Building materials companies are in crisis. Supply chain disruptions are causing issues across the industry. Unfortunately, company leaders have taken a reactive approach to these interruptions instead of dealing with them proactively.
As a result, building material companies are at risk of losing their most valuable clients. Even decade-long relationships could dissolve.
To get a better sense of these problems and what can be done about them, I spoke with Tom Benedict of Wayne Homes. He told me and my podcast listeners about his challenges as a builder and what some manufacturers are doing right.
The Real Reason Your Building Materials Company Is at Risk
Today’s market is chaotic no matter what industry you’re in. Products are being canceled. Deliveries have turned into lotteries. Shipping delays are extending further and further – if they’re even fulfilled at all.
There’s no single problem behind this, which creates confusion, uncertainty and a bit of panic. As difficult as this situation is, it’s not the biggest problem facing building materials companies.
The real problem isn’t the disruptions themselves. It’s the way building material companies are handling those disruptions.
Builders and contractors know that the industry is a mess and that it’s out of the manufacturer’s hands. What they’re concerned with is how those building material companies are treating them.
The Quickest and Easiest Way to Save Your Business
The problems you’re facing are complex, but holding on to your customers doesn’t have to be complicated.
If you’re in a leadership position in a building materials company that’s facing supply chain issues, all you have to do is pick up the phone. Call your clients and talk to them about the challenges you’re facing and listen to their needs and concerns.
That’s a very simple step but it will go a long way to saving your best customers. Your customers want to be kept in the loop. They want to be informed. The news you give them doesn’t have to be good – it just has to be accurate.
Right now, your customers aren’t even getting that. Builders and contractors are kept in the dark because suppliers don’t want to call them up to share bad news.
When suppliers keep quiet about those issues, it’s up to builders to chase down the product that hasn’t been delivered on time. And they’re not in the chasing business.
If you can communicate effectively and in a timely manner, your customers won’t have to be hit with any nasty surprises.
And remember to put some thought in how you deliver this information. You should share bad news over personalized calls and conversations, not mass emails and prepared scripts.
Focus on the Customers That Matter Most
When your customer relationships are at risk, it’s time to play favorites. You can’t save them all. And if you try, you’ll end up losing most of them.
Focus on the ones that matter the most to your company. Put most of your energy into keeping those. First-in, first-out order fulfillment might make sense when everything’s running smoothly, but don’t be afraid to prioritize long-standing customers when things get bumpy.
Consider the 80/20 rule. Who are the few customers who are responsible for 80% of your success? They’re the ones who should be catered to first.
Divide Up Your Clients
Break your clients down into tiers and set clear deliverables for each tier.
Don’t be afraid to share this with your clients. Those at the higher levels will feel valued and appreciated. Those in the lower tiers will be grateful to know where they sit, even if it’s not ideal.
Not only will this help you focus on the customers that matter the most, but it will actually improve those relationships. They’ll come out of this pandemic even more loyal than before.
Take Ownership and Split The Difference
Once you’ve communicated your challenges to your customers, it’s time to take ownership of the situation.
If your deliverables aren’t met, you need to own that cost. That’s not what suppliers are doing right now. Instead, price increases are being handed down to the builder level.
That poses a massive issue for builders and contractors who have quoted the job months in advance. Building material companies that pass the buck are taking money directly out of their pockets. Builders have no choice but to absorb the loss because they can’t ask the homeowner for extra money, especially if the project’s already delayed.
Taking ownership can be difficult, but it makes sense in the long term. Once the market evens out, what do you want your customers to remember? That you acted in their best interest or that you only looked after yourself?
At the very least, you should split any cost increases. If shipping has to be re-routed or a product pulled from another location, call your client and inform them of the price change.
If you clearly communicate the reasons behind the price increase, you’ll have a much better chance of coming to an agreement where the cost increase is shared instead of having it fall entirely on your shoulders.
Share Your Success Stories
So far, we’ve talked about ways to save your business. But what about thriving instead of surviving?
You’ve cut back on your client base and are focused on meeting your new deliverables. Great! But you don’t have to stop there.
A few months into the future, you’ll have core clients who are happy with the improved communication and updated deliverables you set for them. They’ll feel appreciated, valued and grateful to have worked with you.
That’s a perfect story to share more widely.
Sharing those stories isn’t bragging. It’s not a sales call, either. It’s telling potential customers what they can expect from you. It’s saying “We did this for one of our customers. Hopefully we can do the same for you in the future.”
Those stories showcase what it’s like to deal with you. It gives prospects a sense of how well you communicate with your customers and shows that you really value them.
The setbacks we’re all facing right now could easily ruin a building material company’s reputation. But if you handle it well, you can save yourself, help your customers and come out of it with multiple success stories.
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