The latest news from GuildQuality.

Nina Patel of Remodeling has a nice piece on deconstruction in remodeling. I first became aware of the practice when visiting with Melton Construction in Boulder, CO. Another member, Talmadge Construction, is prominently featured in this article.

As dumping costs rise, deconstruction has become more and more economically prudent — not to mention the obvious environmental benefits: reduce, re-use, recycle. The article offers some great advice for remodelers interested in the process.

This AJC describes Robert Charles Lesser’s assessment of Gen Y buyer preferences. The article in a nutshell:

Many in Gen Y have little interest in the lawn mowing, cul de sac life that’s characteristic of so much of Atlanta. At least for now.

Instead, Gen Y wants high-tech convenience and communication, walkability, green building standards and diversity. They’ll sacrifice space, and some will even pay more, to incorporate those qualities into their lives, real estate experts say.

That’s good news for infill redevelopment efforts. “Intown areas and inner suburbs will really remain on an upward trajectory” when the housing market turns around, said Sarah Kirsch, senior principal at Robert Charles Lesser.

Many others have observed similar trends among Gen X buyers and empty nesters. A couple examples here and here.

An afterthought from my previous post:

Among those GuildQuality members that have been with us for more than 2 years, a heartening 47% have had more customers in the most recent 12 months than in the 12 months period prior.

My guess is reviewing revenue numbers rather than number of customers would show a much lower percentage of growth companies (we don’t yet track that info in a normalized format).

Unfortunately, even some of the building and real estate companies that rely on GuildQuality have not been able to carry forward in this challenging market. We know of 12 members that have filed for bankruptcy in 2008.

Of course, when I hear that kind of sad news from one of our members, the first thing I do is check out their account. I noticed enough unhappiness among customers of businesses that are shutting their doors, that I did a little number crunching. I quickly learned that, as a group, they earned the recommendation of their customers 83.3% of the time.

83% is considerably below average for our Guildmembers, so it got me thinking a good bit more. I asked David on our engineering team to pull me all data for all of our members who 1) have been with us for at least two years, and 2) have surveyed at least 15 customers in each of those two years (to get some meaningful data). Here’s what I found:

If you had more customers in the most recent 12 months than you did in the prior 12 months (I called that “Positive Growth” in the chart above), you were among our top performers with a 94% recommendation rate. If you had fewer customers in the most recent 12 months relative to the prior 12 months (”Negative Growth”), your recommendation rate was 4 points lower.

Some other observations:

90% of “positive growth” members have a recommendation rate above 85%

82% of “negative growth” members have a recommendation rate above 85%

42% of members that filed for bankruptcy had a recommendation rate above 85%

If you have a recommendation rate below 85%, you are 6.2x more likely to close your doors than if your recommendation rate is above 85%.

One of the points I try to reiterate in my presentations is that your reputation is your greatest asset. It earns you premium pricing when the market is strong, and it’s your warm blanket when times are tough. Our data clearly supports that assertion.

GuildQuality works with a number of franchises. In many ways, our relationship with a franchise is similar to our relationships with community developers and their homebuilders. We provide the franchisees with the information they need to continuously improve their customers’ experience. The entire franchise community benefits because the strength of the franchise brand improves along with the improvements in the quality of each franchisees customer service. And as with community developers and their builders, we can bring those franchises some special benefits with regard to awards programs and peer comparisons.

This morning I came across an early 2007 interview with four of the leading franchises in the remodeling business. As it happens, two of the four work with GuildQuality (Case Design/Remodeling and DreamMaker Bath & Kitchen).

From Charles Koch’s The Science of Success:

“The key is to recognize when you are experimenting, and limit the bet accordingly.”

A friend works with Georgia Pacific, which in 2005 was acquired by Koch Industries. In my response to a question about “what things are like” working in a company guided by Koch’s business philosophy. Here’s what he had to say:

There is a palpable sense of leadership looking to advance a belief in entrepreneurship among employees – drilled down to all levels of employment so that people look at their jobs and try to find the most effective ways to perform and can be compensated as such. Not a usual tact for other companies.

I have admired Koch for some time, and am excited to be diving into this book. You can see a little more about the man and his Market-Based Management business philosophy here. Thanks to a commenter at Marginal Revolution for pointing out the aforementioned quote.

I just finished examining financial information from 457 recent remodeling projects for which we had survey responses. From the data, it looks like…

Gross Profit Margin = (0.0424 x Satisfaction Index) + 0.4155

Per that equation, if 50 customers were completely unsatisfied (zeros across the board and would not recommend) the remodeler would earn an average GPM of 41.55%. If 50 customers were completely satisfied (fours across the board and would recommend), the remodeler would earn an average GPM of 45.79%.

However, that equation assumes a linear relationship, and isn’t really a reflection of reality. In actuality, the influence is more dramatic on the far left and far right ends of the chart. GPM tweaks up and down in the extremes: when comparing the 50 most satisfied (avg GPM of 49.0%) and the 50 least satisfied (avg of 40.5%), the difference is actually 8.5%.

These customers are all from roughly the same period, so I theorize that the increases in GPM are attributable to a smoother experience. They don’t reflect any increases a member would ultimately realize from continued improvements in reputation. Those gains would certainly come (and some other research suggests they will be significant), but the positive trend I see here is likely a reflection of the direct and immediate benefits of less call backs, less fee disputes, etc.

Bigger gains in profitability come when the stronger reputation begins to earn the company premium pricing. But judging from this data, there are immediate financial benefits from delivering an exception customer experience: Jobs are more profitable when the customer is happy.

On a $10,000 job, the contractor makes $60 more by having a very happy customer (95%) as opposed to a moderately satisfied customer (80%). For a $400,000 job, the same improved satisfaction increases the gross profit by $2,400.

This past week, we moved a few blocks to a new building in Midtown Atlanta. While the move covered only 1.9 miles, we can certainly lend credence to what is said about a welcome change in an environment. We are enjoying ourselves as we continue to settle into our new nest.

An overarching objective we had in mind as we moved was “to simplify”. As the words “we really don’t have that much stuff” began to fall from our lips, our “stuff” seemingly doubled, tripled and finally quadrupled in size. Needless to say, we parted with some of our possessions.

In the end, we were able to manage the move quite comfortably and uneventfully with particular thanks owed to the Herculean efforts of Rob Faraj and Michael Hardy.

For your records, the only thing that has changed is our address:

GuildQuality Incorporated
750 Ponce de Leon Place NE
Suite 3
Atlanta, Georgia 30306

Like most of you, we at GuildQuality make the exploration of lead generation tools a part of our day-to-day effort as a means to grow our business.

Capterra, a web-based tool we use on occasion, earns it’s space by helping businesses “find the right software by presenting them with all of their options so they can compare solutions and make the right decision”. Capterra is a very useful and productive tool for companies not only looking for, but also providing software solutions that help us to keep our eyes on the road.

Recently, Capterra added new functionality which allows software providers, such as GuildQuality, to solicit comments from its customers. You can access our feedback page via the GuildQuality forum here. This is the part where we shamelessly ask you for any feedback you might have about your experience with GuildQuality. We would certainly appreciate any feedback you are able to provide.

As your company continues to grow, you will undoubtedly look to software to help you alleviate and/or make existing processes more efficient. This, of course, is a good problem to have. It’s at these moments, we encourage you to keep Capterra in mind.

Last Thursday on August 28, Geoff Graham addressed the Atlanta Remodelers Council at the headquarters of the Greater Atlanta Home Builders Association. The Atlanta Remodelers Council meet on a regular basis “to improve their business management skills, to network with peers, to perform community service and to work for the betterment of the industry”. This is a really great group of quality-minded remodelers with a collective interest in delivering an exceptional customer experience.

Geoff’s main topics of discussion were the principles behind what he called “Marketing and Anti-Marketing Megaphones”. He explored some of Fred Reichheld’s ideas about NPS and talked about how “detractors” and “promoters” can affect your reputation and ultimately, define the longevity and success of your business. We really appreciated the enthusiasm and participation of the council.

We would like to thank, again, the GAHBA and the Atlanta Remodelers Council for inviting us.

** Geoffrey Graham, President and Founder of GuildQuality, is a regular speaker at conferences, meetings, shows and builder groups across North America. If you would like to make arrangements for him to come speak at your event, simply contact us to provide us with the pertinent details.

On September 20, at this year’s CCN (Certified Contractors Network) Contractor Training Conference, Geoffrey Graham, President and Founder of GuildQuality, will be conducting a workshop entitled “Think like a Customer”. The workshop will focus on what makes the customer experience paramount to the longevity and success of a business.

If you are attending the conference, please stop by to visit us! If you aren’t registered for the conference and would like to attend, click here to get registered. We’ve found this to be a really great group of quality-minded folks and we would love to see you there!

** Geoffrey Graham, President and Founder of GuildQuality, is a regular speaker at conferences, meetings, shows and builder groups across North America. If you would like to make arrangements for him to come speak at your event, simply contact us to provide us with the pertinent details.

Last year at the 2007 Remodeling Show in Las Vegas, GuildQuality and Remodelers Advantage hosted a complimentary breakfast for members, prospects and guests. It was a pleasure to meet many of you and for some of you who have since joined GuildQuality, it has been a pleasure to serve you.

The 2008 Remodeling Show takes place in Baltimore and we have once again decided to team up for a special breakfast event on location at the Baltimore Convention Center. Event details are below:

Date: Wednesday, September 10, 2008
Time: 7 - 8:30 am
Location: The Baltimore Convention Center (Room 337)

Geoffrey Graham, President and Founder of GuildQuality and Victoria Downing, President of Remodelers Advantage will be discussing the following topics:

• Improving your business’s productivity and bottom line
• Learning proven strategies for success from peer group members
• Providing extraordinary client experiences that generate referrals
• Overcoming operational and personnel challenges
• Tapping into the best minds in the business
• Succeeding in today’s economy

If you are interested in attending this special breakfast event, please RSVP as soon as possible - space IS limited and only a few slots remain.

** This event is exclusively for owners of remodeling businesses - preferably those that average an annual sales of $1 million or more (exceptions can be made). Limit of 2 attendees per company.

Yesterday evening, Rob and David rolled out the third and final round of system enhancements of the summer. The two most significant enhancements are:

Question Bundles. You can consolidate multiple questions together, and view performance averages and trends for only those bundled questions (thanks to Heather for coming up with the name “Bundles).

More Filters. Our “filters” enable you to put your customers into a number of different categories, and filter or compare the results by those different categories: project manager, neighborhood, division, project type, etc. You can now create up to 10 filters (the previous limit was six). This means that you now have 10 different ways to slice and dice you’re data.

Rob wrote a forum post explaining this round of enhancements in more detail. Thanks guys for the great work this summer!

Garden & Gun just listed its 50 Best People & Things of the New South. Earning the “Best Developer” spot was Vince Graham of the I’On Group. From the article:

I want to create more opportunities for people to choose from when considering where and how they live. The dominance of car culture has constrained our thinking and stifled our creativity. New technologies and building materials are part of the solution, but restoring a walkable, human scale to our neighborhoods is an essential first step.

Congratulations Vince!

From BusinessWeek:

A 2007 survey by Kelton Research for Autodesk (ADSK) found that when seven in 10 Americans recalled the last time they saw a product they just had to have, it was because of design. The survey found that among younger people (18 to 29 years old), the influence of design was even more pronounced.

Are you building and selling beautiful homes, buildings, communities, or additions? If you’re not, you should be. The embarrassment of the last 60 years of architecture is not passing muster with today’s buyers.

More from the article:

Unfortunately, most business managers are deaf, dumb, and blind when it comes to the creative process. They learned their chops by rote, through a bounded tradition of spreadsheet-based theory. As one MBA joked, in his world, the language of design is a sound only dogs can hear.”

For businesses to bottle the kind of experiences that rivet minds and run away with hearts, not just one time but over and over, they’ll need to do more than hire designers. They’ll need to be designers.