Integration Project
One of Jane’s biggest projects–and challenges–is to mold the four individual facilities into what amounts to one lumberyard with four locations. Some of this involves improving the automation of the yards’ operations and delivery systems so they can work together seamlessly. But it also requires increasing the trust between locations, particularly by embracing a system in which a customer’s delivery will come from the yard closest to the job site, regardless of which yard made the sale.
“We had always talked about operating as a metro yard, but we hadn’t done it,” North Branch’s Hult says. And while he’s in favor of the idea, he also regards the closest-site delivery program “a scary avenue to go down.”
Jane also has centralized the metro yards’ buying, thus helping her get better deals by increasing the volume size of each purchase. Additionally, she is making long-term commitments to her vendors, a strategic move that she firmly believes in and backs up with cold cash. She employed that strategy early on in a limited way with TimberTech decking last spring and later on plunged deeply with shingle supplier Tamko for 2011.
With Tamko, she says she committed last year to $600,000 worth of product, and this spring she saw enough signs of good sales to increase that figure by 50% to $900,000. One reason why: Because of its commitment, the metro division was able to buy the shingles for 47% less than what it had been used to paying. That in turn enabled Lamperts to generate a much better margin and gave Jane’s salespeople an attractively priced product to peddle.
“That invigorates the salespeople,” she says. “People were shocked at the volume numbers we committed to, but this is a strategy that a Target or any big retailer would use.
“We needed a brand to compete with Menards,” she says of the Tamko deal. “We didn’t want to end up driving our lumber and insulation customers elsewhere for shingles because we couldn’t deliver them a good price.”
Fesler says her shingle suppliers didn’t really believe she would bypass them in favor of a new product. Says Jane: “I had one [supplier rep] say, ‘If I go out to one of your yards, they’ll buy from me. They always have.’ And I said, ‘No they won’t.’
“I had a fairly comprehensive plan of how we would grow and become a dominant player in the market,” Jane says. “I spent a good deal of time looking at the market and talking to builders, even the ones who didn’t work with us, but who we wanted to work with in the future. We have to be a good partner. That’s why we have an interior designer on staff who works with them for free. Our core competence is customer service, not a lumberyard.
“We have a Target 50 list of builders we want to work with; it changes all the time,” she says. “Management still goes out on sales calls. We like having relationships at multiple levels, and both employees and customers feel like they have a whole team behind them.”
Total sales for the Twin Cities yards are projected to rise nearly 40% this year to $40 million. Within two years, Jane expects to post $70 million in sales for the division. It’s a bold figure, but she feels her team is up to the challenge.
Growth Strategy
Jane’s success with the shingle program has led her to look at the custom cabinetry and millwork category, and to work toward developing a strategic partnership that will enable her to offer her pro customers a Lamperts line of high-end, custom cabinetry. For her, strategic partnerships are the way to go. “We don’t believe in vertical integration,” she says. “Vertical integration makes it hard to move on opportunities when they become available, which makes it hard to compete.”
In the Twin Cities metro area, Lamperts estimates that Scherer Brothers, Lyman Lumber and ProBuild hold 70% of the lumber business. Jane is intent on capturing some of those dollars. “Scherer Brothers doesn’t know it yet, but we’re coming for their luxury business,” she says.
One industry watcher says he doesn’t see Lamperts as a big mover in the Minneapolis market, and remarks they really aren’t even on the radar of the big players in remodeling and home building.
That’s a situation Jane is intent on remedying. During a recent visit to Apple Valley, where she greeted staff by name and engaged each in quick conversation, manager Bill Jensen introduced her briefly to a young builder who had come in the door with his first project, a $620,000 indoor pool in a Lake Minnetonka home. He was looking for a good package.
Her eyes gleamed when she heard the figure. “This is just the type of work we should be getting,” she said.
There are new cars and trucks out in the yards’ parking lots and enthusiasm in the sales ranks. But the architect of the division’s renaissance is enthusiastically impatient.
“I can’t wait to see what this company will look like in another year,” she says.
Treading Water Is Not a Strategy
Jane Fesler doesn’t lack for opinions about how to run a business. Here are some of her keys to victory:
Get out of the office. If your people are in the office, they aren’t making sales.
Pass out the business cards. Everybody in the yard can impact sales. Even the delivery guys should have business cards and hand them out.
Don’t be shy. If you’re making a sales call, ask for sales; and double-team to make your message more effective. If builders are surprised to see you, turn that surprise to your advantage. “When builders were stunned to see me on a sales call,” Fesler says, “we’d use that surprise, ask for a shot, and sometimes even get it.”
Practice customer service. Customer service is not an instance, it’s a practice.
Spend time effectively. Employees need to be spending 80% of their time at work doing their job. If they aren’t, then they need to be working someplace else.
Stay light on your feet. Vertically integrating your business can tie up capital and, in a recession, will drain finances without adding enough to the bottom line and keep you from moving on opportunities that might help you grow your business.
Partner with your suppliers. By making long-range commitments to your suppliers, you make them part of your team, and invest them in your success.
