The best of both worlds: sure, builders want the best price—but not at the expense of on-time delivery and customer service

Prosales, April, 2003 by Pat Curry

Building materials dealers spend a lot of time thinking of ways they can better serve their customers. But what services do builders really value in their dealer relationships and how important are they when it comes to choosing their suppliers? And the million-dollar question: Does it make sense to invest time and money into offering top-notch customer service programs and delivery guarantees to builders who place an emphasis on receiving discounts and rebates?

The answer in the case of the latter: You bet. When PROSALES asked the 842 respondents of "The Builder Revolution" study about the criteria they use in selecting a building materials dealer and the value they place on the services dealers offer, it revealed an interesting dichotomy. When questioned about the criteria for selecting a supplier, the most important factors were related to delivery and service (see Figure 6). On the other hand, when ranking the value of services offered from building materials suppliers, the survey participants overwhelmingly said that discounts were most important (see Figure 7).

For dealers, these results point to the importance of developing a balanced strategy that doesn't place all the eggs in one basket. Moreover, a builder must choose a supplier before making the first purchase, so based on these findings the most logical order of considerations for a builder is to look at services before price.

Top Demands

So what does it take to offer the best combination of costs and services in town? According to the survey, the price of entry for a builder's business includes materials showing up when and where they're needed on a consistent basis. A total of 93 percent and 89 percent of the 842 individual respondents, respectively, said meeting anticipated delivery times and on-site delivery were paramount, rating them either 4 or 5 on a 1-to-5 scale with 1 being "not important at all" and 5 being "very important."

"I don't care if it takes six weeks, as long as it's there in six weeks," says Michael Baldwin, president of Baldwin Homes, a semi-custom builder from Arnold, Md., who will have three or four million-dollar homes among the 30 or so he will build in 2003. What he doesn't want is to place an order and hear that the product that's always required a six-week lead time will take eight weeks this time. If there's a change in the ordering process, he wants to know as soon as the dealer knows so he can adjust his schedule accordingly. He gives the bulk of his business to three primary dealers, choosing companies he can "really depend on."

Having a personal touch also is key in selecting a supplier. Loyalty/past relationships and knowledgeable/helpful sales reps garnered the No. 4 and No. 5 slots, respectively, on the list of criteria the respondents ranked. Based on our interviews with builders who reviewed the findings, that's because builders depend on their dealers to advise them about the products they're putting in the houses (see "Points of Contact," page 48). They report that their dealers play a major role in helping them to evaluate the quality, performance, and the value of materials. "If [my dealer] says the service on a product isn't good," Baldwin says, "I don't use it."

Dealers looking to leverage this influence should concentrate on reaching top execs and consider the end consumer as well, according to the survey results. Of the 762 builder establishments represented in the study, 62 percent reported that the president/owner/CEO of the company is most likely to influence product selection, followed by the end consumer at 54 percent (see Figure 8). Not surprisingly, those involved with building single-family custom homes were most likely to see the consumers' influence in the selection of products for their projects.

Other service-related factors that ranked high on the survey's findings for selection criteria include after-sales support (81 percent), having products available from stock inventory (79 percent), a dealer's return policy (74 percent), and the ability to handle special orders (73 percent). Availability of preferred brands was not far behind at 69 percent.

Indeed, recognizing the importance that their own customers place on name-brand products, every builder interviewed herein said that it was imperative to them that their dealers carry nationally recognized brands, especially in product lines that are visible to the homeowner. Backing that up, when asked specifically about the importance of nationally recognized brands, the 842 survey respondents said they were most significant in categories including windows (77 percent), roofing (60 percent), locksets/hardware (57 percent), and exterior doors (45 percent) (see Figure 9).

So where does price fit into this picture? In ranking the criteria for selecting a supplier in the survey, it came in at No. 3, with 87 percent of the respondents ranking it important. However, in terms of the value of services offered from building materials suppliers, these builders catapulted discounts to No. 1 and rebates to No. 3.