Eighteen months of customer soundings and self-examination have given ProBuild a clear vision of what it should become, the company's CEO says. The result is more a refinement than an overhaul, but one that helps the company move from its patchwork past to a more flexible, yet still unified future.
"We kept trying to put ProBuild on the jersey of everybody and make everybody look the same, but what we began to realize is we’re not all the same," Rob Marchbank told ProSales in an exclusive interview Feb. 5 during the International Builders' Show. "We're a collection of really strong legacy companies with strong, proud heritages," he added at another point. "How do you build a new DNA on top of that? There’s been a lot of machinations of the company over the years, some good, some bad, and all very situational in the downturn. You have to start with that context in terms of the journey and the path we've been on."
That path led ProBuild to reach these decisions:
- Its target markets and investment focus will be on five customer types: production builders, custom builders, multifamily builders, repair/remodel firms, and the tradespeople who support them. It will serve those five and develop ways to help those businesses in turn find customers.
- Other customer types will continue to get service if they return a profit in a market; Marchbank cited commercial construction and agricultural sales as examples. "What we’re simply saying is, as long as your making good earnings on it, don’t stop," he said, adding at another point: "Just know that over the course of the next three to five years, our resources corporately, our capital, our people, are going to be channeled and focused at those five customer segments.”
- There will be three separate business units. The two parts of the company with the biggest consumer presence--Spenard Builders Supply in Alaska and Dixieline Lumber in San Diego--will keep their current names. Several Northern California facilities bought from Santa Cruz Lumber and Home Centers a few years ago and rebranded as ProBuild facilities will go back to their old name. ProBuild just spent $3 million retrofitting two of the Dixieline stores, he noted. It’s part of an effort “to leverage the uniqueness” where it most makes sense, he said.
- All other parts of the company will get the ProBuild logo. Those yards will be grouped into five geographic regions.
- Roughly 100 different plans to compensate outside sales reps have been reduced to nine, emphasizing commissions that are based on generating profit, not just winning business. Where there once were 56 management compensation plans, now there are three.
ProBuild executives built this strategy through interviews with more than 300 customers, 35 suppliers, and 1,000 ProBuild employees in roughly 100 branches, Marchbank said. The experience taught them that, in some cases, the facilities and their markets had such diverse business models that trying to make them look like other ProBuild yards was costing them business. The company will continue to have shared services and common back-office units most of the operating from the Denver headquarters, "but where it needs to be unique, merchandising and marketing and celebrat[ing] that difference," the company will do that.
No Single Standard
This vive le difference approach is grounded by a key fact about ProBuild: With nearly 400 stores in cities big and small from Florida to Alaska, standardization doesn't work. Even if the company had decided it wanted to focus on the production builder, as it once did, "I had 115 stores in the Midwest where a production builder never showed up," Marchbank said. "So how do you have a flexible business model that allow you to start with the customer and then your associates know how to apply that? ProBuild had a model that we were trying to force on everybody. The answer is no; focus on your customers and work backwards and give them that business model."
The new model says it's OK for the yard in Houston to be different from the one in Mandan, N.D., and sell different products. "The fundamental principle of serving the customer segment [is the same]," Marchbank said. "Texas is going more to the production builder, Mandan more [to retail] customer and repair and remodel. We’re building the business model with the services and capabilities to address those differences. But we want to be able to leverage those five things across all the locations as appropriate, because you can do repair and remodel in Houston--we just haven’t done it yet because we’ve been so focused on the new construction."
The new emphasis is on guidelines and a framework that gives local yards more autonomy, he said. In the past, "we really shut down their ability to serve their customers and take care of their associates," Marchbank believes.
Denver will continue to be the hub for human resources, payroll, legal, and information technology. Buyers will operate out of Denver as well as in the regions, and there will be times in which a product will be sold only in certain parts of the country. This approach, Marchbank said, should "help us engage our supplier partners more locally and take advantage of those opportunities to aggregate locally as well as execute the direction."
It's a balancing act, he stressed: "You’ve got to help the organization understand that there has to be some value from what we have, so we have to work for the greater good, and that sometimes means compromise. So my objective has been to communicate what we’re doing and why we’re doing it. [Employees] won’t all agree, but at least they’ll understand what we’re trying to accomplish and why.
He did confirm that ProBuild continues to rationalize its portfolio, adding three stores last year in Panama City., Fla., Pleasantville, N.J., and Atlanta’s Buckhead district, while closing about 10 others. The company now has approximately 384 locations nationwide. “We are about seeking opportunities,” Marchbank said.
Why Be National?
ProBuild’s size and ambitions have made it a target for fellow dealers who say there’s no logic in trying to be a building supplier that operates nationwide. Marchbank disagreed.
“Is there value? Yes,” he declared. “Have we captured, monetized, and lived it yet? No. It varies again by customer. The R&R customer in Kalamazoo, Mich., kind of doesn’t care you’re national—unless you can bring him tools and capabilities, technologies, services that their local guy couldn’t do. Unfortunately, our past has been that we’ve not been able to do that. So, I’m absolutely a believer that there’s an opportunity for national, certainly some of the national production builders we could do more and make better arrangements with them, not just on price but on footprint. We should be doing things with technology that help us differentiate ourselves.”
Marchbank declined to say whether the company is turning a profit. He did remark that “We’re better than we were when I came” in January 2012 and that ProBuild “exceeded expectations” of the ownership, Fidelity Investments, “pretty significantly” last year.
“Our focus has been about profitable sustainable growth,” he said. “We’re done working hard and going home tired and broke.”
For more on ProBuild, including links to past stories plus background date, see our company page on the dealer.