendent to make determinations)
Overtime pay for employees answering the phone outside business hours
Hourly pay for your superintendent to make determinations
When you work with a warranty management partner, such as ProHome, you have a fixed warranty expense at escrow. You can budget for this expense on every home you build. We’re also confident that, when you tally up the true costs of what you’re spending on warrantable repairs, we can reduce your costs. Your warranty costs become both predictable and lower.
Check out this post to learn more about the benefits of working with a warranty management partner.
If you’d like to talk about how ProHome can help simplify your life, give Matt a call at (316) 706-0368 or email him at firstname.lastname@example.org.
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