Residential home builders are an important customer for many building material manufacturers. As the majority of builders do not buy directly from manufacturers, they require a specific marketing and sales commitment. And in today’s market, you need more than a pretty brochure. You need to show your commitment to the category, and more importantly, to the builder.
With Knowledge Comes Power
The best way to succeed with builders is to be genuinely knowledgeable and interested in their success and not just in selling to them. Before 2004, many manufacturers had marketing programs that showed they understood both home construction and how the builder’s business operated.
As the number of housing starts exploded, manufacturers no longer had to work for the sale, as many of them simply couldn’t make enough product. They often felt builder sales and marketing efforts were no longer necessary. Then when the market dramatically declined in 2007, manufacturers saw no reason to revive their sales and marketing efforts because they didn’t see any opportunity.
Today, manufacturers have adjusted to the new reality of the market size and are starting to market to builders again and are finding their sales and marketing people don’t have the depth of knowledge to work with builders.
Builders’ frequently comment on how manufacturers don’t have enough sales people and that most of them are not very knowledgeable. Many of the marketing programs are self-serving for the manufacturer and not designed to help the builder. In these cases, the builder can feel like it’s a waste of his time for a sales call. A manufacturer with knowledge and the right attitude can gain and maintain a builder’s business, even against a lower priced competitor.
Prioritizing Your Efforts
The best way for sales and marketing people to get trained is simply to spend time with builders. Reading about the building industry is always a good idea, but it does not replace meeting directly with builders. Ask lots of open-ended questions, visit job sites and sales centers. You’ll be surprised how quickly you are not only up to speed but ahead of many other manufacturers.
Your next challenge is prioritizing your builder efforts. With almost 100,000 builders in the U.S., you need to be smart with your time and resources and have a strategy about which builders you approach.
The Top 100 builders account for around a third of all new housing. The top 2 builders account for almost 10%. It would seem that the obvious place to start is at the top, but for most manufacturers this is a mistake. They will eat you alive. You may get an order, but it will probably be with little or no profit as the builder will have all the power. There will also be very little loyalty to your company. This means you will be at risk to be easily replaced by a competitor.
Your goal should be to be a respected expert in your category and deliver builders a powerful story that is focused on making them more successful. If you sell fireplaces, no one else should know more about fireplaces and new home sales. How will the addition of a fireplace help the builder? Which model is the best choice for the builder, not just for you? What are the builder’s biggest problems with fireplaces and how will you solve them? Has he used your distributor and do they have a good relationship? Are there any problems with the installation?
A great way for marketing and sales to gain this expertise is by calling on the bottom 50 builders of the top 100 who build between 200 and 400 homes a year. They are large enough to be a good focus but small enough to get very familiar with so you can learn how to be an expert. As your expertise grows, start calling on larger and larger builders.
Look Beyond Purchasing
As you start to call on builders, the purchasing department is often the first stop. Many builders insist that you start with purchasing and will penalize you for going around them.
Two challenges with purchasing are that they tend to buy from a shopping list and are rewarded for simply lowering costs. If your product is not on their shopping list, it can be hard to get their attention. Selling at the lowest cost, with no focus on increasing sales or profits, is not a smart strategy for you.
The first thing to do is your homework. Get to know the builder.
What types of homes do they build?
At what price range?
How many do they build annually?
Who is their target customer?
How do they sell? A sales center with models, spec homes, realtors?
Who is their competition?
What are their biggest problems? Land, financing, number of prospects, call backs, product availability, other?
Why are you selling them? Volume? Premier builder who will influence others? Other?
Ask to go on job sites. Meet with the construction manager. Ask about your product in general instead of focusing on your company. For example, if you’re selling Marvin windows, find out about any job site issues with windows in general. Both good and bad. Then ask about different brands and suppliers. If they are happy with their current supplier, ask what they do right and what they could do better.
Shop the builder and his competition. Does your product play any role in the sales process such as “Our homes are built better because we use ____”? Is there a way that your product could help differentiate them from other builders and improve their sales? What else do you notice? What suggestions would you make?
Ask to meet with the heads of marketing and sales and share your observations. They love to hear what you experienced and what suggestions you may have.
You now have three ways to sell the builder.
Purchasing, who is interested in price but not at the expense of quality and service. If he is having a problem with quality or service, and you can do better, price is less of an issue.
Construction management, who are focused on productivity. Availability, quality, service, installation problems, call backs and customer service all affect his productivity. Even if he is happy, there is always room for improvement.
Marketing and sales are also an excellent path to a sale. When demand for homes is high, construction management usually has more power. When demand is low, marketing and sales have the power.
Help Them Differentiate
Most builders compete with other builders who build almost identical homes. They are all built to code, in a certain price range, with the same square feet and features that are expected within that price range. They also tend to look similar to fit in with the neighborhood.
This is a dilemma for a builder’s marketing and sales leaders. How do they differentiate their homes and make them more desirable without increasing the sales price?
If you have a noticeable, aesthetic product, show them how it could help them sell more. You may also need to help them decide what other feature to eliminate in order to pay for it. Builders who add unique features, like a NEST thermostat or a higher end Kohler or Toto toilet that plays music, in their models can generate a lot of word of mouth. Shoppers who visit their models are very likely to mention it to friends and relatives. They’ll say “You should go see what this builder has in his model home.”
Even if the product is an upgrade, it can still do its part to differentiate the builder. Consider making it very affordable for the builder to put your premium product in his model.
Many performance products, such as insulation or a garbage disposer, are probably invisible. Making the invisible visible with displays and including it in the sales presentation to prospects can help the builder sell more because they use your product.
Most builders talk about the same things in their sales presentation – countertops, energy efficiency, windows, etc. What they don’t talk about are the small things, the hidden details that can make their house a better home in the eyes of the consumer. The small details can leave a big impression on customers because other builders probably won’t mention them and how they help build a higher quality home.
Committed to Collective Success
The best way to build successful relationships with builders is by showing them that you are genuinely interested in their success.
1. Commit to truly understanding and addressing builder needs in both your marketing and sales efforts.
2. Establish yourself as the respected new construction expert in your product category.
3.. Deliver excellent customer service by anticipating and solving problems without a lot of corporate B.S.
4. Offer marketing support programs that do more than promote your product and help the builder succeed