As you read this, we are in the heat of the summer, and hopefully in the heat of battle as well. I know my year has been rather busy, and I hope the trend continues through the fall and winter.
This particular client measures and monitors virtually everything within the organization, from sales leads to sold jobs, missed sales, product penetration on the jobsites, and on-time delivery. I have worked closely with the company's executives for more than 10 years. I have seen them through good times and not-so-good times. Through it all, the owner has stayed positive, the salespeople motivated, and the employees dedicated to the company and its community. This is a great organization with serious growth potential and very proactive management.
Internal records show this dealer has greater than 90% on-time delivery to jobsites, and very few loads are missing a thing. Maintaining a healthy inventory level keeps the back-order ratio low. Sales analysis, careful management, and customer needs drive the inventory levels.
Despite that impressive record, two critical areas of the survey showed:
Only 77% of those surveyed were satisfied with the company's ability to deliver material to the jobsite on time.
Just 61% were satisfied when it came to getting orders right the first time.
Relative to pricing material (and this is a very competitive market: residential, multifamily, and commercial), the pricing issue was third in importance, behind better service and knowledgeable staff, and product availability/fewer out of stocks.
Based on this survey, it would appear that on-time and in-full are the two most critical issues today. All things considered, price is relative to the quality of service you provide.
Most of the builders surveyed buy from more than one LBM dealer, while 43% would prefer doing business with a single dealer or distributor.
You can take quite a bit from a survey like this. In particular, processes need to improve regardless of what internal measurements may say. Further, even though we measure everything possible and strive for perfection, in the eyes of your builder, perfection is never achieved.
This particular company, running greater than 90% on-time and complete, has set the bar so high that its core customers have come to expect this level of service. Anything less is seen as a failure.
Other dealers in the area can be late to jobsites, have higher-than-average back-order rates and not be as good as my client, and the builders accept it. Because my client has worked for years to achieve a high level of service, it is held to a much higher standard. Is this fair? Probably not, but nobody ever promised fair.
By the way, while other dealers in the area are also suffering in this down market, this particular dealer is still doing well. Margins are stable, jobsite penetration is up, and customer loyalty is strong. Maybe being held to a higher standard isn't all that bad.
The best way to get an honest review of your operation and the service you provide is to ask your customers. But beware that you may not like what you hear.
For a copy of this customer service survey, including instructions, measurement, spreadsheet, and the like, contact my office. Contact information is on our Web site, www.lbmsolutions.com. There is no charge to provide this survey to our readers for their internal use.
Mike Butts is president of LBM Solutions, a DeWitt, Mich.-based LBM supply consulting and training firm.