Blog for Building Materials Companies

Your Annual Plan Should be Fresh

  |  Posted in Strategy

Your Annual Plan Should be Fresh

11 Steps to Starting Fresh With Your Planning for Next Year

Have you ever wondered why Airbnb has the word “bnb” is in its name?

When the company first started out, they modeled their service after the bed and breakfast experience. The idea behind the platform was for hosts to make a bit of money by letting someone stay at their place, cooking them breakfast in the morning, and getting to know them in the process.

If you’ve used Airbnb, you know it’s no longer like staying in a bed and breakfast. It’s a lot more like a hotel or maybe even a time-share. Instead of being hosted and fed by someone, you stay in their house or apartment while they’re away.

The bed and breakfast idea was smart and original. But it was a little too cute to become a massive success – not many people want to get that chummy with strangers.

Luckily for the founders, they knew the importance of starting fresh.

The year after the site went live, they could have just tweaked a few things and stayed the course. They might have turned a profit and done okay for themselves by improving on the bed and breakfast model. But instead, they threw out the original concept and changed directions. Now, instead of being a quaint little app, they’re one of the major players in the hospitality and lodging industry.

It’s Time to Start Fresh

So, what does this have to do with building materials?

Well, this month is around when building materials companies start planning for the coming year. And I want to encourage you to start with a blank slate.

Too many companies just take last year’s plan and tweak it a little. They move some numbers around, they might re-word a few things, but they end up with basically keeping the same plan.

If they were Airbnb, they’d still be trying to get you to cook breakfast and chit-chat with your guests.

This year, write up a brand new plan. It’s the best way to assess where you are, identify your major challenges, and locate your best opportunities.

To get you started, here are 10 things you should be doing and thinking about when putting together this new plan.

1. Peel Back the Onion: Review the Previous Year

Your previous year’s successes are like an onion (bear with me, I promise it will make sense).

Whether you grew your sales volume, increased your customer base, or landed a few big clients, there are some fairly obvious things that could explain those successes. Maybe it was all the money you spent at the trade show. Or maybe it was the extra sales staff you hired. It could have been that you introduced a new product with even more water-proofing.

Those are the surface-level explanations – the first layer of the onion. If you look more in-depth, you’ll see that there’s plenty more going on.

If you want to really understand why you succeeded, don’t just grab the most obvious explanation. Peel back the onion and figure out exactly what you did right.

2. Assess Your Failures (Without Beating Yourself up About Them)

Taking a good hard look at your failures is just as important – and sometimes more important – than evaluating your successes. But a lot of companies don’t like to do this.

They shy away from it for two reasons.

First, it’s unpleasant. Successes are fun and exciting. Failures are, well, kind of a bummer.

The second reason is that people worry that the failures will reflect poorly on them personally. If they bring up that sales are up overall but they’re down in Denver, they might get passed over for the next promotion. So, best to burry it under a bunch of positive announcements.

That’s the wrong attitude. No one likes to fail, but failures need to be reframed as learning opportunities. That takes the judgment out of them. Instead of beating yourself up over last year’s failures, focus on what went wrong and how to avoid repeating mistakes.

I’ve heard that military officers spend more time studying battles that were lost than they do battles that they won. That makes sense: if they don’t understand exactly why they failed, they’re bound to fail again.

It’s the same in building materials.

3. Look at How the Customer Is Changing

Every building material company thinks they understand their customers. The truth is, only a handful really do.

That’s because the customer is changing at a very rapid pace, and few companies are keeping up with them.

Customers who start experiencing labor shortages, higher prices, or new building codes will need something new out of their building materials. If they were looking for a low-cost option last year, they might be desperate for an easy-to-install or energy efficient one this year. But if you aren’t aware of these changing needs, you won’t be able to meet them.

At least once a year, the senior management of your company, along with whoever you can spare, should have some face-to-face time with your customers. Ask them what their current challenges are, what’s new in their industry and whether they see any big changes coming on the horizon. Once you know what they’re facing, you’ll understand exactly what they need out of a building materials product.

4. Get Your Customers to Review You

Don’t just ask your customers about themselves. Ask them about you, too.

Ask them why they buy from you. Ask what you’re doing right and what you could be doing better.

You might think you have a good sense of what your customer thinks of you, but you’ll probably be surprised by at least one or two things you learn. For one thing, most building materials companies think their customer buys from them either because of their product quality or their price. But half the time, what really drives the decision is your customer service and how easy it is to do business with you.

The feedback your customers give you will be like a roadmap for your coming year. It will give you a clear set of steps you could take to make your customers more satisfied. And you’ll probably be surprised at how small and simple the changes they want from you are.

5. Size up the Competition

Take a fresh look at your competition.

When you talk to others about your competitors, it probably sounds a lot like trash talk. You’ll focus on the things they do poorly or you’ll chalk up every success they have to some unfair advantage, like a huge marketing budget or having cornered some part of the market.

That kind of talk is normal in a competitive situation. But when you’re drafting your new plan, you should set it aside and focus on what your competitor is doing right.

And no, I don’t mean listing out those unfair advantages they have, because that’s not the whole story. Even a company with a huge budget can misspend it. A company with a giant sales force can fail to adapt to online sales. And a company that cornered part of the market can lose it if they’re not careful.

You need to look closely at why customers find it easy to do business with them. Then you can find out whether you could do the same or better. You can also use that information to figure out how to poach some of their customers. When you understand why their customers do business with them (and that it’s not just because your competitor has a huge marketing budget), you can come up with a way to win them over.

6. Evaluate Your Metrics

The KPIs you’re measuring is one thing that tends to stay the same year after year. There’s some logic to that: if you want to see your long-term performance, you need to track the same numbers over time.

But what if you’re measuring the wrong stuff?

Look at how you’re measuring the performance of different departments in your company. How are you measuring the performance of the plant manager? What about your technical support? Shipping?

The way these departments are measured almost never has anything to do with customer satisfaction. So, ironically, one of your departments might be measuring off the charts in terms of performance metrics while making your customers miserable.

Consider your technical support department. How are you measuring their performance? Maybe you’re tracking how many calls they take and how quickly they can finish those calls. The faster the calls, the sooner they solve the customer’s problem, right?

Maybe. But consider what Zappos does. They’re an online shoe retailer that has legendary customer service. And do you know what they reward? The customer service rep who spends the longest time on the phone with a customer (and they mean it – they once spent over 10 hours on the phone with one customer!) They know that when a call ends quickly, it might be because the customer is frustrated or because the customer support rep rushed through the call and barely gave the customer any opportunity to ask questions. By rewarding longer calls, Zappos makes sure that no one hangs up on a customer until that customer is 100% satisfied.

I’m not saying you should start rewarding long customer support calls. But I am saying that you need to evaluate your metrics to make sure they’re focused on improving the customer experience.

7. Assess Your Customers

You need to take a good look at the customer pool. You need to know more than just how much your biggest customers bought from you or how many new customers you signed on. You need to know whether there is longevity in your customers (and if there isn’t, increase your efforts to find new customers).

What do I mean by longevity? I mean how many of your customers you can expect to still buy from you in the next year (or next two years, or five, or…)?

If a recession hits, which of your customers are going to have to close up shop? Are any company owners heading for retirement? Are there some acquisitions on the horizon – and if so, is the new parent company likely to keep buying from you?

And don’t just look at individual factors. Consider industry-wide trends, too. Panelized, factory-built construction is growing fast. Are any of your customers going to be left in the dust when this type of construction takes over? There’s also some channel conflict coming, with direct sales cutting out a lot of distributors and dealers. If you’re selling to distributors, do they have a plan for surviving these changes (or can you do anything to help them adapt)? If not, you need to ramp up your efforts and get more customers.

8. Does Your Sales Department Need an Overhaul?

A lot of building materials companies are still using the legacy model for their sales department. They have a VP of sales and, say, 20 salespeople out in the field, and all that really matters to management is how much the whole operation is costing them.

Here’s a better question: are your salespeople just glorified account managers?

A lot of salespeople spend their time making sure current customers are happy. That’s great, and it’s important. But unless you have a lot of people out there hunting for new clients, you’re severely limiting yourself.

And the people who are focused on managing current customers, do they really need to be out there in the field? Back in the day, yes, you had to spend a lot of time visiting your customer in person. But everyone’s a lot busier these days and they’re looking for a more efficient way to manage their relations with you. Your customers would probably be a lot happier with a phone call or an e-mail instead of feeling pressured to have a sit-down meeting. Sending these salespeople out in the field is basically throwing money at something your customer doesn’t even want.

Think of your sales team as made up of hunters and farmers. There are hunters who go out into the wild, looking for new customers. And then there are the farmers who stay close to home and tend to the current ones. It makes no sense to fly your farmers around the country, just like it makes no sense to have the hunters stuck in the office. So, make sure your sales department is structured in a way that clearly define and delineates each salesperson’s role.

9. Look at Who You’re Working With

Take a step back and look at the firms you’re working with, from your advertising agency to the company that handles your website design and management.

These collaborations are a lot like relationships. Sometimes they start off really hot and then get kind of routine after a while. And maybe you’re happy to settle into a routine with your spouse, but that’s not a word you want to use when describing the work your ad agency does for you.

Make sure the magic is still there. If the ideas are getting less creative over time and the website design hasn’t had a proper update in a while, it’s time to move on. Find a company that will bring new and exciting ideas to the table.

10. Establish Some Stretch Goals

When you’re reporting to investors, you’re going to have to be a bit conservative. You don’t want to tell them to expect 10% growth if you can only guarantee something closer to 4%.

So, there’s always some very sober, realistic goal you pass along in documents, memos and quarterly reports. That’s where you say things like, “This year, we’re projecting a 2% growth in sales.”

But if you just aim for 2%, chances are you won’t grow more than 2%.

That’s why you need a stretch goal. A stretch goal is something you could realistically achieve, even if you’re not sure you will. You don’t have to tell your investors about it. It doesn’t have to be announced by your CEO. But it should be somewhere in the back of your mind at all times.

If your stated goal is to grow 2%, then you might start to coast on your success once you hit that 2%. But if your stretch goal is 10%, then achieving that 2% is just you getting started.

11. Define Success

Everyone at your company talks about success, aims for success, and everyone celebrates success.

But unless you define success, not everyone will be on the same page.

If your sales team tells you they’ve had a successful week, what does that mean? Is it a successful week if they increased sales but left a few customers dissatisfied? Is it a successful week if the customers are happy but you haven’t taken any new customers on board? Is it a successful week if you landed a big client but you made your existing customers a little less loyal to you?

Unless you clearly define success, your team will be aiming to grow by any means whatsoever. So, make sure they know exactly what you want them to do to grow the company.

Get Serious About the Coming Year

This coming year will make or break a lot of companies. Having a well thought out plan is critical to being one of the companies that make it.

So, don’t just reshuffle last year’s plan. Throw it out and start fresh.

It’s what Airbnb’s founders did and look at them now.

Contact me if you’d like me to help you start with a fresh plan that will cut the waste and inefficiency in your plans.

Thanks for the following comments.  I’d like to hear your feedback and suggestions on how to sell architects.

“An excellent read indeed Mark Mitchell, Thank You!”
Amelia Conrado
Water Counselor
The Source H2O

“Great post. Excellent outline for developing a comprehensive plan around doing your homework for developing a market-based strategy for 2019. Thanks Mark!”
Anthony K. Wright
Director
Strategic Marketing and Analysis

“I loved this one, thank you very much…”
Claudio Luis Paramo Chavez
Marketing
Elementia

What is the biggest challenge to your sales growth?

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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.