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The Problem With European Building Materials

  |  Posted in Sales

The Problem With European Building Materials

The problem with European building materials companies is that they have not been serious about the largest building materials market in the world, North America. They are now finally starting to get serious about growing their sales in North America.  Until now, most European building materials companies have focused on growing their sales anywhere but in North America.

Compared to the rest of the world, North America is just too competitive and hard to understand for many European companies.  It has been easier to find sales in Dubai or Malaysia than in the U.S.

More European companies are getting serious about North America.

Now that the rest of world has slowed, more European companies are ready to get serious about North America.  I have companies from around the world who visit my website and read my newsletter.  I frequently have companies from Asia and India contact me, only to decide they can’t afford to work with me.

I now have companies from Europe contacting me to help them develop a plan to seriously grow their sales in North America.  I am traveling to Europe to meet with them, develop a plan and act as their guide.  I am also traveling to Europe to train the sales and marketing teams of manufacturers.  Something is happening!

There are a few European companies, such as Saint-Gobain and Assa Abloy, who have successfully made a commitment to North America.  Even then, I see these two companies making mistakes that result in a loss of sales, because they don’t understand this market as well as they think they do.

Most European companies make a half-hearted attempt.

They come to a US trade show and think because their product is so wonderful, that they will somehow get orders.

They find a U.S. distributor who adds it to their line of products.  The distributor announces it to their customers and then wait for orders that seldom come.

They license someone in the US who frequently does not know what they are doing.

They may actually send someone from Europe to run North America.  Frequently these people see it as a tour of duty and can’t wait to get back home. They never take the time to really learn about the market.

They figure, “If we get some money from North America, it’s better than no money.”

They are now waking up to the fact that they have not been getting their fair share.  As they watch the U.S. market grow, they wonder why their sales are not growing at least as fast as the overall U.S. market.  Many Europeans are losing market share.

Like European soccer teams are to the rest of the world,  the North American building materials market is the big leagues. You have to make a real commitment or get crushed and settle for fewer orders than you should be getting.

The biggest problem is a lack of understanding

The biggest problem with European companies is a lack of real understanding of the market here.  I have yet to meet a European building materials company who doesn’t have serious misunderstandings of the market here.  We build differently.  We market, sell and distribute differently.  We value different attributes about your products. We have installers who can prevent you from making a sale, even if the architect or builder wants your product.  We make product decisions differently.  We do things that make no sense to many Europeans. And more.

I am reminded of a story about Mercedes Benz.  Some years ago, their sales were not growing. They asked their dealers why and they told them, “It’s very simple, German cars don’t have cup holders and American’s demand cup holders.”   The German’s dismissed this as silly and declared they would never stoop to having cup holders. The next year, sales continued to decline.

Someone from Germany decided it was time to get to the bottom of this.  “Why aren’t people buying our cars, it certainly can’t be cup holders.”  They sent a few engineers to the U.S. and told them to spend a few weeks and drive from New York to California.  The engineers came back in shock; they couldn’t believe what they found.  “American’s eat in their cars!”  No one in Germany would ever eat in their car.

The next year, Mercedes had cup holders, that were of course overengineered, and their sales started to grow again.

You have some serious blind spots.

I don’t care how much you think you know about the market in North America; you have some serious blind spots.  Unless you uncover these, you will never be as successful as you can.

Other problems I see are too much control where Europe has to approve everything.  The U.S. people will tell me, I know what we need to do to grow our sales, but the people in Europe will never approve it so I’ll give up and just do what they want.

I also see too little control.  These are like absentee landlords who really have no idea what is going 0n and don’t care, as long as the checks keep arriving.  The problem here is that U.S. people are very good at bullshit and telling you things that seem to make sense but aren’t necessarily the truth.

Another problem is the belief that your products cost too much.  It is a myth that American’s only care about the lowest price.  If you don’t tell then why you are a better choice, then price is the only thing to discuss.  Some European companies lower their prices when they should raise them.  The other mistakes they make is simply to hope that the customer will not realize they cost more.

You need to light a fire

North Americans can have all kinds of good excuses why their sales aren’t growing.  They may also be quite comfortable.  “I make a nice living.  I have this job figured out, so I don’t have too much stress or have to work too hard.”  There is no sense of urgency. These are people who need a fire lit under their rear-ends.

The people in the best U.S. companies have a fire lit under them.  There is a sense of urgency. Are you going to win a game if your team walks, while the other team runs?

North American building materials companies have a lot of weaknesses that can be exploited. The building industry in North America is rapidly changing, and manufacturers are not keeping up with the changes.  North American manufacturers are so focused on economies of scale and reducing risk that they do not develop innovations.  Their market and product category is being disrupted more and more everyday, and they are hoping it will all go away.

The keys to success for European companies

  1. Education and understanding.  A willingness to learn about the North American market as if you were an anthropologist who just discovered a new land and the strange people who live there.  Looking more for what is different than what is the same.
  2. The right strategy.  You don’t have to take on the whole market.  You can take on a segment of the market to start and grow from there.  Do not go directly at the largest North American companies, find their weaknesses, of which there are many.
  3. A commitment.  Once you have done your due diligence and decided that this is a good investment, you need to commit to North America.  Think of it as if you are starting a new business.  How much would you need to invest to succeed?
  4. The right team.  You need the right team of people whom you trust and can operate with measurements of success that you both agree upon.
This is very accurate from my experience. One typical mistake I see them making is the largest distributors travel to Europe for the big trade shows, and while there wow the manufacturers with the number of branches and sales people and then are awarded an exclusive. I have seen this over and over again. The problem is the product, and the distributor’s customer base may not be the optimum match. I have experienced European manufacturers giving a US exclusive to a distributor that doesn’t even have coverage in California. As you say, they think “well some sales is better than none, ” but it could be so much better.”
Calvin Luce
Director Sales & Marketing
Luce Connect

The biggest market in the world is waiting for you

Contact me if you’d like to discuss how I can guide you to successfully growing your sales in North America.

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About The Author

I am the leading sales growth consultant in the building materials industry, I identify the blind spots that enable building materials companies to grow their sales and retain more customers.  As I am not an ad agency, my recommendations are focused on your sales growth and not my future income.

My mission is to help building materials companies be the preferred supplier of their customers and to turn those customers into their best salespeople. Contact me to discuss your situation.

  • KazooGuy

    Mark – You are spot on. We’ve had the good fortune of helping several European BPMs with their specification marketing materials. If they’ve done their due diligence to the point of developing US-based technical materials, they are at least asking the right questions. US architect-driven product selection is completely different from the European market. They too often start with distribution sales, and waste a year or two before understanding the role of architects and engineers.

    • Great observations about starting at the wrong place.