Beyond culture driven recruitment, Stewart also places a heavy emphasis on sales training to ensure that the company can continue to attract and retain its builder business. “Probably the most extensive [competitive] efforts are enrolling all of our outside sales and some of our inside sales-people in a weekly sales training course,” Stewart says. “This makes them not only better salespeople for our company, but better salespeople for their customers.”
While Stewart’s salespeople focus on custom contractors,84 Lumber stays much more production-minded in the Nashville market, benefiting from a large unit-count, wide market coverage, and economies of scale. “Just in location-counts itself, we have 10 locations across the market, including Goodlettsville, Murfreesboro, and plans to build one in Lebanon,” says 84 area manager Jeff Cory, who oversees 84 Lumber operations across central Tennessee. “So instead of having one big location, we have several. The production builder in this market is not just [doing business] in one area. He is all over, and obviously something that is 60 miles away from you, you cannot service as well as something only 20 miles away from you.”
In comparison to local and regional dealers in the Nashville market, 84’s more obvious advantage is in its national name recognition among production builders, along with the capital might to invest in the footprints required to service them. “We have a truss plant at Donaldson, Tenn., that does panels and trusses that we opened three years ago and have grown out of just because of volume,” explains Cory. “So we have a new location slated to open in April that’s 35 acres—a huge piece of land. We are a debt-free company. We grow about 30 or 40 stores a year, so we should grow another three to four stores in the next three years in this market alone.”
Bigger may be better for 84, but for single-unit Fakes & Hooker, it’s not the number of footprints that matters, but the type of shoe that fits best, and in this case it’s the contractor boot. Founded in 1863, the pro dealer eschews DIY retail sales due to big box penetration in the Nashville market. Although the company has serviced consumers during its 140-year tenure, partner and director of operations Ted Aulds concedes that market has dwindled to an end. “With Home Depot and Lowe’s stores in all directions of 10 or 12 miles of us, it has become cost-prohibitive for us to service the do-it-yourselfer market,” he says. “So the big boxes are in a different market all together. We have a good customer base supplying more custom home builders, and a few tract home-builders. We have our own niche.”
Selling successfully into that niche against regional and national players has been a function of local relationship building and pure, single-unit flexibility to businesses on the go. While the pro dealer industry at large is just settling into next-day delivery or—in rarer cases—same-day delivery, Fakes & Hooker shoots for a three-hour window from order call to jobsite drop. “We want the truck to roll within three hours from the time the order is placed, and we want all deliveries on the job by 3 p.m.,” says Aulds. “We have been able to excel against our competition because they have problems turning around the trucks [as quickly]. We are not as large and are able to pick and choose who we deal with, so service is our ace in the bag.”
On the Same Page With the exception of deep rural areas, most U.S. construction markets are similar to Nashville in that they are home to local, regional, and national suppliers. But even as companies coexist in the market, they often are attracting different types of customers or servicing a particular slice of companies within the overall residential construction business. For example, while Fakes & Hooker is limited in its single-location trading area, the staff is able to interact with its builders on a near split-second basis. However, Fakes & Hooker may not attract regional builders that work in different parts of the Nashville market like Stewart can, or benefit from relationships with national builders in other markets like 84 Lumber does.
According to Rader, one of the primary obstacles to succeeding in any competitive environment is attempting to match your company up against the strengths of the local, the regional, and the national dealer simultaneously. “Don’t do all three, focus on your market fit first—then look elsewhere for growth opportunities,” Rader concludes. “Most successful LBM dealers are engaged with customers and understand the customers’ issues. In any competitive environment, successful dealers will understand how to take the most pressing needs of builders and turn them into profitable opportunities that solidify the business.” Editor’s Note: Chris Rader contributed reporting to this story.
Team Building Tap into your employees’ knowledge of customers and competitors to gain a market edge.
Every residential construction market has a different set of constraints, and although you may feel pinched by the level of service, prices, or products offered by your competitors, don’t give up. Stay focused and stick to your guns. In any market, most successful LBM dealers are not just riding the construction activity tide—they are continuously engaged with customers and helping to solve their business problems.
Nobody understands those needs and challenges better than the pro dealer sales and operational employees who interact with builders on a daily basis. Think of the ways that you have helped your customers work out monetary, design, or operation problems that may not have been solvable without the members of your team. Companies should share this information internally, including posting the results along with open-book short-term and long-term financial goals on a board in a war room or meeting room so that everyone in the company can join in solving problems and getting fired up about the results. So, open the war room, clear off the white board, and ask your employees the following questions:
Once you complete this exercise you will understand more about your company’s services, customers, and competitors. Use this information to develop sales and margin goals for your existing customer base for the next year. Spend time at your customers’ sites and figure out what products they are selling that you are not supplying. Can you profitably supply these products? Should you supply these products? Finally, focus on your competitors’ customers and identify those that can be brought into your fold with a focused “conversion” strategy. With any strategic plan, you ultimately want to develop tools to attract, engage, and retain the customers that will fit in well with your business model.
When it comes to war room operations, it’s much better to plan to conquer a new market or customer base rather than to defend your existing turf. —Chris Rader is president of Rader Solutions, a Lafayette, La.–based management information, education, and training consulting firm for the construction supply industry. Email: crader@radersolutions.com.
