As the housing market continues to recover, more pro dealers whose bread-and-butter clients have always been small home builders, remodelers, and custom home builders, are courting production builders for their high-volume sales.
The bigger the builder, though, the harder it is to get a toe in the door, say sales reps for dealers who do business with the industry's giants.
"Their needs are totally different" from remodelers and custom builders, Jackie Allmond of Choo Choo Build-It Mart's pro sales team in Rincon, Ga., says of production home builders. "They are set up on a system that won't allow you to come in and just ask for business. You really have to earn their business."
Sales pros agree that selling to the builders they call "the big boys" has its perks and challenges. Their advice for adding volume builders to an LBM dealer's customer base: Make yourself an expert on the builder's product, process, and people before making your pitch. Some tips:
• "Generally, you're going to go after a production builder the way you eat an elephant, one bite at a time," Allmond advises. "You're not [going] to go to a national builder and say, 'I want all of your business.' You take a bite of a part of his business, and you become a source for him that he can depend on."
In fact, notes Allmond, some of his large clients have bought the same windows, trim, and framing lumber from his competitor one month as they bought from him in another. "Or one month, I get the framing and they get the trim," he says.
His advice: "You can't get your feelings hurt. In the big production game, you've got to be prepared to lose. ... You'll lose more often than you win."
• Getting to the purchasing agent usually requires an introduction. Allmond notes that large builders typically purchase only from vendors on an approved list. "If your name's not on there, you can hang it up," he says.
Allmond says he works his way into the decision-maker's office by getting to know the superintendent on the job site and proposing solutions to problems with products or delivery. Then, he says, the superintendent often is willing to introduce him to the purchasing agent.
• Because big builders are so focused on the bottom line, their purchasing agents often get paid more as they save their companies money by bargaining for every penny.
"The one thing the big builder is looking for is some way to take this product and build it better for less money," notes Allmond. "So we take their home, the structural piece, the windows, all of their products, and we try to 'value engineer' it. We figure out some way that we can make it as good or better a product as they're getting [from another dealer], but for a better value."
• Big builders' focus on profits drives them to ask their LBM dealers for deep discounts and plenty of extras at no charge.
Allmond tells about a competitor who struck a deal for a huge volume of windows with one big building company, which conditioned the sale on the dealer's covering all of the warranties. The competitor agreed and, Allmond recalls, "It almost put him out of business."
"They play hard ball," Allmond cautions. "They're going to ask you for things that are unreasonable, and you have to be prepared to say yes or no. Sometimes 'yes' gets you into trouble."
Doug Wirges, director of sales at Hillsboro, Ore.-based Parr Lumber Co., agrees: "This isn't just selling product," he cautions. "It's being profitable."
He advises pro sales reps to know what their own bottom line can withstand "so you're comfortable knowing when you need to walk away from it, or which concessions you can make and still be profitable."
• With profits comes paperwork. Wirges calls doing business with big builders "time consuming on the LBM side. ... There are so many people involved and so many different systems. It makes it more of a challenge."
Dealers who are not set up to administer these complicated accounts, Wirges says, should "shy away" from them.
• While the proliferation of paperwork and purchase orders piles on administrative duties for the dealer, Bill Hofius, New England sales manager for Riverhead Building Supply in North Kingstown, R.I., notes it can be easier to equip a home builder than a remodeler. New homes don't call for the dealer to search for parts and products to fit into decades-old openings or match outdated colors and styles. "You work with what's in front of you when you take the project from start to finish," says Hofius, "versus walking into a building that's 100 years old with a timber frame that has been remodeled again and again."
• Realize you're not the only one trying to sell to your market's volume builders. In addition to your competitors, national manufacturers are convincing these prosperous players to buy their brands. Some offer incentives or cut deals with the builder without consulting the pro dealer who will deliver the products, even if your shop is the builder's go-to supplier. "They treat the builder as their customer and the lumber yard as the conduit to handle the business," notes Hofius, who has also worked in the Atlanta market. "We don't always get the business, though. The manufacturers can steer the business wherever they want to."
Few sales reps would recommend focusing 100 percent of a dealer's sales effort on large-volume builders. Still, notes Hofius, "if I thought I could bring some value to a large national or regional builder, I would go in and ask. If you don't ask the question, the answer is going to be 'no.'"
And you'll miss out on the opportunity for high-volume sales. Even at a modest profit, "it's big money," says Allmond. "If you hit one of those big boys, you could be rolling in dough."
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