If you sell building materials to homebuilders, mid-tier builders are an important segment. They are more approachable and easier to deal with than the largest builders. They each build hundreds of homes every year making your sales efforts worthwhile.
As mid-tier builders who generally build between 500-1500 homes in a year, these companies generally build in a single market or geography. It is an important segment of the building industry that accounts for just 6% of all new home builders, but they account for 45% of all housing starts. As mid-tier builders, this group will collectively build about 350,000 new homes this year. While many building materials manufacturers focus on the nation’s largest builders, mid-tier builders maybe be a better target.
- Open to Change: Mid-tier builders’ reach is mainly regional; however, in some of those regions they compete with national builders. They do not have the same financial backing as the larger builders so they are constantly looking for the “extras” that will make their homes more attractive to buyers. If you are looking to increase your mid-tier marketing, then show mid-tier builders how your new products will increase buyer demand for their houses and differentiate them from larger builders.
- Influencers: Mid-tier builders are frequently as well-known as the national builders in their market areas. Since these builders are usually active in their local organizations, other builders in the area watch them for innovative ideas and follow their practices. If a mid tier builder uses your products, other local builders will take notice and start using your product.
- Approachable: When mid-tier builders negotiate, they negotiate owner-to-owner. Mid-tier builders identify themselves as small business and tend to have the same core values about the strength of relationships, service and work quality. They are also more loyal which means they may not be an easy sale. It also means they will be more loyal to you as long as you are a good partner to them.
- Buyer Decisions: When you sell your products to a mid tier builder, he “buys” your whole company. By that, we mean that the builder buys from the manufacturer expecting that the manufacturer operates efficiently and charges a competitive price for the product. When you negotiate with a mid tier builder, remember that you speak with the decision maker who can trigger the sale — or kill the sale — at any time. They don’t have the time to focus solely on price. They don’t have the time to manage a tricky relationship with a manufacturer. If the relationship looks like it will need a lot of hand-holding, the builders will take their business somewhere else. On the other hand, a manufacturer who produces on time, at a competitive price, who partners with good dealers, and who responds quickly will have a solid relationship with the mid tier builder who chooses his company.
- Best Approach to Mid Tier Builders. The best approach to a mid tier builder is through the purchase manager. The purchase manager is the gatekeeper, but the opportunities with the builder come earlier than that. Show the builder that you know his business and what the builder’s challenges are. You can show models of your products; walk the building site, talk to marketing and production managers at the job sites. Join local builder associations to listen to what the builders have to say. In other words, do your research, your homework to understand what the builder needs.
If you want to read more about mid-tier builders and the opportunities they provide for manufacturers, see Lauren Richards’ article entitled “Engaging the Mid Tier Builder” or Stephen Crouch’s article from Builder Partnerships
To talk more about this topic, or anything else, please contact us. We look forward to helping you grow your business.