A knowledgeable local sales rep who is empowered to answer questions and resolve problems quickly continues to be a critical element in why builders choose one manufacturer’s product over another, or switch products and brands.
That’s one of the key findings in a survey of 70 builders that explores what they look for and expect from suppliers. The presentation of the survey’s results was conducted by The Shinn Group's Builder Partnerships and Wizard Strategy, a marketing firm that works with myriad suppliers. As they were being presented, the findings were buttressed during a webinar on Thursday by five builders of different sizes and geographies, who shared their observations about the findings as well as some of the issues they deal with regularly with their product suppliers.
As expected, the greatest number of builders—35% of those polled—valued price first in their relationships with suppliers, followed by:
Total Cost: 10%
Jobsite support: 4%
One builder who was polled commented, "With good prices comes protection from unnecessary price increases."
Price is also the dominant reason why more than two-fifths of the builders polled said they’d switch from one supplier to another. But manufacturers whose relationship with builders rests primarily on price run the risk of losing business to competitors that can demonstrate a greater concern for that builder’s ability to sell homes, and are better able to explain total costs that include product knowledge training, warranties, advertising, distribution, energy efficiency, and so forth.
When asked what they wished their suppliers would do more of, the number one answer among builders surveyed was "be committed to my success and not just making a sale."
This is especially true when builders are considering making a change in their product lines, or adding a new product. They are looking less for price than for what will differentiate them from other builders, and what will lead to improved profit margins. Builders also want to know before they take on a new line whether it will add to their construction costs, or whether there will be installation issues they and their contractors will need to deal with.
"If the product does not perform well, it’s not worth it," said one of the survey’s participants. "A balance between low cost and product performance/durability is most desired." Another added, "Overall, it’s the installed price and workmanship level that make a lasting impression" on his company and its home buyers.
One of the webinar’s builder-panelists, Randy Birdwell, CEO of Texas-based Gracepoint Homes, made the point that James Hardie, from which he’s been buying siding for more than 30 years, wins over other manufacturers because of its attention to how builders install its products to avoid any warranty or construction defect problems down the road. "In a litigious society, new products are extremely risky," said Birdwell.
That’s another reason why having a well-informed field rep is so important to the vendor-builder relationship. "Companies that have been cutting back on their [field] reps are probably shooting themselves in the foot," said Mark Mitchell of Wizard Strategy, who presented the findings during the webinar.
Moen, the faucet manufacturer, was named by the most number of the survey’s respondents as the supplier that supports their companies best because Moen offers regular rep contact, it keeps builders informed about upcoming price changes, has "excellent" customer service, competitive pricing, and strong sales and model home support.
Kohler and Whirlpool also ranked highly among builders, primarily for the "transparency" of their relationships, the quality of their products, and the ease of those products’ installation. Mitchell was quick to note that brand was not mentioned as a factor in these suppliers’ support of builders, although both companies’ names are so recognizable that most builders probably took that as a given.
The webinar’s builder-panelists endorsed many of the survey’s findings, particularly about the value of vendor representation. "When you narrow it down, it’s how small problems are handled right away and don’t become issues," said Tom Benedict, vice president of purchasing for Wayne Homes in Ohio. He went on to say that a good local rep can "overcome small differentials in pricing" between suppliers.
The panelists prefer reps who will give them straight answers, and suppliers that are flexible enough to lock in prices for, say, six months or the duration of a community’s construction, so as not to throw off the builder’s own pricing. Steve Coppieters, vice president of operations for Kartchner Homes, which builds in Idaho and Utah, noted that the 20–25% price increase his drywall suppliers had been threatening this year turned out to be a 10% increase, which in turn undermined his company’s marketing in the process.
Robert Wormald, CEO of Frederick, Md.–based Wormald Companies, thinks builders and product suppliers are leaving "a lot of money on the table" when manufacturers' reps don’t train builders sufficiently to sell their products, especially a company like Wormald that sells a lot of options.
"Communication is huge, keeping us in the loop," said Audrey Stroman, CFO with Pennsylvania-based Rouse Chamberlin Homes, who acknowledged that communication must be a two-way street, with builders letting suppliers know about their production schedules and buyer preferences, and manufacturers keeping builders abreast of product availability and supply-chain issues. "We can’t sell a house with products the customer doesn’t want," Stroman noted.
As the housing industry comes out of its recession, the builder-vendor relationship could become more stressful. The panelists on the webinar said they are already hearing about shortages in drywall, tubs, and hardwood flooring. And after getting beat up on price for several years, suppliers are imposing price hikes again. (The Associated General Contractors of America reported on Thursday that in August prices for gypsum products were up 17.8% compared to August 2011 and up 0.3% compared to July 2012. The index for architectural coatings, while unchanged compared to July, was up 11.7% year-over-year. And lumber and plywood costs increased by 2.3% in August and were up 6.9% compared to August 2011.)
Manufacturers will also need to do a better job of staying on top of changes in building and energy codes. Several of the panelists noted their employees are often more knowledgeable than suppliers are about local changes.
John Caulfield is senior editor for Builder magazine.