Home builders, like most business people, have straightforward motives. Strip away personalities, and what they want is to make money and continually build a positive reputation. With every home, the builder can enhance their profitability and their brand. Your goal as a building material/service provider is to find a way your partnership can help the builder deliver both of these.
If you just sell them stuff to use in their building process, you won’t win in the long term. An age old adage I have followed from many mentors before me says, “If you make your customer successful, you too will be successful.” Focus on what success means to your builders, and you too will find successful business results.
What Side of Profitability Are You On?
It’s easy for a sales person to hear from any customer, “Give me a better price so I can make more money.” What the customer is really saying is that he wants to make more profit per sale. There are always two sides of profit. One is the cost side, how much I pay for something. This is where most sales reps spend the majority of their time in discussion with their customers. It’s an emotional, grinding process — a battle to see who will budge first or who can squeak out a little more. However, the other side of profit is how much the product is sold to the customer for. This is where more sustainable profit comes from, because it’s tied to something more emotional — perception of value. How much a product is sold for is rarely tied directly to what it costs; it is based on perceived value by the end user. Many times, a price concession given by a sales rep is merely passed on to the end user, as the builder doesn’t adequately portray the product/service’s value. The end result is generally lost profitability for everyone involved.
The Job of the Supplier is Partnership
A building material manufacturer’s job is to become a business partner with the builder. This means we need to truly understand the builder — including their building practices, unique style of building (by model), target homebuyer demographics, and trends in their industry and specific region. If we understand the builder, our product recommendations become much more relevant and connected to their approach. You then become more relevant to that builder’s business success.
Making Your Product Relevant
Once you understand the builder and his prospective homebuyers, you can make your product more important to him in the buying process. To do this, you need research that will help you state your case to the builder. This will also help you define how to position your product with the homebuyer.
Sales reps need to realize that they must extend their conversations beyond the builder’s purchasing agent to foster a more relevant relationship with the builder. The PA is incentivized on reducing cost of materials year over year, so of course they want to focus on cost. Where you will win is getting to the builder’s marketing leader. They are incentivized by year over year increases in revenue and profit per unit sold. Adding a more relevant product to the standard list of materials or on the upgrade list will help accomplish this goal.
The VP of Marketing can be your company’s ticket to a stronger, more profitable relationship, but you better provide a comprehensive story that attaches your product to current trends and each builder’s specific approach.
The definition of a partner is a “shared responsibility for the success of an initiative.” Be part of your builders’ success, and you too will have a sustainable and profitable relationship.
When you let fear stand in the way of growth, you’re failing. Sure, it feels great to be comfortable but if you stay stagnant and avoid taking risks, you’re essentially hurting your business and chances for exceptional growth.
Looking forward, we’re expecting big changes in the construction industry. It’s time to get prepared so you can prevent commotion in your operations and come out ahead. In this post, Bill takes us through his forecast of the future to help you understand what’s expected over the next few years.