{"id":7083,"date":"2005-10-06T16:09:11","date_gmt":"2005-10-06T16:09:11","guid":{"rendered":"https:\/\/zonda-develop.go-vip.net\/prosales\/article\/small-differences_o"},"modified":"2025-06-27T02:07:22","modified_gmt":"2025-06-27T02:07:22","slug":"small-differences_o","status":"publish","type":"post","link":"https:\/\/zonda-develop.go-vip.net\/prosales\/news\/industry-trends\/small-differences_o\/","title":{"rendered":"Small Differences"},"content":{"rendered":"<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> Mark Scott has been on both sides of the fence. Through the 1980s, the owner of Mark IV Builders in Bethesda, Md., built custom spec homes; for most of the past 15 years, his focus has been high-end residential remodeling.<\/p><p class=\"wp-block-paragraph\"> And though he brings in about the same revenue as he did building new homes (roughly $5 million this year), Scott&#8217;s needs and buying habits as a remodeler are far different than they were as a home builder. \u201cAny kind of builder is all about the price. That&#8217;s the culture,\u201d he says. \u201cNot getting something when I need it is a much bigger deal to us [remodelers] than saving a few dollars.\u201d<\/p><p class=\"wp-block-paragraph\"> But it&#8217;s a concept that too few LBM dealers and other product suppliers seem to grasp, especially as more of them shift their sales focus to large-volume production home builders. \u201cWe&#8217;re a small fish in most suppliers&#8217; yards,\u201d says Scott, who spends up to $500,000 a year on LBM supplies. \u201cWe&#8217;ve been pretty much told [by some dealers] that they&#8217;re not interested.\u201d<\/p><p class=\"wp-block-paragraph\"> Collectively, custom builders and remodeling contractors account for hundreds of billions of dollars in construction activity every year. Together, they make up 45 percent of the customers among the top-grossing LBM dealers, according to the 2005 PROSALES 100, the largest share by far.<\/p><p class=\"wp-block-paragraph\"> But as individual small business owners, they buy in quantities dwarfed by even medium-sized home builders, causing some dealers to neglect their business\u2014at their potential peril. \u201cAlthough an individual account may not represent a larger percentage of sales, when you add them all up, it can be quite substantial,\u201d says Rick Ferguson, editorial director for The Colloquy Group, Frequency Marketing, a loyalty marketing firm based in Milford, Ohio, adding that small accounts also often consolidate purchases with dealers, buy higher-margin items, and are typically more flexible on price than large-volume customers. \u201cYou have to understand and appreciate their collective value on the bottom line.\u201d<\/p><p class=\"wp-block-paragraph\"> Complicating a dealer&#8217;s sales efforts to this segment is that small-volume builders and remodeling contractors have their respective differences, requiring sales reps to become even more specialized\u2014assuming there&#8217;s interest in those segments of the industry as opposed to chasing bigger-volume builders.<\/p><p class=\"wp-block-paragraph\"> To combat perceived or real neglect by an increasing proportion of LBM dealers, small-volume contractors are sometimes turning to the Internet, specialty outlets, and big box retailers to get what they want and need, at least in terms of products, if not services. They are also improving their internal processes to be more efficient in their purchases. \u201cI&#8217;m trying to buy better,\u201d says Scott, such as consolidating orders for multiple concurrent jobs and buying more online.<\/p><p class=\"wp-block-paragraph\"> Meanwhile, dealers anxious to hold on to small-volume pros and their typically higher-margin habits are employing loyalty programs and value-added sales services targeted to that segment. \u201cIt&#8217;s our niche in the market,\u201d says Matthew Smith, a contractor salesperson with TW Perry, a four-location, $120 million dealer based in Gaithersburg, Md., and Mark IV Builders&#8217; primary LBM supplier. \u201cSomeone has to be there to meet the need.\u201d<\/p><p class=\"wp-block-paragraph\"> <b>Subtle Distinctions<\/b> If you added up their respective spending annually, a custom builder who finishes one or two homes a year and a residential remodeler like Scott may show about the same amount in an LBM dealer&#8217;s books.<\/p><p class=\"wp-block-paragraph\"> But when and what they buy is often vastly different. \u201cHome builders know all of their specifications from the start, because they&#8217;re starting from scratch,\u201d says Ron Kastein, president and owner of Barker Building Supply, a three-location, $20 million operation based in Delavan, Wis., at which small-volume customers make up most of the dealer&#8217;s sales, in part given the lack of national or regional home builders in the market. \u201cRemodeling is more of an investigative effort. They usually need to replace or match something existing,\u201d and often don&#8217;t know what that is until they actually start on the project.<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> From a timing standpoint, custom builders are more akin to their tract-home peers: Lumber and other product packages are delivered in a predetermined volume based on a fairly rigid schedule of construction phases\u2014albeit typically over a much longer period of time than a fast-tracked production operation.<\/p><p class=\"wp-block-paragraph\"> But because remodelers rarely know all that they&#8217;ll need at the start of a job, they&#8217;re more apt to make ad-hoc calls to the yard for a one-off or fill-in deliveries during the project. \u201cWe consolidate purchasing as much as we can, but it would be silly to have our leads [site superintendents] run around for stuff,\u201d says Chris Stebnitz, sales and brand manager for Stebnitz Builders, a remodeling firm in Delavan and one of Barker Building Supply&#8217;s customers. \u201cIf something pops up, we&#8217;ll ask [Barker] to deliver it.\u201d<\/p><p class=\"wp-block-paragraph\"> Not only that, but remodelers like Stebnitz and Scott may have several jobs going at any given time, while a custom home builder, especially one at the upper end of the market, might manage only one or two simultaneous projects. Even if both require roughly the same dollar volume of materials, their ordering and delivery habits are like apples and artichokes. \u201cFor a remodeler, everything is different on each job,\u201d says Stebnitz.<\/p><p class=\"wp-block-paragraph\"> By contrast, custom builders tend to order a more standardized package of materials. Though \u201ccustom\u201d implies unique, not all small-volume builders construct truly custom homes; as a result, their materials packages (especially structural products), specifically in terms of phased deliveries, are far more reliable than a remodeler&#8217;s. \u201cWe typically modify a plan from our own library or from a house plan catalog,\u201d says Dan Storrs, co-owner of Phoenix Custom Homes in Bridgewater, Conn., resulting in framing and other product packages that are similar in scope and specifications.<\/p><p class=\"wp-block-paragraph\"> In addition, custom builders and remodelers have different product demands. \u201cWith custom builders, there&#8217;s more leeway. They&#8217;re more willing and able to go with products that are stock items or easily available,\u201d says Smith, which, in a small way, also reflects their cost-conscious nature. \u201cRemodelers need to match what&#8217;s there already or put back exactly what was there before,\u201d Smith says, recalling his efforts to find rare and discontinued casing profiles, door styles, and hardware from sources nationwide to meet the demand of his remodeling contractors.<\/p><p class=\"wp-block-paragraph\"> Storrs concurs. \u201cWe rely on brand-name products and hitchhike on their value [to our home buyers],\u201d he says. \u201cWe select products that we know people will like and that we have no trouble with,\u201d in terms of delivery, installation, or warranty service.<\/p><p class=\"wp-block-paragraph\"> That being said, there are similarities among all small business owners, including contractors, when it comes to purchasing habits. \u201cIn some ways, their behavior mimics consumers, in that they buy both emotionally and rationally,\u201d says Ferguson.<\/p><p class=\"wp-block-paragraph\"> For dealers, the trick to serving both small-volume builders and remodeling contractors is to commit to an inventory (or at least reliable sources) of higher-margin finish products, sales services (preferably through a staff dedicated to small-volume customers), and some sort of recognition program for such customers. \u201cIt encourages them to let you get to know them better,\u201d says Ferguson, which, in turn, results in better target marketing to capture their business, boost sales and profits, and attract even more small accounts.<\/p><p class=\"wp-block-paragraph\"> <b>Service Masters<\/b> Dealers have heard this before: Small-volume customers rate services over price. While that&#8217;s true generally, there are clear differences between custom or small-volume builders and remodeling contractors in terms of what they need in that respect from a dealer or supplier.<\/p><p class=\"wp-block-paragraph\"> Scott, for instance, can&#8217;t work with a rookie salesperson. \u201cAlmost everything we do has some aspect of customization,\u201d he says, expressing the need to work with dealer reps able to easily source what he needs. \u201cI can&#8217;t volume-purchase anything, which means I&#8217;m paying a markup, even more than a small builder, so I expect some service for that.\u201d<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"><p class=\"wp-block-paragraph\"> Kastein takes that attitude to heart at Barker Building Supply. Ten years ago, he streamlined his inventory by eliminating housewares and lawn and garden products to attract pros more so than walk-up consumers. \u201cOur motto is \u2018Go where the pros go,&#8217;\u201d he says. \u201cThat means keeping updated on what they&#8217;re looking for and hiring appropriately to create the perception that we&#8217;re knowledgeable and serious.\u201d<\/p><p class=\"wp-block-paragraph\"> In addition to an experienced and loyal staff, Barker Building Supply offers its account holders free estimating and materials delivery, co-op dollars for advertising, and individual business and financial consulting. The dealer also supplies updated prices every week and offers a contractor&#8217;s room stocked with displays and samples for pros to use with their clients. \u201cIt&#8217;s their store,\u201d Kastein says. \u201cWe&#8217;re business partners.\u201d<\/p><p class=\"wp-block-paragraph\"> Like Barker Building Supply, Stebnitz&#8217;s primary window and door supplier, Window Design Center, a single-location, $6 million operation in Madison, Wis., delivers more than just the products he needs for his remodeling jobs. \u201cSmall-volume customers value personal attention, the ability to make a single phone call from start to finish, and someone who knows what they&#8217;re talking about,\u201d says the Center&#8217;s project manager Chas Vaughan.<\/p><p class=\"wp-block-paragraph\"> Stebnitz also values the fact that Vaughan makes the one-hour drive to Delavan twice a month (at least) and is otherwise readily accessible by cell phone and e-mail to answer his questions and check his specs. \u201cWe get great communication and great follow-through,\u201d says Stebnitz, such as sticking to his schedule for delivery and offering sales and installation training off site at Stebnitz&#8217;s shop. \u201cIt&#8217;s important to us that our suppliers invest as much into our company as we do in theirs.\u201d<\/p><p class=\"wp-block-paragraph\"> Dealers and suppliers also can assist their small-volume accounts by offering installed sales or showrooms. \u201cWe tend to use [showrooms] offered by specialty dealers,\u201d says Storrs, who sends clients to his plumbing, flooring, and window and door suppliers&#8217; shops for a peek at what he&#8217;s selected on their behalf or a chance to swap the specification for something else.<\/p><p class=\"wp-block-paragraph\"> As for installed sales, Storrs relies on his contractors to bring both materials and labor to the jobsite. \u201cI let my subcontractors bring the brands they&#8217;re most comfortable with, as long as it meets my specifications for quality and warranty.\u201d<\/p><p class=\"wp-block-paragraph\"> Perhaps most important to Scott, however, is a dealer who hears him regardless of his lumber ticket. \u201cThe good ones listen to what I have to say, good or bad,\u201d he says. He notes that the number of yards who still serve small-volume pros in his market has dwindled from a dozen to four in the last decade, limiting his leverage to shop around but girding his loyalty to those who earn his business. \u201cIf I complain too loud, I&#8217;ll end up at The Home Depot,\u201d where, he says, he already spends six figures a year for materials. \u201cI have to be reasonably loyal to a lumberyard to get good service.\u201d<\/p><p class=\"wp-block-paragraph\"> Like in the Washington, D.C., market where Scott and other remodelers and small-volume builders have witnessed a 10-year exodus or gobbling up of small, independent dealers to serve them, Kastein is keeping an eye on tract builders beginning to buy large parcels of land in his area, as well as big box retailers moving in, to understand\u2014and sell\u2014the differences between them and his operation to small-volume customers.<\/p><p class=\"wp-block-paragraph\"> \u201cWe&#8217;re not too foolish not to look at how we might service and benefit a large-volume builder, but not at the expense of our core business,\u201d Kastein says. \u201cThe most important square footage you can sell is between you and your customer, making sure they feel comfortable working with you and that they&#8217;re satisfied.\u201d\u2014<i>Rich Binsacca is a contributing editor for PROSALES<\/i>.<\/p><p class=\"wp-block-paragraph\"> <b>Tips for Serving Small-Volume Accounts<\/b> Consider the following intricacies between small-volume builders and remodelers\u2014both their differences and how they vary from large-volume accounts:<\/p><\/div> <!--nextpage--><div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\"> <li>Builders, no matter what size, are more sensitive to price than remodelers, who are most sensitive to on-time delivery.<\/li> <li>Small-volume (and even custom) builders tend to standardize their specifications; remodeling contractors require more special orders and oddball specs to match existing conditions.<\/li> <li>Collectively, small-volume accounts can make a significant impact on a dealer&#8217;s bottom line.<\/li> <li>Small-volume accounts appreciate loyalty programs that reward and recognize their business, enabling a more effective marketing effort to their needs.<\/li> <li>Small-volume accounts tend to purchase higher-margin products, consolidate purchases for logistical convenience, and are more flexible on price than larger-volume accounts\u2014but expect extra services in return.<\/li> <li>A small-volume builder may have one or two jobs running simultaneously; busy remodelers often have several.<\/li> <li>Dedicate experienced sales staff to small-volume accounts, especially remodelers who tend to need special orders and sources.<\/li> <li>Take comments, concerns, and kudos seriously, as they tend to represent those of other small-volume accounts.<\/li><\/div> ","protected":false},"excerpt":{"rendered":"<p>Mark Scott has been on both sides of the fence. Through the 1980s, the owner of Mark IV Builders in Bethesda, Md., built custom spec homes; for most of the past 15 years, his focus has been high-end residential remodeling. And though he brings in about the same revenue as he did building new homes [&hellip;]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"scheduledNewsletterDates":[],"_scheduled_newsletter_id":0,"footnotes":"","jetpack_post_was_ever_published":false,"zonda_content_type_url_append":"_o","zonda_dfp_zone":"","zonda_exclude_recommended_contents":false,"zonda_exclude_most_popular":false,"zonda_exclude_tagged_results":false,"zonda_eyebrow":"","zonda_last_newsletter_date":"2099-12-31T23:59:59.999-05:00","zonda_original_url":"","zonda_pdf_version":0,"zonda_print_headline":"Small Differences","zonda_promo_abstract":"Mark Scott has been on both sides of the fence. 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