Selling to Builders, Second edition

By Steve Monroe

Building suppliers, manufacturers, trade contractors, real estate brokers-if you sell products or services to home builders, this book will increase your success rate and business savvy. Learn the types of builders and what will get you in the door and writing orders.Steve Monroe draws on over 30 years of sales wisdom to provide proven tools that assess where you stack up as a sales or service professional, motivate you, and polish your performance, whether you aim to serve small-volume, custom, or large production builders.This second edition includes a companion CD with exercises that help you evaluate your current business practices and guide you to become an even more successful salesperson. The CD also has easy-to-use business forms that will bolster the amount of business you are doing with builders."Bull's-eye! Selling to Builders hits the target! Steve Monroe has simplified the keys to earning the builder's business. This book is, without question, the sales bible every associate member at NAHB should have". --Michael Kurpiel, Strober Building Supply, Cherry Hill, New Jersey"I can't image a better resource for training new sales people in the millwork industry". --L.Thomas Bychinski, Peachtree Companies Inc./Weather Shield Windows and DoorsSelling to Builders, Second Edition Kindle Edition is also available on Amazon.com. You can start reading this book immediately on your iPad, Kindle, or smartphone (iPhone, Blackberry, or Android), or on your desktop by simply downloading Amazon's Kindle App here.

• Language: English
• Publisher: BuilderBooks
• Release date: Jan 1, 2007
• ISBN: 9780867186642

Book preview

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Introduction

After the first edition of Selling to Builders hit the shelves in 2001, my wife Louise observed that I had addressed most every concern and area in selling to builders. The book was well accepted by those interested in strengthening their relationships with builders.

Since then, several attendees of workshops that I had facilitated began asking questions about the future of selling to home builders and related professionals. They wanted to know how to tailor their sales and marketing strategies to sell to builders in an evolving market that was characterized by new business models and new players. So I started doing research and taking notes, lots of notes. When BuilderBooks Publisher Christine Charlip asked me if I would be interested in writing a second edition, I leaped at the chance. So, here you have it.

It is my sincere hope that when you are finished reading this book it will be dog-eared, highlighted, and scribbled in and that you will be energized and raring to go sell, sell, sell.

I encourage you to complete all of the exercises in the book. These exercises have been developed to prompt you to evaluate your selling skills and your business operations. The forms and checklists have served me well over my 30-year sales career, and I believe they will help you become a more successful salesperson as well.

Each chapter concludes with How Do You Stack Up? Be sure to answer yes or no to each question. The challenge is to turn your negative responses into positive ones. If you answer no to any of the questions, take a 5-minute gut check and figure out why you answered no. Decide what you have to do to be able to answer yes. List the three actions you will take to better capitalize on your strengths and overcome your limitations.

What You Will Find on the CD

Successful Sales Attitude Behavior Self-Assessment

Successful Sales Attitude Behavior Peer Assessment

Time Tracker

Time Chart for Goals

Personal Sales Planner

Partnership Agreement Form

Competitor Checklist

Competitive Counteractions

Lead Tracking Form

Client Management Form

Time Chart

Quick Quote Form

Prospective Customer Form

Certificate of Completion for Installation Services

Effective Sales Kit Checklist

Inspection Report

Second Call Checklist

The files can be easily customized to meet your business needs. To access the files do the following:

Place the CD in your CD drive.

Launch Microsoft® Windows Explorer.

You will see three subdirectories:

Word files: These files can be edited using Microsoft® Word.

PDF files: These files are predesigned forms that you can immediately print and use.

Text files: These plain text files can be manipulated by any word processing program.

Double-click the icon that represents your CD drive.

Select Copy, and copy the files to your hard drive.

1

Overview of the Builder Market

Ask any builder why he or she chose residential construction as a profession, and you’re likely to get a variety of answers. But if you look beyond a builder’s everyday concerns, such as weather delays, long-term interest rates, the lack of dependable labor, client expectations, increasing costs for materials and supplies, and the scarcity of available land, you will find a visionary. Builders have a unique gift of seeing substance and form where others only see raw land and opportunity and potential where others see obstacles and challenges. The most successful builders can turn their visions into profits.

Builders may be among the last of the risk takers in America, and they lead the charge when it comes to optimism. They routinely put their reputation, self-esteem, and financial capital on the line in hopes that prospective home buyers will purchase their vision. Imagine taking a concept, putting it on paper, committing it to a blueprint, and then ushering it through the local government’s building review committee. If the initial concept makes it that far in the process, the builder then sets a footprint on a piece of land, prepares the site, and begins building, ultimately giving form to the vision.

Selling to builders or servicing their needs allows you to be part of this fast-paced, creative world. But what kind of builders or which aspect of the building industry should you target? Figure 1 illustrates the various types of builders and their operations.

To establish prices for your goods and services, you must first decide what is important to you. You may choose to tailor your goods and services based on the number of units produced or the builder’s yearly revenue. The Cost of Doing Business Study published by the National Association of Home Builders (NAHB) describes builders by classifying each by sales volume (average sale price) and by type. Although dollar volume is a strong indicator of a builder’s presence in the market, so is the number of actual units built. What you offer in goods and services reflects which factors are more important to your business needs. If you supply material or contract services to builders, the number of units built is critical to your bottom line. However, if you supply services that support the building process such as accounting, financing, marketing and sales, or information technology, volume may not be as important.

Figure 1. Builder Operations

Source: NAHB Cost of Doing Business Study, 2006 Edition

About one-third of NAHB’s 235,000 members are home builders and/or remodelers. The remaining members are associates who work in closely related fields within the housing industry and provide mortgage finance and building products and services. The 2004 earnings reported in the most recent Cost of Doing Business Study (2006 edition) break down as follows:

Small-volume builders reported an average of $3.6 million in revenue.

Production builders reported an average of $33.5 million in revenue.

Combination builders, those who build on land they developed and purchased and on land owned by their customers, reported an average of $12.3 million in revenue.

Small- and moderate-volume combination builders often use standard plans that can be modified to suit the client’s needs. These builders tend to purchase scattered lots in a development from other builders or developers. The combination builder might employ a jobsite supervisor to manage daily operations; whereas small-volume builders usually manage the job themselves. These builders may own land, often 10 acres or less, depending on local building restrictions. Either the builder or a local financial institution will finance the project. Although the builder does some of the marketing, he or she often gains referrals from clients or works through real estate brokers.

Production builders, called large-volume or tract builders, produce attached and detached single-family homes from standard plans with the possibility of minor modifications. They may sell the homes prior to construction or build them on a speculative basis. The jobsites are usually managed by regional representatives; therefore, this type of operation requires a reliable means of communication. Lending is generally project-based, although some production builders are self-funded. In-house salespeople generally conduct sales from the model homes in each development. Production builders are normally involved in land purchases and development and work several years ahead of current demand.

In addition to the previous classifications, custom builders construct one-of-a-kind homes for specific clients. They often build in upscale developments on scattered sites. They depend on the real estate community to supply leads and use referrals from home owners. The prices for their homes often exceed $1 million.

Not all builders build new single-family homes. Some derive all or a portion of their yearly sales from remodeling. Others serve as general contractors, devoting most of their resources to building and developing multifamily projects such as apartments, condominiums, and town homes or mixed-use properties.

Selling Goods and Services in an Evolving Market

Your particular market and builder base will vary in response to new innovations in technology and materials, economic and social forces, consolidations, and home buyer demographics.

Virtually any item that involves computers today did not exist before the early 1990s. With the addition of lasers, the vital task of laying out the footprint of a house has become a one-person job. The explosion of direct-connect units augmented by cell phones has allowed builders and suppliers to be readily accessible, even while on a jobsite. Smart House® technology is now available across the country, and more and more builders are advertising their products on the Internet. Some builders have stopped constructing model homes in favor of virtual reality showrooms.

Laminated veneer lumber has revolutionized the framing process. The advent of oriented strand board has impacted exterior walls from medium-density fiberboard to basic trim packages. Soon there may be a system that will allow the builder to hang vinyl siding and the needed structural material for an exterior wall in a single operation. Composite materials are becoming commonplace, and state-of-the-art computers help home owners deal with rising energy costs. In addition, the advent of green building techniques allows builders to create houses that do not damage the environment and are energy efficient.

Even the buyer is evolving as emerging minority communities are purchasing homes at a record rate. The growing Latino demand for housing is the subject of Casa Y Communidad: Latino Home and Neighborhood Design (www.BuilderBooks.com). Not only is this emerging market impacting housing sales, but an increasing number of Latinos are entering the residential construction workforce. You may need to learn a second language to converse with trade contractors and employees. A September 18, 2006, Associated Press article reported that the Mexican government recognizes 162 living languages.

In addition to Latinos, other ethnic groups are becoming commonplace on construction jobsites. I have worked in central North Carolina for nearly 14 years. I recall going out on a customer service call where I was the only native-born person present other than the home owner. The project manager was from Jordan, the framer was from Mexico, the warranty person was from Afghanistan, his assistant was from Morocco, the siding guy was from Korea, and the landscaper was from Guatemala. The project manager did an incredible job of communicating across the language barriers. The savvy salesperson needs to be culturally aware. Patience, effective communication, and mutual appreciation are the keys to bridging cultural differences.

There has also been a major shift in the dynamics of the supply chain. In the past, builders purchased goods and services directly from dealers and/or distributors. Today, many manufacturers, and distributors have consolidated, and as a result they can offer builders a full range of goods and services. Those manufacturers who have not consolidated are beginning to sell directly to builders, allowing them to bypass conventional distribution channels and deliver their products right to the jobsite. As a result, there is an increasing demand for turnkey services, such as framing, interior trim, siding, windows and doors. In addition, the general reduction in manufacturing capacity due to aging factories has also impacted prices.

Another change in the building scene in many markets is the introduction of national large-volume builders. Often, these large and well-respected firms can enter a new market and obtain immediate market share by purchasing local or regional building companies, leaving small-volume builders scrambling to find lots and meet the price points the new competition brings to town.

But one thing remains the same: Builders still construct houses, and their businesses have several common characteristics.

Common Builder Characteristics

Building firms are generally family organizations. You can easily find several generations working on the same jobsite. This trend is not unique to small- and medium-volume builders. Some of the largest building companies in the United States have their roots in family-oriented businesses.

Builders are fiercely independent-thinking entrepreneurs. Not only must they determine which housing styles to construct and the best location for those homes, but they must also be able to quickly react to changes in the market.

Builders need information. Builders and their staff face well-informed consumers who know how to ask tough questions. The builder’s staff must be able to answer those questions quickly and confidently.

Builders must perform. Because a home is the single biggest investment that most families make, a builder must construct a home that meets, or exceeds, the buyer’s expectations.

Builders are high maintenance. Even with the introduction of computer-assisted design plans, builders still make last-minute requests. They might need fill-in material because of new crews, shrinkage, or changes from the home owner-to-be. As a supplier, you must be able to respond immediately. Your response time will be key to gaining the builder’s confidence and keeping their business.

Builders