Selling today’s builder the right way.
Measure your success by share of individual builder accounts, not by share of market. That’s good one to one marketing
In the competitive, complex and cyclical housing industry, a good number of retailers are ill prepared for the cataclysmic change going on. Traditionally, they have been comfortable mass marketing lots of products that they themselves bought for sale to builders. Such selling is no longer sufficient for success. It is product oriented, buy it and move it, not market and customer differentiation oriented, which are essentials for success today.
In the days ahead, builder retailers must focus on share of individual builder accounts one customer at a time rather than just share of market. Interestingly, according to National Association of Home Builders figures, no single builder accounts for more than 1 percent of total industry production.
As a one to one marketer, your goal should be to sell a single builder as many products as possible over a long period of time and across different product lines lumber, mill work, roofing, siding, everything needed to build with. You must seek new builder customers as well as concentrate on keeping and growing existing builders. Focus on the 20 percent of your builder customers and prospects who are the most loyal and offer the biggest opportunity for future profit.
Identify customer needs
Here’s what builders tell Professional Builder magazine they want from you. First, they want better communication. They also want more in store displays of product features; more information on product maintenance and long term product operating costs; and timely and accurate follow up on all product inquiries and concerns. In summary, better partnership.
Try calling at least three builder customers a week and ask them how you might serve them better or how you can help correct problems they may be having with your firm. Listen and take notes on why they buy from you and how they use your products and services. (This might surprise you.) Find out what they like and don’t like about you; how you compare with competitors; what your company does that annoys, infuriates or delights them.
Staple yourself to the order
Review the 10 steps involved in your order management cycle (OMC). These are order soliciting, order generation, cost estimating and pricing, order receipt and entry, order selection and prioritization, scheduling, fulfillment, billing, returns and claims, and post sales service. In tracing your builder orders, you will see and experience transactions the way your builder customers do.
Ultimately, it is an order that connects the builder to your company. In each of these 10 steps, every time an order is handled, the specific builder is handled. Every time there is a snafu, the builder sits unattended.
Grow your accounts
Industry studies document the following buying patterns
Builders generate increasingly more profits for you each year they stay with you.
As individual builder purchases rise, your operating costs generally decline.
As you gain more experience with individual builders, you can serve them more efficiently.
Some long time builder customers are willing to pay more up front for products and services because of the value of their relationships with you.
Loyal builders also can help you drum up new builder business. One of the leading home builders in the United States has found that more than 60 percent of his sales are the result of referrals. Service oriented retailers are finding that satisfied builder accounts also can help them find a steady stream of new customers.
Who is the builder of the ’90s
Twenty years ago, builders tended to be product specialists, most building only single family homes. Not so today. Today’s home builder is well diversified. The industry is becoming market driven, with focus on more limited production of customerized homes for smaller and better targeted market niches. Emphasis is on winning over the discretionary and more affluent move up buyer. In this climate, a growing number of builders are recognizing the necessity to transform from a sell a house mentality to a strategic marketing mentality.
In order to sell and service today’s builders better, you must understand the challenges they face, and who they are collectively and individually. Three major concerns loom over the industry rising interest rates, environmental and regulatory legislative issues, and volatile lumber prices. In addition, financing troubles, lack of inventory, rising land costs, and labor and material shortages are all driving up housing costs.
On a national level, prices of homes, both new and existing, will rise faster than inflation in the year ahead. The current median price of an existing house is expected to average $115,600 this year, a 4.7 percent increase from last year. New home prices this year will rise 4 percent, reaching $137,500.
David Jensen Associates, a market based community planner in Denver, notes Long gone are the days when builders could sell homes simply stripped along streets with little regard for the needs and wants of the market.
The adage If you build it, they will come has been replaced by Build what the market wants, and they will buy.