This isn't the first time you've read these words: "Welcome to the first issue of (insert new name here)." But I believe this is the first time in our industry that a magazine–especially one produced by the industry leader in trade publications–has been dedicated entirely to one segment of the LBM industry: installed sales or installation services. And if you were one of the attendees at last month's 2008 LBM Solutions Installed Sales Summit, you were among the first in our industry to receive a copy of this special ProSales supplement.
All of us are good at the basics of managing a lumberyard: ordering material, receiving material, warehousing operations, load building, delivery. They're the core competencies of what we do every day. There is a similar set of operation points to installed sales, but they are vastly different from the day-to-day operations of a typical LBM dealer. You cannot apply the same practices and principles to an installation services operation that you do to building and delivering a rough frame pack for a builder.
In each issue of Installed Sales Guide, I will discuss in detail those operational and managerial issues that confront us. I will look at overall department management, human resources issues, financials (including budgeting), specific product installation practices, and other management challenges that arise. I also will look closely at the installed labor quotient of this business and discuss the pros and cons of using employees or subcontractors for the installs. I also intend to explore the differences in management practices for remodel and retrofit installed services contrasted with new-construction installed services.
This month, I want to discuss customer resource management (CRM). In the December 2007 issue of ProSales, I profiled a client who stands head-and-shoulders above the crowd in customer management. I am happy to report that this customer hasn't slowed down and, in fact, is growing its business by selling more to its customers. Let's look at what this takes and how CRM and installed sales go hand in hand.
In the last ProSales 100 survey, the following product categories were among the top 10 of being offered installed:
- Windows and exterior doors
- Interior doors and trim
Now let's suppose you sell rough frame packages to Builder A all the time. Occasionally it buys windows and doors. How can you move this customer into the "all the time" category? Start by tracking callbacks, and then help this builder manage its jobsite and business.
Here are all the tools you'll need:
- A notebook
- A pencil
- A willingness to work
Every time you receive a call or complaint about windows or doors sold to this builder that you didn't install, log the call: date, time, and nature of complaint. Then investigate it. In your notebook, keep track of what caused the problem. Was it product failure or installation failure? In most cases, you can trace the failure of a window or door to perform properly to faulty installation.
Note the situation (pictures are a help), and the corrective action. Keep notes on how long it took to complete: how many trips, total number of hours, everything. Also note who caused the problem.
Here is where a willingness to work comes in. Track every callback for this builder. Keep a separate book for each of your core customers. (Yeah, at 79 cents each, they're expensive, but worth it.) After you've compiled 90 or 120 days' worth of callbacks, it's time to take your customer to lunch.
According to the 2006 NAHB Cost of Doing Business Report, the average cost of a callback to a builder is approximately $375. I'm not going to use this number with a client unless I have to; I just want you to be aware of it because this could possibly give you an edge in negotiations.
Approach the builder with facts. "Bob, during the past 90 days, we've helped you resolve five callbacks on separate houses, all with window/door problems," you might say. "After looking at the numbers and calculating the cost of labor, products, and customer service to your homeowners, let's look for some solutions."
You continue: "In each case, we identified the situation as having been caused by faulty installation, not product failure. Here is what we can offer: let us install your windows and doors in accordance with approved industry best-practice methods. We'll also wrap the house, install the windows and doors, properly shim, flash, and seal the openings and guarantee the process."
Obviously, you can't do this for $375 per house. But if you can get your builder to agree that this is a real problem in need of a solution, the amount will help offset your labor cost to install. Once your customer has agreed that a solution is in order, you can offer the service for whatever price is reasonable.
Here's where the customer resource management comes in.
1. You've sold additional product: windows, doors, house wrap, shims, caulk, tape.
2. You've demonstrated to your customer that you want to be part of his solution–a true supply chain partner, not just another supplier.
3. You've demonstrated that you want to help this customer manage its jobsites for increased efficiency, lower operational cost, and improved customer service.
4. Last but not least, you've clearly differentiated yourself from the competition. This customer knows you are here for the entire race and you intend to earn its business.
At the end of the day, that's all there is: helping your customers, earning their respect and their business, and knowing that you are the best you can be. Manage your customers, don't just work with them. Manage the resource.
–Mike Butts is president of LBM Solutions, a DeWitt, Mich-based LBM supply consulting and training firm.