The housing market in Minnesota's Twin Cities is deep into its second year of recession. Builders here are struggling to stay alive, as are their suppliers. "Some competitors, arrogantly, only sold new construction, and it's really killing them now," says Pat Hegseth, sales manager for Lamperts, a St. Paul-based pro dealer.
A diverse customer base helps shield Lamperts from the ravages of the housing downturn, but not entirely. Hegseth points to one commercial account that recently had 17 bidders for a project. So "a big push" for this 34-yard dealer has been to get its 120 salespeople to prospect more avidly for new business at a time when contractors are desperately seeking help.
"Our salespeople are in a mode of mutual survivability," says Hegseth. "Customers who wouldn't give us the time of day in past years are willing to sit down and look for solutions. It's easier to prospect now than during the boom years, and we're opening doors for when the market turns around."
Finding new customers is tough these days, and holding onto them is even tougher. But those fundamental goals are driving how dealers manage their sales teams.
For Golden State Lumber in Northern California, that's meant emphasizing to its reps that they "go out and see all of their customers, not just certain ones," says Rick Zaslove, Golden State's president. A few years ago, Zeeland Lumber in Michigan initiated "cold call Tuesdays," when its sales reps pitch noncustomers. Now, "that's pretty much an everyday thing," says Mike Dykstra, vice president of sales.
Zeeland's approach to client management is to divide its 12 reps into groups of two or three that serve customers as a team. A trio might have 60 to 80 active accounts, says Dykstra. One team member handles inside sales and administration, estimating, and so on; the other handles field sales and jobsite visits. This system makes Zeeland's sales department more self-sufficient, says Dykstra, and ensures that a client always has someone knowledgeable to call when problems arise.
During the housing downturn, Zeeland has broadened its sales reps' responsibilities to encompass installed sales. It launched a new turnkey division, Zeeland Contractor Services, in early 2007. Zeeland also dedicates two sales teams to commercial accounts.
In Georgia, VNS Inc. has its reps selling for all of its divisions, which include nine Choo-Choo Build-It Marts; Wholesale Building Products, which targets multifamily contractors; an installation division called ProCon Construction Services; and its door and truss plants. "The single-family [construction] market is bleak, and we've had to adjust to it," says Gary Campbell, the dealer's COO.
Offering installation has helped expand this dealer's multifamily business. And VNS has added staff with expertise and retrained its reps to go after supplying light commercial projects, a pursuit Campbell says will outlast the downturn for his company. VNS has eliminated its regional sales coordinator level and pushed that responsibility down to its yards.
Other dealers, though, are making more drastic changes to weather dismal economic conditions. In early October, Buck Byers, president of Barr Lumber of San Bernardino, Calif., said he was considering several options, including closing some of Barr's seven yards. Barr's 14 outside sales reps would probably be asked to handle more yards and do more inside selling, he says. Perks like car allowances likely would be pulled back or eliminated.
But dealers need to be careful about the brunt of their expense cuts falling too heavily on commissioned salespeople, whose earning power is limited by a housing economy in tatters.
"Salespeople have felt the effects of the downturn more than our other employees," says Hegseth. "Our parameters for performance haven't changed, but we know the market, so our expectations aren't so high. When one of our guys sells a house package, we want to celebrate that victory."