Here is an idea to spark your 2012 profitability. Start selling to builders!
At the end of 2011, a funny thing happened. There was positive news on the homebuilding front. After five years of bad news, including the last three during which we all predicted this could finally be the “bottom,” it’s time to ask: What if this is the bottom? Inventories are down and the stocks of most national builders started to rise at the end of the year.
If it is true that home building will start to gain momentum sometime in late 2012 and continue to build into 2015, then now is the time to start prospecting for builder accounts that can stabilize your business model. Most of the roofing contractors I meet are reluctant to pursue the builder audience for fear of low margins and high nuisance accounts. So before I give you ways to sell effectively to builders, let me identify a few reasons why you should pursue this lucrative audience.
• Builders stabilize your cash flow.You rightly recognize that builders will not provide the same margins as homeowners. But the good news is that a builder relationship does not require you to constantly “sell” each transaction. Builders, once you have proven your abilities to get the job done, will provide the loyalty that enables you to keep your crews busy throughout the year.
• Builders enhance your margin structure. If you have ever sat across the kitchen table feeling desperate for a sale, it is because you are desperate. A solid backlog of work with builders enables you to negotiate with homeowners from a position of strength and hold the margins you deserve on replacement roofs.
• Residential business-to-business is more relationship-based than low slope.Low slope commercial sales efforts are transactional in nature, while builder accounts do not require the necessity of quoting on every project. When you deal with a commercial project, you’re selling to a committee that includes the designer, general contractor and owner. When you sell to a builder, you are dealing with the primary decision maker directly.
Here are three ways in which you can successfully sell to builders.
1. Think relational rather than transactional. Too many salespeople approach builders with the idea of getting the “next” job. The problem is that builders, by and large, are loyal to dependable suppliers. They switch suppliers and contractors when something goes wrong with their existing one. Your goal is to be the first choice a builder makes when things go wrong with its existing roofing contractor.
2. Stop bidding and start proposing.When you finally get the call, the timing is right to be the next contractor of choice. Don’t blow it by submitting a “bid.” Sell the total cost of doing business by presenting a proposal that identifies how you will produce profits for the builder. The “price” you charge might be similar or even higher than competitors. But the “total cost” of doing business is reduced when you help manage production schedules, eliminate delays, and provide products that give your builders a competitive advantage.
3. Select the right builders.You are a victim to builder clients only when you allow them to manipulate you. Not all builders are created equal. Many are combative and manipulative in their negotiation practices, while others are cooperative and willing to provide loyalty to deserving suppliers. Proactively seek out builders that are the latter type.
You may be a contractor who shuns the idea of selling to builders. In fact, most roofing contractors are reluctant to pursue this audience. If this is the case, then it means that you’re facing soft competition. Differentiate and stabilize your business model by incorporating sales to builders. You may discover that they provide the stability promised in my article. Only one thing is certain. You’ll never know if you don’t try.