By Matt Collins
Builder Partnerships Senior Consultant
In any product segment, only one company can be the cheapest. You don’t want to be that company. Suppliers with nothing to offer but the lowest price will lose their customers as soon as another company finds a way to shave a fraction of a percentage.
It’s far better to differentiate by being the company that offers the most valuable relationship. In a competitive market like the one we have now, builders will remember — and reward — the suppliers that have their backs.
Here are six ways you can become invaluable to builder customers without sacrificing profitability.
1. Edit or create their scopes of work. Ask to see the scope of work for your area. If one exists, review it and offer ideas or comments to improve efficiency or reduce waste. If one doesn’t exist, ask if the builder has a template and help them write one.
2. Volunteer to keep their customer option catalog current. Don’t wait to be asked; take the initiative. Get copies from the design gallery and ensure the information on your products look great. Be sure to keep your information consistent with their branding. Don’t overstate your brand; remember that their buyers are buying a home from the builder because of their brand. If a builder sees that you get this, it will put you in a different category than all other providers. I know this is counterintuitive but when it comes to home sales, it is their brand that matters most.
3. Offer cost-savings ideas. Everyone is concerned with hard costs these days. Come up with several ways for builders to reduce costs through increased efficiency and help them get those systems implemented. Be different and reward builders that operate efficiently by allocating your operating costs in a way that favors the efficient builders with lower costs from you.
4. Show their field staff you appreciate their business. Show up on the jobsite with coffee and doughnuts or cold drinks on a hot day or maybe pass along tickets to a ball game. No agenda — just get out there, see what they’re building, and connect. The field team will remember that and pass it along to purchasing. Don’t offer the benefits to the purchasing staff; the best builders prohibit purchasing from taking personal benefits from suppliers and it puts you in a good light if you know this. Give the gifts to production and they will be an advocate for you.
5. Grade yourself and ask for an honest report card. Don’t just ask, “How are we doing?”. Identify the characteristics that would matter to the builder, choose five or more to grade yourself upon, and consider ways you think you could do better. I’ve only seen a supplier do this once in all my years in the home building business, and it blew me away. After that, I threw everything I could their direction because I knew they were looking out for me and were working to achieve excellence.
6. Track commodity costs and adjust prices accordingly. If increases in commodity costs force a price increase, offer to monitor an appropriate index or price and agree beforehand to lower the cost to a specific amount if the index drops. The point is to predetermine price increases and reductions based on an agreed-upon standard to take the pain away. So many builders are reluctant to give cost increases, even legitimate ones, because they will never get the cost back. A case in point: Builders gave away increases when diesel fuel went up, but nothing was ever given back when the price went back down. An open and transparent supplier who had returned some of the increase would have been viewed as a rock star — and would have gotten all the volume from its builder customers.
We often talk to builders about the importance of being the Builder of Choice. These builders operate differently and their suppliers see the difference. In the same way, operate as a Supplier of Choice and let the builders see that you operate at a different level. Take the initiative, show the builder that you put them first, and earn the business.