“For the first five and a half years of our seven-year warranty, it was the number one reason people purchased a Kia.”

The Key To Converting Customers to ‘Buy New’? Think Like a Car Brand

Like it or not, the construction industry is now in an era of disclosure and consumer transparency. And unless iCIRT ratings become mandatory, the industry urgently needs to fix the ‘customer relationship’. Yes, we said customer.

The construction industry may not like to admit this, but developers and builders are responsible for building homes for customers – and it’s the biggest investment of their lifetime.

Attached to this investment is the longest customer-facing warranty period compared to other industries, and that makes sense for a ‘lifetime product’ such as real estate.

Major construction defects are covered for ten years. Whereas for cars – the second biggest purchase in a person’s lifetime – up to seven year warranties (with some limited ten year ‘conditional’ warranties) are on offer.

However, even with a lengthy warranty period, consumer confidence in construction has never been so low. A recent Equifax Study indicates one in three potential property consumers within the next five years, has a negative perception of the construction industry, with 47% identifying a lack of trust and/or shortage of qualified contractors and buildings as impediments.

When Australians purchase, invest in, build, or renovate a home, trust matters. 1 in 3 have a negative perception of the construction industry. However, 76% are willing to pay more for a trustworthy building professional.

— Equifax Insights – September 2023*

This isn’t helped along by the fact that all the consumer marketing takes place pre-construction, where brands ‘sell the dream’, evoking the emotion needed to close the sale. According to data from Nielsen of the top 20 categories by ad spend, real estate is #13. And that doesn’t include the brochures, the show-rooming and other pre-sale spend.

And yet, compared to the automotive industry who markets its warranty and service value proposition aggressively, construction seems a laggard in this regard. It misses out on leveraging the most customer-facing part of the journey, Post Construction. This is where the customer experiences the finished product. It’s when customers are handed the keys, live in their product and experience the dream v. reality – whether the promises meet expectations in terms of quality and care.

Big investments are emotional. And as strata living and property investment in Australia grows rapidly, the construction brands that consumers choose for their next purchase and recommend to friends and family will be based on customer experience, service and quality.

And this will weigh in favour of the brands that are there to provide the best customer service.

Every other consumer brand tries to build relationships and loyalty by working with their customer to get the right results. And in construction, with so many details, moving parts, emotion and expectation – why are we not working more closely with the end customer to build trust?

So as we collectively try to bring back consumer confidence to our industry, could the warranty period of construction present an opportunity just as it does in other industries?

How KIA Challenged Quality Perceptions To Increase Sales

The automotive industry discovered several years ago, is that consumers ultimately want a sustained positive brand experience.

Mercedes, for example, actively fosters a customer connection beyond the showroom, investing in after-sales services, including warranties and maintenance programs which have contributed to customer loyalty by ensuring a seamless ownership experience.

Kia, on the other hand, was struggling with market share and sales due to perceived quality versus actual quality. The strategy? Shift perception by offering a long-term seven-year warranty and educating consumers.

It worked. Kia is now Australia’s third-largest selling car brand, shifting up from 12th in 2015 by committing to a strategy of sustainable growth.

“For the first five and a half years of our seven-year warranty, it was the number one reason people purchased a Kia.”

On the success of their warranty offering, Marketing General Manager Dean Norbiato said, “For the first five and a half years of our seven-year warranty, it was the number one reason people purchased a Kia.”

It didn’t mean defective parts and ‘car trouble’ disappeared. Rather it was about building a trusted relationship with customers and managing their expectations. And this in turn, built the brand.

Kia Australia attributes much of its record sales growth over the past seven years to its seven- year warranty coverage. And rival companies are beginning to follow suit.

As for the impact of the seven-year warranty on sales? Says Kia Australia CEO Damien Meredith: “If you look at where we were in 2014, and what happened in the following years, there was a dramatic jump in sales. So, there’s no doubt it helped, but I think it was most significant in that it gave Australians permission to look at the brand and that’s where the strength came from.”

The Construction Warranty Period as An Opportunity

If the construction industry wants to instil consumer confidence in our industry, why not start at the end – where we already have warranties in place that we can leverage this warranty environment to drive customer satisfaction, loyalty, and rebuild our reputation?

More developers and builders need to work with owners in a transparent way to help them understand defects, their implications and the work itself.

“Ultimately consumers want a sustained positive brand experience.”

It feels as though the construction industry could follow the lead here, creating a seamless ownership experience beyond the showroom, and use it to their strategic advantage.

There are already ‘green shoots’ emerging in the form of high-quality rated businesses. The NSW Government, through the NSW Building Commissioner has done a stellar job in creating a customer-facing connection between our industry and the consumer.

More developers and builders should be taking on the warranty period as an opportunity to create a positive brand relationship with their customer.

As Kia Australia’s CEO says, “We’re forever looking at what we could do (with warranty). The whole team is forever looking at the permutations and combinations of its benefits, what it would cost, how it would work.”

Creating a better connection between owners and developers is the answer, and all it needs is a technology enabler for customer confidence and stakeholder collaboration. This our mission with DLP Manager – to bring back consumer confidence in construction, one defect at a time.

Now is the time to book a call with Chris Polin below, for a one-on-one session about your organisation’s post-construction strategy for your pipeline of projects.