Inviting Consumers to Stay

By Maria Patterson Print Article

RISMEDIA, September 1, 2009—As the economy struggles, businesses across all industries scramble to capture their share of shrinking consumer dollars with promises of bigger and better service. The real estate industry is certainly no exception. In a tough market, attracting consumers and keeping them takes on an entirely new meaning. That’s why HSA Home Warranty has revamped and reinforced its customer service effort—to keep clients coming back for more and, thereby, build loyal relationships with Realtors. 

Focusing on the consumer, however, is far from a departure for the 25-year-old Madison, Wisconsin-based company. It’s more like coming full circle. 

“When we started out as the new guy on the block, we didn’t want to come in as the low-priced leader,” explains HSA Founder & CEO Robert Lehmann. “We wanted to offer the best service in the industry. The warranties out there at the time were pretty basic and didn’t have the consumer in mind—it was just a piece of the real estate sale. Our concept was to come in with a product that really had some benefits for the person buying the home. Over the years, we’ve gone through some periods where price was everything, but we’re back to refocusing on the service side. We’re going to maximize the benefits and service to the consumer and, thereby, benefit the real estate agent as well.” 

The strategy is simple to grasp, yet extremely challenging to legitimately pull off—especially in an economic era where resources are stretched and expenditures limited, at best. But for HSA, zeroing in on the consumer is the only approach to take. 

“We target the consumer so hard because we want to keep them for life,” says HSA President Mike Clear. “We want to keep renewing that person year after year. The more claims we handle for them and the better we service them on every claim, the more we increase renewals. That’s why we focus on the consumer.” 

And, conversely, consumers are increasingly focused on home warranties. According to HSA Executive Vice President of Sales & Marketing, Gary Lombardo, while real estate agents have traditionally viewed home warranties as a peripheral risk management or marketing tool, many consumers are now viewing warranties as an integral part of homeownership. 

“Today, agents are seeing that home warranties bring convenience to homeownership and that there’s a place for home warranties in all homeownership, not just for first-time home buyers or customers with older homes,” Lombardo explains. And the numbers are proving the case. “Even in this down market our second quarter showed robust profitability. Our financial strength has improved significantly over the past two quarters,” he adds. “A lot of that has to do with how we’re managing the company, but we’re also experiencing an exponential increase in renewals. That reinforces our position that we are bringing value to consumers year after year.” 

A Bright Spot in a Down Market 

This time last year, Lombardo was unsure of exactly how home warranties would play out in an economy and real estate market on the downward spiral. Would homeowners view warranties as an expense they could cut or as a way to prevent an unaffordable future calamity? The latter proved true…thanks to HSA’s outreach efforts with customers. 

“Consumers are renewing at higher levels than we’ve ever seen,” Lombardo reports. “But it wouldn’t have happened without our customer service. We have eight months to build a value proposition in the consumer’s mind after they purchase their home. When we start our renewal process in month eight, they need something to draw upon that is positive. So we need to make sure that our hold times are kept to a minimum and that phone calls are handled courteously. The customer experience with our customer service center has to be a positive one.” 

Lombardo also attributes increased warranty renewal rates to the protection they provide against major repair costs, as well as the convenience they bring to modern homeowners. 

“Homeownerhip has really changed,” he explains, “and we have crazy lives. If something goes wrong in your home, you want to make one phone call to solve the problem and you want to know that the service person entering your home and repairing your problem is bonded and insured.” 

Home warranties are also gaining ground in today’s market due to the critical role they can play in a distressed property sale. 

“We’re trying to educate the Realtor community that a foreclosure sale is one that should be warranted because it’s extra risky,” says Clear. With home-seller disclosure statements practically non-existent in an REO sale, a home warranty provides important peace of mind for the buyer. 

The Customer Service Strategy 

Increased retention rates and the growth in warranty sales would not occur without the accompaniment of excellent customer service, says the HSA leadership team. 

Delivering on the promise of increased customer service, however, is difficult to accomplish in these times, says Clear. “It’s very tough to do in this market because every company in this economy is in a cost-cutting mode,” he explains. “Our company is thinner than it has been in the past so we’ve had to rely on technology and improving process flow to deliver great customer service.” 

According to Senior Vice President of Operations, Micheal Herman, the plan to redesign the company’s customer service division was embarked on five years ago in anticipation of higher consumer demands on the service experience. 

“We decided to revamp our customer service operation with a cross-functional approach that developed well-rounded service associates who could quickly and efficiently meet the needs of our customers and clients,” explains Herman. “Gone are the days where companies train employees in one specialized skill. It’s inefficient, and in a service setting often leads to multiple transfers and hand-offs from one skill to another. By cross-training our associates in several warranty skills, they are more equipped with the knowledge and tools to quickly meet the needs of our customers and clients.” 

To create a cross-functional customer service environment, HSA launched a training and quality assurance program and developed curricula that would enable employees to become adept in a wide range of skills. 

“Their jobs now are pretty complicated compared to the normal call-center job where you’re repeating the same skills 120 times a day,” says Herman of his team. “Today, our team has a much greater depth and breadth of knowledge in order to handle a variety of calls and issues independently. Our goal is to empower more and more of our associates to become decision makers. We want them to be able to handle the problem and resolve it for agents and customers. In fact, we encourage them to do so.” 

Despite the investments HSA has made in its customer service operation, it is still operating in the cost-conscious business climate of the current recession. 

The ultimate indicator of customer service success, of course, is customer retention. 

“Retention is how we measure ourselves, and our retention is very good,” says Lehmann. “If we’re keeping our customers, then we’re doing something right.” 

Part of retaining customers and winning loyalty, of course, involves the ability to handle those difficult customer service situations. This past year, therefore, Herman developed “containment teams.” 

“The idea is to contain something before it spreads,” he explains. “Our sales reps have access to the containment teams and can deal with people empowered to make all the decisions in one spot…they don’t have to run it by upper management to get approval. So, in most cases, they can solve problems quickly—often within minutes.” 

“Our culture is built around solving the problem for the customer and the real estate agent,” says Herman. “We are in relentless pursuit of the real estate professional’s loyalty. Our department plays a key role in the pursuit. How we handle each call is reflective of that pursuit.” 

Powered by People…and the Right Technology 

While technology plays a critical role in improved customer service, increasing the human element is equally important, says Lehmann. 

“There are some things technology can do to improve the overall experience, but you also have to make a commitment to hiring the necessary staffing, which is expensive,” says Lehmann. “That’s why a lot of companies are going the opposite way.” 

As Herman explains, sometimes it is a small technology tweak that leads to a significant process enhancement. For example, about two years ago, Herman’s department introduced an internally grown and developed application to help track the progress of claims. The program allows Herman to constantly monitor the company’s current inventory of customers and ensure that their claims are moving along smoothly. It also allows Herman to identify areas in the process that might need improvement. 

“These are relatively simple concepts traditionally used in the factory setting but new to a service setting,” he explains. “It enables us to manage the work in progress and identify any bottlenecks. It allows us to manage the customer experience in the most efficient way possible. These tools allow us to run a lean shop but still deliver the results we want to.” 

Other technology investments include enhanced call recording software, which has made it easier to archive calls for claim review, and a workforce management application. With these advanced tools in place, the HSA Service area leaders can keep a pulse on the service level at all times and make adjustments to staffing assignments as needed. In return, HSA customers and clients are treated to a high level of service consistently. 

“Technology becomes the conduit for information,” says Herman. “There’s been a lot of investment made in making sure our operation is moving forward and that we’re staying ahead of the curve. Any new technology and new project is framed around what the payoff will be to the stakeholders…our customers and employees.” 

Pay It Forward: Client Retention for Agents 

The quality care that customers receive from HSA along with the overall positive experience of having a home warranty, paves the way for loyal relationships between agents and their clients. 

“Realtors are turning their clients over to us,” says Lehmann, “and they have to have the confidence that they’ll be treated well. We want the Realtors’ clients to call them and say ‘thank you for putting us with HSA Home Warranty.’ The most important thing we can do is be a good partner in order to maximize the Realtor’s experience and their customer’s experience.” 

“We want to make sure we service customers and live up to our claim if something breaks,” agrees Clear. “This makes life easier for the real estate agent.” 

HSA ensures that its customer service operation provides the same level of quality communication and problem solving to its Realtor clients as well. “The Realtor gets top priority and is put into a separate telephone queue,” says Lehmann. “We put people in the field to personally handle any issues that may arise. Realtors are very busy today—we have to minimize the contact time and maximize the benefit they can get.” 

The commitment HSA makes to its Realtor and broker relationships is proving to be highly valuable in the slow market. For brokers, home warranties provide both an important revenue stream and a competitive point of difference. 

“The successful brokers and the ones who are surviving are the ones with revenue coming from mortgage, warranty and title business,” says Lombardo. “They are embracing our partnerships and expanding upon them. They are setting themselves apart and adding additional revenue streams.” 

Strong broker and agent relationships combined with increasing good will among consumers, bodes well for HSA’s future. 

“As the market turns, we’ll be in a good position to grow,” says Lehmann. “We’ve already built in our growth—our task now is to execute, to deliver on service and to maintain our position.” 

Ultimately, says Herman, HSA’s success boils down to its company-wide culture of integrity: “If our values are aligned in an honest and fair way, and if we deal with customers in an honest and fair way, then we’ll keep customers. We’re making sure that customers know we’re here and that we’re happy to serve them.” 

For more information, visit www.onlinehsa.com. 

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com. 

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Saturday, November 21, 2009