November, 2005

Shepley Wood Products, Hyannis, Mass.

Reliability and close relationships helped Shepley Wood Products gain a foothold in the industry, but anticipating needs and cross-selling format have maintained the success.

By Craig A. Shutt

Tony Shepley’s passion for serving builders has kept his business growing since he began back in 1978. But the company’s initial emphasis—fast delivery—has developed into a more focused sales and service orientation. In fact, Shepley says today that if a customer requests his fast delivery service, the company has failed. "It means we didn’t take control of the sales process and anticipate the customer’s needs well enough.” The $75-million, Hyannis, Mass.-based company always has prided itself on its reliability and its passion for ensuring builders get what they want right away, he says. In fact, its slogan is Passionate Professionals Who Dare To Care. "I can hang my hat on that,” he says.

The company’s four-hour delivery guarantee is the tangible expression of its belief in being reliable. "If I tell a customer it will be there today, it will be there, no matter what,” he stresses. "Frankly, that passion and desire were the only things we had going for us at the beginning.” Today, however, the company offers more, including a sales approach in which each customer deals with both horizontal and vertical sales experts, who ensure all the customers’ needs are met—without battling internally for commissions.

In the early 1970s, Shepley was thriving as a member of a local rock band. "It was lucrative, but it was unstructured, and I didn’t know how long it would last. The structure of a ‘real’ job appealed to me.” So he and a friend, who had connections at a local mill, began selling lumber to builders off their truck. Shepley would pick up whatever lumber the mill was selling that day, he’d call ahead to let his partner know what he was returning with, and the partner would try to sell it before Shepley arrived back in town. "As the day wore on, the incentive to sell became greater,” he says.

Ignorance was bliss, he notes. "We weren’t selling to people at the top end of the credit scale.” A customer ultimately offered to build them a warehouse to store their unsold lumber, and, in 1978, they rented a store to create their first location. To stand out, they developed their own Unique Sales Proposition (USP), which was based on passion and desire. "It’s the only thing we had,” he says. That manifested itself as a promise to make all deliveries within four hours—a key point when most dealers promised two to three days.

As sales grew, however, Shepley wanted to add more value to the equation, making the company a greater partner in the builder’s business. One way he achieved that was by creating an estimating service that provides an individual takeoff for each plan, which was reviewed with the customer. "It’s better for everyone to discuss upfront at the desk what is needed than to discover it in the field.”

That anticipation of needs is the key to the company’s service, he says. "It’s an evolution of the four-hour delivery,” he explains. "That’s not their key need, usually. If nothing else, four-hour delivery means they’ve probably been waiting for the products for three hours when you arrive.” His goal is to provide critical-path planning, so all materials arrive just before they’re needed.

"Either way, I’m going to spend time and effort and money to deliver the products. But with critical-path planning, I get more credit and produce more added value for the customer.”

Focusing on critical-path planning and anticipating when products will be needed comes from examining the business and determining where opportunities lie, he explains.

"Usually, the opportunities are within problems.” Slow response time by dealers led him to develop his four-hour delivery promise. Now, he’s developed a sales system that overcomes the problem of all customers being generalists when it comes to product information.

Even before adding his estimating and other services, Shepley recognized the need for dedicated sales teams to support each customer. To that end, he reorganized his sales people into two groups. Each geographic sales team consists of an outside sales person plus a group of inside sales people, who provide support. "Their focus is on customer relationships and managing customer accounts,” explains Shepley. "Customers build relationships and depend on the inside sales people as much as they do the outside sales person.”

Working alongside those groups is another team of sales people, who developed over time as specialties developed. They are known as Vertical Product Specialists (VPS). Each is an expert in a specific product category or service area. "They don’t sell anything but that product,” he says. They work with the outside sales teams but focus specifically on educating and reinforcing the team or customers about their specialty. The company has VPS in 10 key product categories: Andersen and Marvin windows, interior trim, engineered wood, paint, hardware, installation services, flooring, roofing/siding and estimating. The service category was added when it became apparent it could aid the company in ways beyond added revenue. "It avoids having the products installed wrong and having it appear to be a product problem.” It also helps create a satisfied homeowner by cutting callbacks for the builder—which creates a satisfied builder.

Both teams of sales people have their income supplemented by sales commissions, Shepley notes. Originally, he had used strictly salaries, but he discovered that incentives work best to motivate sales people. But using only commissions puts the focus on the next sale rather than on customer service and interaction, so the blend works well.

Shepley had to work out a special commission arrangement, however, because he’d seen the dangers of having sales people working at cross purposes with a customer. When two commissioned sales people from other companies call on the same customer, internal competition can become too heated. "At industry meetings, sales people would tell me that they lost more sales to the guy in their own company than to anyone else, so they’d end up competing and lowering margins.”

To avoid that, the company’s commission system is based on total sales to each customer. The outside sales teams’ income is determined by total sales to its customer base, across all products. The VSP team’s income is based on sales of its products, across all customers. In that way, no matter who sells the product to the customer, both sides of the sales team benefit. In some cases, the two visit the customer together to provide more detailed information on new products or product applications.

"Neither sales person takes away from the other’s commission that way, and by selling together, they can boost sales.” They also help each other out by noting when customers aren’t purchasing certain products or by asking customers if they’ve considered certain lines.

Shepley’s focus is 100% on contractors, and that can be seen in the operation of its two separate showrooms for its Andersen and Marvin products. "We meet with homeowners, but usually only in conjunction with their builder or architect,” he says. "We really back away from homeowner-driven projects, when customers come in looking for products to buy. We tell them that we won’t be providing them with a service if we sell them direct, because the builder is a key part of the process.”

The goal with all of these services and sales approaches is to add value that boosts sales. "If you’re looking for knowledge and preventative medicine and critical-path planning, you’ll buy from us, and you’ll buy more. Our goal is to ensure that the builder ends up with a happy customer in a well-built house, which is what the builder wants, too.”

Today, Shepley and his 154 employees keep an eye out for more opportunities and refinements that will turn their passion into more value for customers. "The good news is that there is plenty more opportunity for us to improve,” he says. Whichever ways that manifests itself, it will be driven by a passion that still burns in Shepley.

"I’m as excited about being in business today as when I first got in, if not more so,” he says. "Being passionate about what you do can get you over the low spots.

A lot of people don’t like their jobs, but I have fun with it. I love making deliveries. I’m like a kid in a candy store when I’m on a 60-foot boom truck lowering a piece of steel.”

That passionate approach extends to all his employees, he says. "I depend on everyone who works here. I want them all to enjoy where they work and what they do. That attitude is passed along to the customer, and they feel it, too. You have to keep working at it, but it’s well worth it.”