In my 20 years of working with building material companies, I have consistently seen the same mistakes made over and over again. Mistakes that limit their effectiveness, waste dollars and, most dangerously, set them up for a premature end.
1. Sales and marketing disconnect
In every company, we have worked with, either marketing or sales has the upper hand. One always thinks they are superior to the other.
If sales has the upper hand, then many times they think that marketing is an art department. They think it’s marketing’s job to produce whatever brochure or sales tools they need. If a customer has a request, the answer will usually be yes. And if those pesky brand standards get in the way, it doesn’t matter. Whatever it takes to get the sale.
If marketing has the upper hand, then everything gets blamed on the sales forces inability to execute programs. Marketing can tend to develop programs from their ivory tower perspective that have little to do with the realities of the marketplace.
Sales and marketing need to work together toward the mutual success of the company and not their own agendas. Marketing people should ride with sales people and call on customers. Sales people’s opinions about new marketing programs should be taken into account.
2. Employing the wrong programs either because “we’ve always done it” or because someone thought “it was a good idea.”
Most companies start their marketing budget process with a list of what they have done in the past. In order to do anything new they either see what’s left, or they try to make the case for a larger budget.
A smarter idea is to use zero-based budgeting and challenge every expenditure. Ask yourself, “What is this program really accomplishing?”. What if you didn’t do something like exhibit at a trade show or print a new brochure? How could you make better use of this money?
The next challenge is the resistance to change from other areas of the company. You’ll hear lots of “We’ve always done this, we just have to do it.” The best cure for this is strong leadership who recognizes and supports those brave souls who challenge the status quo.
Just as bad are programs that are implemented just because someone thinks it’s a good idea. “We have to have a social media program. Everyone else does and it’s the thing to do.” Maybe it is and maybe it isn’t, either way, you need to stop and think, “Does this support our objectives? How will we measure its success?”.
3. More focus on the competition rather than the customer
When I talk to building material manufacturers, it is amazing to me how seldom they talk about their customer. When they do talk about their customer, it is usually something negative around the subject of how all they want is a lower price.
A much more frequent subject of conversation is the competition. They talk about how they stole a customer, have a new website, ad campaign or a new product. They then start to plan how they can react to the competitors’ latest change. This is a natural reaction as we are all more afraid of losing something rather than the potential benefit of gaining something. A focus on competition is about minimizing the risk of loss.
Competitors are always reacting to each other, rather than proactively growing the category. You and your competitors keep fighting over the same slice of the pie. While you are focused on each other, you frequently don’t notice that the slice you are fighting over is getting smaller and smaller.
4. Price reductions as a form of strategy
Sales slow? Lets have a sale! Bad move. Most of the time a discount may boost sales in the short term but at a cost to the value of the brand. You temporarily gain a few price-conscious customers and give away margin to your most loyal customers who don’t need a deal.
Sales are like crack. They are very addicting. And while you are enjoying a brief bump in sales, you are reducing the perceived value of your brand each time it goes on sale.
The other type of price reduction comes from important channel customers who demand it. They are actually just sharpening their negotiating skills with you. The easy way out is to give in and say you had no choice. The harder strategy is to shift the focus off your price and onto how you can help the channel customer succeed by doing a better job of delighting his customer, with your help.
5. Marketing is not measured
Sales people are measured and held accountable. How much did they sell? Did they achieve the sales goals? So, why isn’t marketing held to the same standards?
Marketing departments and their programs are too often not held accountable for results. They are usually measured on relatively meaningless terms, such as their ability to meet deadlines and budgets. This is how you measure a clerk, not a respected marketing expert.
There should be a measure of success for every marketing expenditure that is linked to a measurable increase in sales. And these results need to be measured. After a program has been completed, there needs to be a post-mortem analysis to determine its level of success. This is the only way you can begin to measure the ROI of your marketing budgets and to improve.
6. Fear of taking a leadership role with major customers
Most building material manufacturers are afraid of major customers like Lowe’s and Home Depot. They don’t realize what a dangerous attitude this is to have. Stop caring what major customer think. You know more about your product, the category and the customer than he does. At least you better know more.
If you don’t believe that he needs you more than you need him, you are just counting the days until you are replaced by another brand. You need to stand up with confidence and proactively take him ideas to grow his business. Do not wait for him to tell you what he needs.
In order to do this effectively you need to always act in his best interest and act like the channel captain. Acknowledge that sometimes your competitor’s product may be the best solution for his customer.
7. Overreliance on product features in sales messaging
Most companies try to sell in by leading with their product features. Instead, you should lead with a business proposition that explains how the channel customer will benefit from carrying your product.
Benefits like more sales, more margin, more traffic, more loyalty, more differentiation from competitors, and fewer problems are just some examples of benefits that matter a lot more to your customer than just the new, improved features of your product.
8. Thinking too small
Most manufacturers are either afraid to think big or it doesn’t even occur to them because they’re so focused on making small incremental improvements. The benefits of thinking big by far outweigh the risks. The way I look at it, a small, safe idea may gain you a single digit increase in sales while a bold idea can lead to a double-digit increase. And even if you fall on your face, there’s a very good chance you’ll still end up with the same single-digit increase.
To create big results, you have put a stake in the ground about your leadership and commit to innovation and growth. Customers recognize boldness and are afraid not to be with a company most likely to leap ahead.
You can also listen to my podcast on The 8 Most Common Mistakes