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