By Stephen Crouch, Vice President of Operations
For the first time in nearly a decade, it is good to be in the residential new construction business again! Challenges exist in certain segments of the industry, but for the most part, manufacturers see home builders as a growth opportunity over the span of their three- to five-year planning cycles. This is especially evident by the attention many manufacturers have given to the home building industry in their first-quarter results press releases and conference calls.
The job of senior management within an organization is to look at the big picture and identify the best opportunities for growth and increased profitability. Despite the potential for higher mortgage interest rates, the housing forecast looks very favorable for new construction. Sales prices are up, inventories are low, and demand is increasing.
So, it makes sense that the senior management teams at many of our manufacturer members are redirecting resources and hiring new people to pursue the opportunity to increase business with home builders. They also are creating promotional campaigns that include some form of direct content marketing. It’s a great strategy for pursuing such an attractive growth opportunity, but execution is the key.
Does your team have what it needs?
The job of middle management is to take the builder sales strategy and develop the plans to prepare the sales and marketing team to execute. Too many times, though, the change in strategy is conveyed to the larger team without supplying the tools or training needed for execution.
This can happen for a few reasons. Middle managers may have a clear understanding of the changes that are required and believe it is obvious to everyone within the sales and marketing team. Or, middle managers may lack the experience of working closely with home builders since it has not been a focus for a large part of their careers. Budget constraints may also hamper their efforts to prepare their team for execution. Whatever the reason, the failure to prepare the sales and marketing team appropriately will hamper the ability to leverage the full potential of the opportunity.
Here are five basic steps manufacturers should take to prepare their sales and marketing teams to pursue the growing home builder market.
1) Clarify what it means to focus on home builders. If a manufacturer sales team has typically sold only to direct buying customers, sales reps will likely be confused or hesitant about calling on the customer of a dealer or distributor. The team needs to know that their goal is not to change the distribution of product, but simply to drive a specification for the manufacturer’s product through existing channel partners.
2) Clearly explain the focus on home builders and why is it in the best interest of the team. The sales and marketing teams need to be on the same page regarding the objectives for the change in strategy. Are they trying to expand their dealer relationships at the same time they are growing builder specifications? Is this part of a strategy to knock a competitor out of a dealer or distributor? The ‘why’ can impact the way the strategy is executed.
3) Clearly identify the target market. As with consumers, builders are not a homogenous group; they have different needs and buying hot buttons. Those may not always be obvious. As the sales effort transitions to focus on builders, the sales and marketing teams need to know how to recognize the differences in builders, segment them, and modify the message to appeal to each segment.
4) Create the product message to deliver to the builder. Every manufacturer and every product has certain strengths and attractive characteristics; these likely are not appreciated universally by builders, dealers, and distributors. The team needs an understanding of the best message to deliver to each type of customer.
5) Compensate the sales team to support the objectives of selling to builders. Many factors go into driving a conversion at the builder level. Specific sales are hard to quantify since the transaction does not typically occur between the builder and the manufacturer. Anyone who has ever been a sales rep or who has worked with sales reps knows that the pay plan drives pretty much everything. Especially in situations where sales reps are required to divide time between calling on builders and calling on dealers, they will spend their time where they can see the greatest connection with compensation. Manufacturers need to ensure the compensation plan is set up to encourage their sales team to call on builders.
Manufacturers that invest time and a bit of money in preparing their sales and marketing teams to pursue their new construction strategies will see significantly larger benefits than their competition. Don’t wait to take advantage of the opportunities created by the resurgent housing market. Email me for information on how our team at Builder Partnerships can help you craft and execute an end-to-end strategy to reach and capture the profitable mid-tier home builder market.