Your Partners Reflect On You: Observation on Customer Service and Home Warranty Companies

Thanks to a catastrophic plumbing issue that just happened at Casa de Hahn last Thursday, Sunny and I became front-row observers and participants in the customer service debacle that is home warranty companies. We’re nowhere near out of the woods yet, and we’re facing weeks of repairs ahead of us, including replacing the flooring throughout the main level of our home. She tells me it could have been much worse.

But let’s get something positive out of this horrible experience. Partly because I do strategy for a living, and advise companies on things exactly like how they should think about customer service, client retention, and profit maximization, and mostly because it’s really boring to hear (or read) somebody complain about some shit. Even if in this case, I literally mean shit, as in all over the house.

I won’t be able to avoid entirely complaining about failures in customer service at American Home Shield — one of the largest, if not the largest, home warranty company in the industry — but I will limit them to where such complaints might actually be productive.

Because the important point for the the real estate industry in particular is to recognize that horrible service by one of your partners reflects on you.

So let’s start there.

Vendors, Partners, Contractors

For the most part, we’re all industry professionals here… or investors who are interested in the residential real estate brokerage space. So we know how most of the partnerships in our industry work.

Brokers and their agents are the primary distribution channel for so many of the companies who work in and around the home. Mortgage and title are obvious, but so is homeowner’s insurance and home warranty. We know that insurance companies in particular offer incentives to brokers and agents for sending them business, because those products are not subject to RESPA. Mortgage, title, and closing services have more hoops to jump through because of RESPA, but we all recognize that oftentimes, the partnership is about revenue and profit to the broker and agent, rather than about what is best for the consumer.

Yes, yes, we know that’s not always the case. We know that some agents stick with a mortgage broker because they know that their mortgage guy will bend over backwards to make funding happen. We know that many brokers pick a partner because they know that they can trust that partner to do right by their clients. But let’s not kid ourselves and think that cold hard cash doesn’t play the biggest role in many a company’s decision to partner with this company or that other one.

What this catastrophic plumbing failure taught me is that there are real dangers to brokers and agents that arise from picking the wrong partner, especially in home warranty, but probably in most other areas as well. Why?

Because consumers don’t know anything at all about most of these partners. Most regular people have never researched title companies or homeowner’s insurance companies or whatever. They’re wrapped up in finding their dream home, trying to secure one, then packing and moving and buying new furniture and a thousand other things that go with buying a house today. Consumers rely almost entirely on the recommendations of their trusted advisor: the real estate agent.

If your agent tells you that First American is the best title company, well, then you use First American. If she tells you that Joe Smith is the finest mortgage broker, then you likely go with Joe Smith. And if she says you really should buy a home warranty, and to buy it from American Home Shield… well, then you do that.

This lack of knowledge and experience on the part of consumers is, of course, the reason why these companies would want to partner with brokers and agents who could recommend them to their clients. You don’t see a lot of TV companies wanting to partner with agents, because consumers might know too much about TVs. They know precisely zip about home warranty.

Which means…

Angry Consumers Do Not Assign Failure

When consumers are pissed off, they’re not looking to figure out who precisely is to blame. They’re just pissed off, and probably stressed out, and the entire experience sucks. They don’t want to assign blame; they want to blame everybody.

The reverse is also true, as we know. If the consumer has a wonderful experience with a lender that you recommended, he’s going to think more highly of you for having recommended that wonderful lender.

So I can tell you with absolute certainty that if the consumer has a totally shitty customer service experience with one of your partners, the anger isn’t going to stop with that partner. It’s going to hit you too.

We might then ask, “What makes a consumer angry?”

It isn’t the tragedy itself that makes consumers angry; it’s the crappy customer service they receive afterwards from people who are supposed to help them that drives them to a murderous rage.

To quote Bender, the world is an imperfect place. Screws fall out all the time. Most of us who are fully grown recognize that bad things happen to good people, and that oftentimes, no one is to blame… despite what the plaintiff’s lawyers want to tell you. It’s nobody’s fault that a hurricane dumped a trillion gallons on your town, and now your house is flooded. It’s a tragedy that an uncontrolled forest fire burned down your house. It’s nobody’s fault that an undetected plumbing problem results in a sewage flood in your living room.

Sure, we’d get stressed out, we’d get sad, we’d be upset with the tragedy that randomly struck us… but we’re not truly pissed off about being the victim of an unforeseen event.

No, we get truly pissed off because of horrible customer service. In fact, I would suggest that those things that truly piss us off is not “customer service” at all, but “company service” whose goal is to do everything in one’s power NOT to help the customer in his time of need.

Anyone who has ever dealt with the “customer service” department of the average health insurance company likely knows what I’m talking about. The goal isn’t to actually serve the customer; it’s to refuse to pay out a claim.

When that happens, the customer who is already dealing with a stressful fucked up situation, now finds a target for all of his anger and frustration with the unfair and imperfect universe… and that rage will spread to everybody and anybody who is even remotely connected to the horrible “customer service” experience.

In all things related to a house, I have to tell you that you, the broker or agent who is the hub around which all of these companies revolve, will be the second biggest target, right after the company with the terrible service.

In our case, that broker is REX. We’ll talk about them more below.

Things Not to Do, If You Don’t Want Angry Customers

So this looks as good a place as any to discuss some of the things Sunny and I experienced thanks to the tragedy of the plumbing leading to having to deal with the customer service department at American Home Shield. I am picking on AHS, first, because they are our home warranty provider, and second, because they’re huge. They are the creators of the entire home warranty field, and still the largest provider of home warranty services.

To save pixels and electricity, I’ll confine the complaints to a couple of areas and hope to include suggestions for improvement. Because it may be that there are others reading this who might consider reviewing their own customer service processes and systems in light of the failures herein.

American Home Shield & Home Warranty

American Home Shield founded the entire home warranty sector and is likely the largest home warranty provider in the industry today. According to their own About Us page, AHS was founded in 1971 to:

Protect homeowners from the expensive and unexpected repair and replacement costs that are inevitable with home ownership. Things like having the stove or washer stop working at the worst possible time or having the A/C quit in the heat of summer. We decided to change all of that and founded the home warranty industry.

Home warranty is a specialized insurance product that is more like health insurance than car insurance, despite the language above. What I mean by that is, most insurances cover against unexpected events: an accident, a fire, a storm, etc. Health insurance, on the other hand, and home warranty covers fully expected and regularly occurring events. We all get sick at some point, or just need to go to the doctor for an annual checkup. Those are fully expected and regularly occurring events. Similarly, stoves and washers stop working all the time; it is the nature of mechanical products that they will eventually break and require repair or replacement. HVAC systems do quit in the heat of summer (which we also recently experienced); they require maintenance and repair. It’s just part of living in an imperfect world.

So AHS can and should expect that its customers will need them, not might need them. Major systems needing repair in a house is not a matter for actuarial tables, but a matter of certainty.

Furthermore, when things fail, it is almost always an emergency. AHS’s own language above talks about the A/C quitting in the heat of summer. That’s an emergency just about everywhere, but particularly in places like Arizona, Texas and where I live: Las Vegas. It’s not even a matter of discomfort; it is actually dangerous not to have A/C in some places for parts of the year.

The AHS Website

So the first point of failure is probably the most important one: the website.

In 2020, consumers would prefer to use online methods for requesting service; companies would prefer that they do because it saves the companies a lot of money. I can’t post all of the screens from AHS, but here’s one screenshot of the Request Service:

All of the costs are highlighted, but you know what’s missing? (And I promise you, there is no further screen after this where this feature exists.)

What’s missing is a way to ESCALATE the issue, or to alert AHS that you have an emergency situation at hand.

Instead, going via the website (which Sunny did), you get the notification that (1) you’ll be charged $75 dispatch fee, and (2) AHS will get back to you to schedule the appointment within 24 hours.

When you have sewage water pouring into your house, that is just not going to work. Having someone call you back to schedule the appointment (not actually show up, mind you, to fix the problem but just to schedule the appointment) in 24 hours is not acceptable. The entire house would be flooded by then.

So what is absolutely necessary, a no-brainer if you will, is a giant red button that says “EMERGENCY” that should immediately connect the customer to someone who can help RIGHT THE $&#@*$ NOW. Not in 24 hours, not in 8 hours, not in 2 hours, but RIGHT NOW.

Charge more for dispatch, charge to just use the EMERGENCY button, whatever — but there has to be a way for customers to escalate a service request from a routine “my ice maker isn’t working” to a “DIRE EMERGENCY” thing.

And please believe me when I tell you that there is no way to escalate or expedite service on AHS’s website; we know because we called them and were told by AHS customer service reps that there is no way to escalate or expedite a request on the website. So let’s turn to that experience.

The Call Center

The true horrors begin here.

I do corporate strategy for a living; I understand that customer service is expensive, and companies want to try to cut expenses not just to rake in profits but also to keep prices low for consumers. I get it, I do.

However… if you are a company providing any kind of service to consumers, and you provide a phone number, you have to do a better job with your overall telephone system.

First, the automated phone tree system at AHS is awful. Feel free to call them and experience it for yourself. It is among the worst voicemail hell systems I have ever experienced, and I’m including the DMV, big cable companies, and medical insurance providers in that assessment.

Second, if you’re going to have human CSRs, then by God, empower them! When Sunny called, waited forever to finally get connected to a human being, then requested EMERGENCY SERVICE, she was told that there was nothing that the CSR could do to find the next available vendor. No, Sunny was told to contact the vendors directly to escalate the issue herself. Oh … and the service provider can’t schedule an appointment until they receive the ticket from AHS which typically takes several hours and up to 24.

What is the point of having a human being then? Why pay the hourly wages?

Organizations like Zappos have become famous and enormously successful because they empower their CSR’s to solve problems, and only escalate really big issues they can’t handle. Our CSR couldn’t even find us the next available plumber? What is she good for then?

Third, if you’re going to have 90 minute hold times — because that’s how long we were on hold — then you absolutely must have a “Would you like to have us call you back?” feature, and that feature must repeat every few minutes. I think we got that option once in the first few minutes of the call… and it disappeared forever. That is just asking for the customer to seethe and rage.

Relatedly, if your system is going to tell the consumer that “hold times will be approximately 20 minutes” then a human being must pick up the phone before 20 minutes is up, or you have to apologize and give the consumer the opportunity to be called back. Neither happened on our marathon hold.

Fourth, I don’t know why it is, but honestly, I don’t believe I have ever once had a great customer service experience with any company in any industry with a call center located in India. Part of it is the accent, but a huge part of it is the training that these CSRs are put through, and the scripts and procedures they must follow. Whoever is writing those scripts and creating those procedures need to be fired, and replaced ASAP, because they are simply awful. They actually make a human being sound and act like a robot.

In a follow-up call, where all we wanted to do was to speak to a manager, an escalation specialist, or someone who can actually help with real thorny issues, the two phrases I heard the most from the (probably nice) rep from American Home Shield during our lengthy call was, “I understand” and “Unfortunately.” It didn’t seem to matter what we told her. The response was invariably, “NAME, I understand. But unfortunately… <read something from the script>.”

Keep in mind that the only request we made of her was, “We know you don’t have the authority to help us with this, so please connect us to someone who can.” It took at least 30 minutes of back and forth with “NAME, I understand, but unfortunately…” followed by a series of inane questions that came straight off a script, with Sunny getting progressively angrier and more annoyed, before we were finally connected with a Escalation Specialist.

Why not just connect us right away when we ASKED for the Escalation Specialist?

The answer: corporate procedures and training. The poor woman was probably looking at getting fired if she didn’t check all the boxes on some checklist or another. That’s ridiculous, and it leads to the consumer not just being dissatisfied, but actually driven to murderous rage.

Maybe this isn’t an Indian call center problem, but a more general training and procedures problem, but all I know is that this problem is absolutely the worst whenever I had to deal with a person in India.

A thought for companies that are outsourcing customer service: maybe think again about what your customers go through when they call YOUR customer service number? In fact, maybe call that number yourself and pretend to be a customer and go through the experience… ideally before you sign the agreement, but hey, do it now. Do it periodically, just to check.

By the way, remove the phrase “I understand” from the script. Because it becomes quickly obvious that the CSR does not understand, and then it becomes obvious that the CSR isn’t even listening. Rage goes nuclear when that happens.

The Opportunity for Service Providers

I genuinely believe the current state of customer service in the ancillary industries — especially those that will have to deal with upset consumers — results in a major opportunity.

Venture Capital is chasing “digital” closing services, and digitized everything. Maybe the real opportunity is in using technology + empowered customer service + a truly consumer-focused culture to provide far better customer service to homeowners, renters, landlords, etc. who need help during a crisis.

Elon Musk learned that lesson recently, and said “Humans are underrated.” In the brokerage side of our industry, we never had to learn that lesson. Nobody is out to get rid of excellent agents — only the crappy ones. Maybe the services side should learn that lesson as well.

The products are all pretty much undifferentiated. Honestly, could anybody tell the difference between one home warranty policy and another one? One mortgage loan looks pretty much like another one. Title insurance is title insurance whether you get it from this company or that one.

The differentiation, then, has to be around customer service. And because of the structure of the industry, these companies worry far more about keeping their brokers and agent partners happy than they do about keeping the ultimate client happy.

I think there is a major opportunity for service companies to focus first and foremost on consumers, delivering Zappos-quality customer service, and use that as a differentiating factor in finding brokers and agents who want to partner with them.

The bar, after all, isn’t that high today. Put a “EMERGENCY” button on your website. Train your call center better and empower them. We’re not talking rocket science here, merely executing better with the consumer in mind.

The Opportunity for Brokers and Agents

What about brokers and agents? This experience showed me a couple of real opportunities for them as well.

Advance Warning

Remember that the agent is the hub around which all of these home-related services revolve. She is the trusted advisor that consumers rely on when purchasing the biggest asset most of them own, going into multi-decade debt to do it. Consumers might be doctors, lawyers, or even former real estate brokers and industry consultants… but they don’t know everything and haven’t thought about everything.

Imagine if the agent did, and gave some advance warning of possible problems!

In our case, despite Sunny having dealt with thousands of home inspections in her career, and us having ordered and carefully read through said inspection report, neither of us thought about the fact that the standard home inspection does not include a detailed camera-scoped inspection of the plumbing system.

What if our agent had recommended that we spend the $300 and do that? Even had we refused, we’d be thinking today, “Boy, our agent really knew his stuff; wish we had listened to his advice.”

I spoke with a top team leader about this earlier today, and he mentioned that his team always recommends the extra plumbing inspection (and several other optional inspections) for properties of a certain age. That’s a really good best practice. But my take is to recommend them for all properties for all buyers. Don’t press the buyer, because that could make them suspicious, but at least recommend one time with an explanation as to why and let the buyer choose whether to spend the money or not.

At the very least, they won’t be blaming the agent for their electrical system blowing up.

But what if the inspection finds a major plumbing problem, and the deal dies? That might happen, yes, but think about this: would those buyers, who just saved themselves from buying a house with a major plumbing problem thanks to your advice, really use anybody else after that? You have already proven your value, and showed how you just saved them from a $30K bill in the future. They are your clients for life after something like that.

I think there are numerous opportunities like this in real estate. Focus on the major systems that really would cost an arm and a leg should something go wrong. Maybe it requires a different kind of training for real estate agents — one that focuses far more on details that the layman simply don’t know or would miss, rather than on incessant leads, leads, leads. But the impact, I think, is to really prove the value of an expert advisor who could save the homebuyer (future homeowner) from catastrophes.

Become the Consumer’s Champion

Say a problem does arise, despite advance warnings, and through nobody’s fault. The consumer has just suffered a major setback. He has to call people and companies to make things right again.

What if the broker or agent could be his champion in his hour of need?

I mentioned that our broker was REX. Well, I have to tell you that REX truly stepped up once they learned of our difficulties with American Home Shield. Jack Ryan, the CEO of REX, himself has been involved personally  in trying to help us with AHS, because AHS is their home warranty partner and Jack went to bat for us in a big way. And frankly, he’s been indefatigable. It’s just amazing. Thank you Jack.

Most important in our back and forth conversation was something he said that truly resonated with me. Now, this isn’t about business models or whatever; I think it’s more about culture, and culture starts at the top.

Jack Ryan’s take is that while many other brokerages think of the agent as their customer, REX thinks of the consumer as its customer. (Yes, it helps that REX agents are W2 employees rather than independent contractors on a split, but I know traditional brokerages and agent teams who have similar cultures.) Accordingly, his focus and the focus of REX is on guiding, protecting, and serving us the homeowner rather than on guiding, protecting and serving its agents or its partners.

I realize that many of you in the industry look down on REX as a discount brokerage, but at this moment, REX could be the most expensive brokerage in the world and I would choose to use them again precisely because of how they stepped up in our time of need and became our champions.

Recently, I wrote a post about the Relationship Narrative in real estate. In it, I wrote:

So build relationships. Maintain them. Put in the effort. But never forget that consumers, agents, brokers, MLSs — every human being in other words — always want what’s best for their families. They all want the very best for free or lower cost, and you have to convince them to part with their money because what you’re providing is worth it. It doesn’t get more fundamental than that in trade, in business.

The very best way I can think of to convince me to part with my money is that you stood by me and went to bat for me in my time of need. All the emails, newsletters, postcards, and client appreciation invites pale in significance to someone who comes to your aid during bad times.

I think far too many brokers and agents and their trainers think that relationships are built on being nice, asking after the family, parties, and lunches. Sure, they could be… but we all have fair-weather friends, don’t we? The real relationships are built during bad times, during storms, when things suck ass.

I admit that we are lucky because I know Jack Ryan. My job and weird status in the industry affords us access that most consumers likely don’t have. But the principle is, I think, scalable. If the average consumer knows that his agent, who he used a year ago, is ready, willing and able to become his champion with no commission check anywhere near the horizon… and that agent knows that her entire brokerage, franchise, or organization will support her efforts to be that consumer’s champion… I sincerely believe that consumer will become a loyal fan.

Real relationships are built during stormy nights, not days of sunshine.

In Conclusion…

I am sort of glad this happened to us. Not really happy of course since nobody wants to live through a catastrophic raw sewage situation that will result in weeks of inconvenience and thousands and thousands of dollars in expenses. But we learned something about the state of customer service in the real estate industry.

If this helps to trigger some ideas for improvement, helps brokers and agents establish even more value, and helps home warranty companies (including our own, American Home Shield) improve customer service for future consumers… well, then perhaps it’s worth our short term pain.

The main takeaway for most of my audience is this: shit happens. It’s how companies and individuals respond to shit happening that dictates whether you earn the customer’s eternal gratitude and loyalty, or their incandescent wrath. Customer service is not merely an expense; it is an opportunity to earn lifelong customers, as well as the risk of losing customers forever.

Choose wisely.

-rsh

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

5 thoughts on “Your Partners Reflect On You: Observation on Customer Service and Home Warranty Companies”

  1. I’m shocked that any agent wouldn’t suggest a sewer scope. In my market it’s the norm. In fact, a few of the cities I work in require a sewer scope to be on file with the city before COE and it is negotiated who pays for it. Usually, the seller pays. Good listing agents require the seller do the scope before listing and include it with the disclosure package.

    • Well, maybe this could be the start of something really positive then if we can get brokers and agents to make that recommendation a standard part of client service. 🙂

  2. This is just a classic case of the person paying for the product & selecting the provider is not the one using it – same thing that plagues IT departments and why corporate software is a cesspool of non-usability.

  3. Rob,
    Unfortunately, your experience and writing are spot on, from customer service, phone hold time, to the robotics scripts and responses.
    I recently had a water heater failure and AHS could not get to it for 4 days. This was a rental, with a family of four during early COVID-19 home confinement. I had to have my own plumber take care of it in one day. AHS would not reimburse any of the cost.
    In the past if you wanted to escalate a service call or claim the AHS sales rep would be of immense value and ability to take care of issues and offered a great customer service. AHS has cut many AHS sales reps positions and now there is no one to step up and help.
    It seems like a home warranty is a necessary evil and we are all at risk from the reflection of their very poor customer service.
    I hope AHS executives (AON) find your writing and take appropriate action and change.

  4. Great article Rob. Many firms should start to tell agents the real reason why they push these home warranties for agents to buy on behalf of their clients. Does the firm receive a kickback on the warranty the agent paid for out of their commission check.? A revenue for the firm the agent is paying for (unknowingly).

    Are sales managers still getting a bonus on capture rate for AHS? Even after PHH the real estate industry doesn’t learn. Own worst enemy.

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