Getting a builder, architect, contractor or owner to say yes has historically taken a lot of time, patience and persistence. That is now changing.
There has never been a better time to grow the market share for your product. Builders, contractors, architects, owners and developers are all looking for ways to change the way they design, source and construct buildings.
In the past, they all had their ways of doing things and those ways worked well enough. They stuck with these solutions even when they knew there was a better way. There was just no incentive to consider alternatives or implement new ideas.
For those in the industry, change meant risk and extra work. The benefits couldn’t possibly outweigh those downsides.
They would change sometimes, but only for a lower price, to replace a supplier who screwed up, or when their hand was forced by updated building codes.
Things are completely different now. These professionals used to see change as risky. Now, they see that there is a much higher risk
Why Builders And Others, Are Embracing Change
Every builder knows who their competition is. When they’re losing a sale, they can tell you which builder they will lose it to.
They are building a home at a price point – let’s say $600,000. There will be three or four builders in the same market all building $600,000 homes. If you toured those homes, you would be hard pressed to tell them apart.
They all have the same finishes and features that are expected at that price point. They make small changes to their models every year to try to set themselves apart. But if they make a change that costs more, they have to cut back somewhere else.
The home has to cost $600,000. It can’t cost $603,000. And they don’t have the nerve to ditch the granite countertops.
If each of these homes cost their builders $550,000, they all stand to make a $50,000 profit from selling them.
Now, what happens when one of these builders decides to outsource everything to a company like Katerra or Entekra?
Well, one thing that might happen is the cost of building the home might have just gone from $550,000 down to $500,000. The builder’s overhead is lower because he only needs a sales and marketing department. He can also offer to complete the buyer’s new home weeks or months faster than the other builders.
Because this builder’s homes are built in a quality-controlled factory environment, he can also offer a higher quality home. And on top of that, those costly call back issues aren’t his problem anymore.
This builder has also now shifted his focus to reducing cycle time and the time value of money. He knows how much it costs him for every day it takes to get a home completed.
He now sees that
This builder can now price his $600,00 homes at $580,000 and still make a bigger profit than his competitors.
How Does a Builder Compete With That?
Many of them are not going to turn over what they see as the heart of their business to a third party. To stay competitive, they’ll have to get smarter about how they build.
They know they can’t succeed by trying to negotiate even better deals from their suppliers. And even if they’re willing to pay more for labor, they won’t be able to find enough qualified workers.
It’s very clear to them now: staying with the status quo is the bigger risk.
And it’s not just the residential market. The same thing is happening in commercial construction. The financial incentives for getting in the building sooner are driving many of the same changes.
How You Can Get the Sale Today
If you manufacture products that are in a common category type, like asphalt shingles, you need to set yourself apart from the other asphalt shingle companies. More colors and deeper shadow lines are no longer going to get the sale. Here’s what you should do today:
1. Eliminate any unnecessary costs between you and the customer. More customers are going to question the value of the distributor, dealer or commissioned sales person. It’s not about cutting prices; it’s about eliminating any costs that don’t provide good value.
This can include things like getting rid of
More customers will be buying direct. You need to decide how you will deal this. If you plan to sell direct, you need to have the systems designed, tested and ready to go.
2. Operationally, what can you do to make it less costly for the customer to deal with you? Many companies are making it harder and more costly for customers to work with them. Don’t assume you know what this means to the customer – ask them how you could make it easier or more affordable to work with you.
3. Send your R&D and product people out to jobsites to see how your products are actually used in the field. How are they delivered and installed? What other products do they interact with? Learn the pain points for the construction manager and installers and find ways to make them more efficient or reduce waste.
Many times, a small change on your part, can make a big difference in jobsite productivity.
4. Become a student of offsite construction. Watch how builders are finding ways to be more productive on their own and with third party suppliers. Add companies like Katerra, Entekra and others to your prospect list.
These companies are surprisingly transparent, so you can learn a lot from them even if they don’t buy your product.
You will find out how they and other builders are reducing waste and inefficiency with your type of product. You can then take what you learn from them and improve your own product or provide suggestions to your other customers.
An Opportunity for Products That Have Never Reached Their Potential
If your type of product has never captured as much of the market as it should, now is the time to grow your sales. All the reasons your product wasn’t considered seriously enough in the past no longer exist.
If you sell a product in one of these categories, or a category like it, you don’t have to settle for a small market share. Even if you think you’ve hit your ceiling in terms of growth, there are things you can do to move beyond it. Here are two things you should start doing right now:
1. Stop competing with each other for the relatively small number of customers who use your type of product. Instead, work together to grow the sales of your product type. In other words, don’t settle for a small sliver of the pie – make the pie bigger and your portion will grow.
2. Make these two changes to your messaging:
-Stop telling the customer your product is better than your competitor’s. Tell them why they should buy and build with a product like yours.
-Focus on the benefits for the builder, contractor, owner, or architect – not the homeowner.
Some of the products that could see their sales grow today:
Radiant Underfloor Heating
There must have been at least six companies showing their radiant underfloor heating at the International Builders’ Show. All of their messages were about why their system was the best. They all assumed the customer was already interested in their product category – not a single one was telling builders why they should switch to radiant underfloor heating.
At the Amvic booth, I asked a salesperson to tell me why a builder should change the way they heat the homes they build. He blew me away with his sales pitch.
He didn’t talk about how nice it is to feel the warm tile floor in the bathroom of your high-end home. He was thinking much bigger. He made an effective case for replacing forced air systems with underfloor heating in all homes.
He didn’t try to convince me that the Amvic system is better; he showed me that the world should change to underfloor heating.
Insulated Concrete Forms
There were many ICF manufacturers at the builders’ show, including Amvic. They were all touting why their ICF is the best. Just like the underfloor heating companies, the ICF exhibitors were all fighting each other over the small number of builders who use ICF, instead of convincing more builders to use it.
Fox Blocks is the one company I saw that was doing it right. They realize that the real growth opportunity is getting more builders to build with ICF instead of wood framing. The theme of their booth was “Kick The Sticks.”
Metal framing has the same opportunity as ICF. Now is the time to start converting builders from wood framing to metal by showing them it can benefit them. If they can’t find framers they are less worried about how carpenters can work with metal. They still have to get walls built.
Reflective insulation is another category where manufacturers have never realized their full potential. If they focused on getting builders to take another look at reflective as a better solution, they would see their sales grow faster.
What if more builders left IBS with a plan to look into making the switch to one of these types of products?
Getting the market to make switches like these will not be easy or happen overnight. The key is to find those builders who see this type of change as something to seriously be considered.
Work closely with those first builders to make sure it is a successful change for them and promote it to the world. A second and larger group of customers will now be ready to make the change.
Here’s How to Make This Happen
1. Form a group or make better use of your existing association to promote the use of your type of product. The Vinyl Siding Institute, the Tilt Up Wall Association and the SIPS Association are good examples of organizations that are actively doing this.
2. At major trade shows like IBS or AIA, have an exhibit about why buildings should be built with your type of product. Once a customer is interested, give them a list of manufacturers to contact. Individual manufacturers may no longer need to have their own exhibit (which often have a poor return on investment).
3. Have your group or association become a content marketing powerhouse for the benefits of building with your type of product. When you don’t have to worry about promoting an individual brand, you can really focus on telling the product story.
If you are the leader in your category, watch your back. For the first time in a while, it’s anybody’s game.
If you want to take sales from the leader, there has never been a better time – if you have the right message and offering.
If you have a product that has never been adopted as widely as it should have, customers are ready to relearn or reconsider your product.
Builders, architects, contractors and owners are no longer set in their ways. They’re willing to try new products if it gives them an edge over their competitors. Even if they dismissed your product type before, they might be willing to take it seriously if you can show them it will reduce waste, improve building times, lower their cost, or help them grow their business.
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