I recently had a conversation here at the house with "Bill," a remodeling contractor. This gentleman had been a fulltime builder, but he hasn't put up a new home in three years. "Anything that keeps the wolf from the door" is his business model right now, including plowing snow out of driveways. He is probably not unlike many other small contractors in the country. What makes him notable is that when he stopped building houses, his sales rep from a large, reputable dealer stopped calling on him. Simply vanished.
I asked Bill if the outside sales rep was still at the yard, or if the rep too was a victim of the housing downturn. Bill said he understood the OSR was still there. The company certainly is still there, downsized for sure, but maintaining a presence in our market.
Bill said that when he completed his last house there were several visits and a number of calls by the OSR, but when no new jobs were forthcoming, the calls and visits stopped.
Meanwhile, Bill turned to remodeling. He did small jobs at first, the occasional bath or kitchen remodel, simple door replacements and other projects that as a builder he never would have considered–too small and bothersome. Many of his jobs have turned into much larger projects, second and third callbacks to the same house for additional work, room additions, basement remodels, and other projects. He is now a well-respected remodeling contractor and wonders if he even wants to return to building houses.
So naturally I asked him where he was buying his material–he still needs sticks and sheets, right? Bill said he purchases almost everything he needs on a daily or weekly basis from one of several big-box stores in our area and various specialty distributors. He pays cash or credit card, and the goods are loaded in his truck or delivered by the store to his jobsite. His purchases are smaller, obviously, but he is a regular cash customer. And none of his material needs are any different than what is normally carried in inventory at any LBM dealer across the country.
Bill does have some special-order needs, but those are taken care of by the box stores as well. For the most part, he charges based on time and material. Bill knows he pays more for material now than if he still had an account with the lumberyard, but he receives immediate service, picks up just what he needs for that day's business (since he can't store material on the jobsite) and seems happy.
What happened to the OSR? Who let this customer fall through the cracks? In today's market, how many other builders have turned to remodeling to generate business, and how many of them are no longer being serviced by you?
Yes, their service needs are greater, their product quantities are smaller, and there's a higher "touch" factor and more busywork required to take care of the customer. But people like Bill are still customers who are actively pursuing business and are ready to pay for their purchases.
Where before he may have been doing $750,000 in business, today a Bill might only be generating $75,000. But it's still business.
How do you find these guys, where do they hang out, how do you determine their needs? Most large cities and municipalities have Home Builder Associations with an active remodeling council. That's one starting place. Another may be simply to ask some of your remaining customers what they know, who might have changed market strategy. Also look for gaps in your customer list–who's no longer buying from you, or who has volume that has suddenly dropped significantly. An OSR's job is to dig for business, not simply accept fate.
Bill is still working. Are you?