Construction supply dealers, like many other companies these days, are hemorrhaging seasoned and valuable veterans. It’s a problem that has been developing for years and is one of the biggest challenges facing dealers today. To make matters worse, the problem could also take years to resolve.
For decades, baby boomers (born between 1946 and 1964) have represented the largest generation in the U.S. workforce since the U.S. Census Bureau started tracking population data. At its peak, in 1999, boomers were 78.8 million strong, which represented more than 28% of the total U.S. population. Today, boomers are 55 to 73 years old and in the middle of a mass workplace exodus as they enter retirement.
The ramifications of this development are widespread, affecting every part of most businesses in nearly every market. If it hasn’t already done so, this large swath of aging and retiring employees could significantly affect your business, your customers, and your partners. To prepare, dealers are taking a hard look at their sales teams and making needed adjustments. The eight tips that follow are from experts and progressive dealers and they will help you stay ahead of the challenges presented by retiring boomers.
1) Create a Succession Plan
When veteran salespeople retire, they take an encyclopedic knowledge of sales experience and best practices with them. That’s why company leaders need to have a succession plan in place to make sure talented employees are ready when leadership roles open up. Training should be a big part of this plan.
Curtis Lumber, whose revenue grew 6.9% in 2018 to $210.9 million, conducts annual companywide training during the winter months—January through April. Salespeople are trained in sales, accountability, financials, policy and procedures, products, operations, safety, computer skills, human resource–related topics, and more, says Lindsay LaRuffa, director of sales and operations for the Central New York division at the company. She states that training in supervisory skills is also offered—an often overlooked managerial skill set. Just because someone has a lot of experience and is a successful salesperson doesn’t mean he’s good at mentoring others or managing them effectively.
Another part of your succession plan could be to invite older employees to stay either in a full-time or part-time capacity. Not all employees who have reached retirement age are ready to retire. Some might want to keep their jobs, and others might want to ease into retirement and work in a reduced capacity.
More older adults (ages 65 and older) are either working or actively looking for work today than 30 years ago. The participation rate of employees from 65 to 74 years old is projected to be 30.2% in 2026, compared to only 17.5% in 1996, according to the U.S. Bureau of Labor Statistics. So, consider talking to your older employees to see if they have any interest in working with the company in a way that is beneficial for everyone.
Marcus Lumber, founded in 1920, is preparing for an exodus of its own, according to Grant Leavitt, co-owner at the Marcus, Iowa–based dealer. Leavitt’s father, Bob, and uncle, Jim, are planning to retire within the next five years, leaving Grant’s cousin Tom as the only remaining third-generation of Leavitts at the company, Grant says. Their retirement requires Tom and the fourth-generation of owner-operators: 32-year-old Grant; his 33-year-old brother, Clay; and their 23-year-old cousin, Hunter (Tom’s son) to step up their efforts.
2) Add Value
As is common with many owner-operators, Bob and Jim Leavitt tend to contribute a lot to the bottom line, so when they retire their departures could weigh heavily on the business, especially at a small company like Marcus. Because of this, Grant and his partners opted to get an early jump on hiring new salespeople. While it might be ideal to replace experienced sales leaders with other seasoned veterans, this isn’t always an option. So Grant and his partners tried another tack that has worked well for them before: hire people with field experience. Almost all of Marcus Lumber’s 12 salespeople have experience working on a jobsite. This gives them a lot of credibility in the eyes of a contractor.
“We’re all looking for the guy that’s got 25 years of experience working in a lumberyard to come work for us, but we’ve moved on from that view and we’ve just gone after people we feel we can train,” Grant says.
That training focuses on adding value to the sale. “We’ve spent a tremendous amount of time in developing our team to be value-added salespeople,” Grant states. That means training salespeople to focus on the big picture, not just a single product. “We’re trying to sell a project, meaning a house remodel, or a new house, or even a bathroom remodel,” he adds.
To help its salespeople be more project-focused, Marcus Lumber relies heavily on a “top-notch showroom,” Grant says. This requires more comprehensive visual displays. For example, instead of mounting faucets on a wall or a display rack, Marcus Lumber has a Delta Faucet display station that shows each faucet mounted on a countertop and paired with its own sink. This helps customers broaden their view beyond the faucet to the area they are working on.
Grant and his partners believe so strongly in the value of a visually compelling showroom that the company added 7,500 square feet to its showroom about two years ago, bringing the total size up to 25,500 square feet.
“We believe in the showroom selling model and have seen it improve our operation and grow our company’s reach for many years,” Grant says.
Another way to add value to the sale is to showcase the quality of the products, especially if customers mention products or prices from a big-box retailer. When this happens, salespeople at Marcus Lumber are encouraged to reveal that the components of similar-looking Delta Faucet products sold at a big-box store are plastic, whereas they are cast iron at an independent store.
Technology can also be used to add value. For a more customized and immersive experience, Marcus Lumber enables customers to build and view their design ideas with a 3D virtual reality tour, which gives them a sense of how it feels to stand inside their newly designed kitchen or bathroom before the project begins.
Altogether, these efforts helped Marcus Lumber increase sales 12% last year, according to Grant, and they have put the dealer in a better position to thrive when Bob and Jim retire.
3) Recruit New Construction Pros
The aging population won’t only affect the construction supply industry. Builders and remodelers are also aging and, because their jobs are physically demanding, they might not be able to put off retirement. If no one replaces the outgoing veterans, their crews will dwindle, which negatively affects their productivity. And when their productivity drops, so do your sales.
Lonnie Kvasnicka, territory manager and outside sales rep at Dealers Choice, a Beacon Roofing Supply company, recognized the impending demographic shift in his customer base not long after he joined the industry in 2005. So Kvasnicka, who is a member of ProSales magazine’s 2019 class of Four Under 40 winners, enlisted the help of lumber leaders and industry associations. Together, they reached out to young professionals, college students, and high school students to raise awareness and interest in the industry and helped to recruit them when they were ready.
Today, there’s still a significant need for new recruits. According to the BLS, about 32% of construction workers were between 45 and 64 years old in 2018. It also doesn’t help that the BLS reports that more than 2 million construction jobs were lost as a result of the Great Recession and, despite the surplus of high-paying jobs today, millennials are not flocking to fill them. Clearly, helping your customers find talented employees helps everyone, but there’s an added bonus: If you’re successful, you’ll look like a hero in your customers’ eyes, which will undoubtedly do wonders for your relationships. So, learn from Kvasnicka and plant seeds today to help feed your business in the future.
4) Assess Personalities
When a business has a national presence, it’s common to assign salespeople to accounts based on customers’ geographical location. But when your business is local, it frees your company to segment accounts differently. Being successful in sales requires you to interact with a wide variety of customers and prospects. However, like everyone else, salespeople’s personalities differ, which could explain why one salesperson has better success with some customer accounts than others. With this in mind, account-based planning could help pair salespeople to the best sales role or client.
That’s what executives at Central Valley maintain. The company, headquartered in Napa, Calif., grew sales 18.6% last year to $138.9 million. This enabled the company to jump five spots to No. 54 on the 2019 ProSales 100 list (see our May/June 2019 issue). The dealer wanted to evolve its sales efforts to accommodate the unique skills and preferences of its next generation of salespeople. So, it came up with an account-based planning approach.
“Key to this success is differentiating responsibilities within sales,” says Garret Ippolito, chief marketing officer at Central Valley. “Who is better equipped at account management? Who is better equipped to develop new business? Knowing clearly the customer’s personality and needs will ultimately determine who on our team is best suited to grow that chosen customer’s business.”
5) Set Objectives
If you were to ask a salesperson to share her main objective for a particular sales call or meeting, she might confidently tell you “to make a sale.” Naturally, this is a desirable outcome but it’s unreasonable to expect her to close a deal every time, even if a prospect is interested. The prospect could be in the early fact-finding stage and not yet ready to buy, other people might have to weigh in on the purchasing decision, or a budget might have to be approved for the purchase.
This is why salespeople should always set reasonable objectives for each sales call or meeting. If it’s an introductory call, a couple of objectives could be to gather all the necessary information about the prospect’s needs, expectations, and timelines and to set up a follow-up call. Another objective might be to find out who needs to be involved in the purchasing decision and to invite them to join the next call. A subsequent objective might be to ask for the opportunity to provide a bid.
In a recent ProSales column, “If You Want Something, Ask for It,” Brian McCauley writes that there are two main benefits to setting objectives prior to a sales call: “You will know when a sales call has reached its natural conclusion and it saves time for you and the customer.” Not only will the customer appreciate this, the time you save with that prospect can be spent on another sales call.
6) Communicate Your Value
Successful businesses in the construction industry sell more than a project, materials, or services. They also sell an experience. More often than not, customers will remember the experience much more than the price. During the session “Selling Your Why: Clearly Communicating the Reasons Potential Clients Should Hire You” at the 2019 International Builders Show in Las Vegas, David Lupberger, president at Remodel Force, stated that communicating the experience companies can provide helps those businesses differentiate themselves from their competitors.
While Lupberger’s message was directed at builders and remodelers, it applies to distributors and dealers, as well. Customers, regardless of their level of expertise or the nature of their project, will be more inclined to work with those they trust. Selling through manipulation, Lupberger said, such as relying on fear, price, promotion, or put-downs, builds neither trust nor loyalty with potential clients. Instead, communicate why clients should work with your company to create trust, pair your company with the ideal clients, and create a network of repeat customers. While on the surface what is being sold is a material, a product, or a service, dealers and distributors are, in reality, selling value-added experiences.
Lupberger said a business’s why must be in alignment with and a direct communication of its core values. Clients are buying the people associated with the job more than anything else, and so communicating your values and principles can better help clients choose who they want to work with. Lupberger also stressed the importance of contacting previous and repeat customers and asking them why they chose your business. This feedback can then be used for marketing purposes.
7) Offer Additional Services
Implementing this tip might require approval from the top brass, but if carried out, it could boost sales. Of the 100 dealers on this year’s ProSales 100 list, the number of yards that only sell construction products dropped from 30 last year to 25 this year. This drop is pretty telling, but the real eye opener is how little this group contributes to the PS100’s overall revenue—a paltry 6%. The harsh reality is that it’s getting harder to increase revenue without offering additional services.
While 52% of dealers on the PS100 offer manufacturing services (such as building components like trusses or doing millwork like door-hanging), not every dealer has the capital to invest in a manufacturing facility. Fortunately, there are other ways to offer additional services that won’t break the bank.
Marcus Lumber is a prime example. The company has been providing plumbing and HVAC services for about 70 years. From the builder’s perspective, “it’s one less person you’re trying to track down,” Marcus Lumber’s Grant Leavitt says. The plumbing and HVAC services, which are fulfilled by five in-house, full-time HVAC technicians, generate about 10% to 15% of the company’s overall revenue, he says.
Due to the short supply of skilled trade workers in the area, during the past year Marcus Lumber started offering electrical installation services and hired two full-time electricians to help contractors when needed. “It breaks our hearts when somebody comes in and says, ‘I’d like to buy this stuff, but I can’t find anybody to call me back and install it.’ That’s a real bad situation for us as far as a growth outlook goes,” Leavitt states.
8) Embrace Digital Solutions
Technology is becoming essential to many aspects of business, sales included. As boomers continue to retire over the next decade, now is a good time to leverage technology to help automate customer-facing processes. The efficiency gains alone could make a tech investment worthwhile.
Already, e-commerce accounted for 10.2% of all retail sales in the first quarter of 2019, according to data from the Census Bureau. And even LBM channels cannot escape this e-commerce wave, with it accounting for $2.36 billion (or 13.4%) of retail sales in the “Lumber & Other Construction Materials” census category when data was last reported in 2016. A survey from the Home Improvement Research Institute found that only 11% of pros said they never use the internet to buy products. In addition, the majority of pros who did purchase building materials online bought from big-box stores, such as The Home Depot and Lowe’s.
Big-box stores are closing the gap between themselves and traditional dealers as they shore up weak areas and upgrade online and digital marketing capabilities. Such stores are improving their stock inventory and employing more knowledgeable staff members—two areas where dealers typically have enjoyed an advantage over big-box retailers.
Home Depot, the largest home improvement retailer in the U.S, has improved its ability to serve professionals quickly online. The retailer is now able to reach 90% of the population with one- and two-day service from its direct fulfillment centers. Home Depot also launched a B2B website for pros, Home Depot Pro, which has onboarded 135,000 pro customers since its launch in 2018. The retailer aims to have 1 million pro accounts on the website by the end of the year. Home Depot Pro allows customers to link their purchases to QuickBooks and offers a pro purchase card program to streamline the pro shopping experience.
Nearly half of the companies on the 2019 ProSales 100 indicated that they have no plans to get customer relationship management (CRM) software. Additionally, only two-thirds of the top dealers and distributors have a system in place where customers can pay bills online and enter queries about product availability and price, with only 53% of 2019 ProSales 100 members offering an online store for customers to buy products and pay for them at the same time.
Don’t let the big-box stores do to you what Amazon did to independent bookstores. If you haven’t already invested in customer-facing technology, now’s your chance—especially as the younger generation of tech-savvy builders and remodelers take on more leadership roles.
Enter Generation Z
As retiring baby boomers continue to exit the workforce, hiring managers must make way for Generation Z. (The oldest members of this generation are already 22 years old). According to a Pew Research Center report, Gen Z is the most racially and ethnically diverse generation in the U.S. Nearly half (48%) of 6- to 21-year-old Gen Zers in 2018 were nonwhite, compared to only 18% of early boomers in 1968. Additionally, members of Gen Z will likely be the most educated and technologically savvy generation.
So, to appeal to Gen Zers, hiring managers must promote job stability, financial security, cultural and gender diversity, technological innovation, educational attainment, and a path for career growth.