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August, 2004

How to Sell to Remodelers

The numbers are staggering: Last year, remodelers did $182 billion in business, up five percent from the previous record-setting year, and counting.

By Carla Waldemar

But don't you dare treat them like your custom builders because their needs are vastly different. Here's how to get your piece of the pie.

Call them the Jedi Knights of the building material industry. The Remod Squad™ is a force to be reckoned with, setting new standards for service to remodelers in Minnesota's Twin Cities.

Dave Klun serves as sales manager for the sales group of Scherer Brothers Lumber Company, launched five years ago and operating at three of its five locations, geared to focus solely on the special needs of its remodeling contractors and serve them to death.

The program was born when Dave and a focus group of employees developed the strategy with management after querying close to 50 such customers, who nearly wept in gratitude. As the Dangerfields of the building industry, they'd been pushing to be recognized as clients whose needs were dramatically different from those of new-home builders.

At last, some respect. "We'd always sold to remodelers, but not differently than to our custom builders," Dave explains. In this pioneering venture, "We try to focus on remodeling as a growing and developing industry with its own demands and challenges, with our own specialized salespeople. We started with two of us; now we have seven senior salesmen and seven associates in the sales force, which has grown by customer demand. I'm the quarterback. But it's truly a team effort," he emphasizes, "dedicated to developing and growing another channel of customers. We work holistically-meet every month to go over issues and challenges. You need specifically-trained salespeople," he reinforces. "It's become a career path for them."

It represents a stretch of vision for a traditional, third-generation company. Originally the group was named Remodeling Consumer Sales till after one night, chewing the fat over a slice of pizza, out came the thesaurus to liven the image. Dave started signing emails from the Remod Squad, and it wasn't long before Marketing took it to their hearts; they came up with a snappy logo and trademarked the darn thing.

Different Breed

At the outset, seasoned remodelers sat the boys down for a lesson in the facts of life. Here's how our needs differ from the bros in the new-home business, they said.

Remodelers do demolition, number one. "It's a whole different mentality," Dave professes. "It requires set-up-such as covering an existing floor-and different equipment, like dust masks and floor protection. Then, they've got to put it back together, adding the challenge of working through an existing situation."

Number two, "The remodeling business is so fragmented, all over the board. Some work just in the suburbs, others only in the inner city and never get on a freeway. There's the difference between adding a family room on suburban acreage and working in a vintage, inner-city home where you never know what's behind the wall-'My god, look what we found!'-which may require immediate, urgent action, and you're got to respond to that."

One benefit to Scherer Brothers was that there were good margins to be had by filling demanding requests on special-order products and hard-to-find items. "Remodelers told us that sure, price is important, but service is more so, and that they will pay for it, as long as you perform. So to balance both, you need to stay in touch, make adjustments. We'll go to their offices, be involved in their project-manager meetings once or twice a year, in order to offer encouragement. It's part of partnering." Dave's not one for buzzwords, but that's a concept he's one hundred percent behind. (The Remod Squad also is eager to partners with manufacturers, which may utilize its expertise in programs to promote remodeling nationwide.)

To serve these contractors, "You also have to think of complementary products. If they're doing beams and headers, have you got the right hanger? Lots of hardware products to orchestrate. Yet remodeler guys don't buy a ton of hardware compared to the buying volume for new construction. So, you have to balance how you stock products.

"This led us to establish our Hardware Strike Force, to identify products and keep them in stock because it's often 'We need that today!' We can't lose that train of thought," he prods his team.

Another crucial difference: Remodelers require small deliveries. "So we bought specific equipment for them, challenged the mind-set in our company. For a new home, you can unload lumber in the middle of a cornfield at 5 a.m., but not at a customer's client's home. We learned that delivery two days ahead of schedule is great for a custom builder but bad for a remodeler, where it sits in the family's vision. So you deliver what they need on a daily basis. You can't block the driveway or leave materials where they kill the grass. And when oil from a truck stains someone's driveway, who would they call?" he demands. "We recognized that it requires topnotch maintenance by our mechanics to preserve the appearance of a finished driveway. We service our trucks so they don't drip oil. Again," he notes, "it's a mind-set that challenges traditional patterns. These customers want delivery and operational excellence, not just a good sales force. And to grant this level of service, they're willing to pay more."

Another bonus came as a nice surprise. "Loyalty, like you wouldn't believe! They're relationship-driven-you earn their respect, offer a fair price, and they're not out there shopping. The Remod Squad identifies their expectations and matches them by goals and chemistry with our salespeople to get the best fit.

"The drivers are working on developing a more customer-focused mindset, too. The driver is the last person [representing the company] to see the homeowner. Therefore it's absolutely critical that they leave these homeowners feeling there's a sense of caring."

Oilcan comes to mind. That's the moniker of piggyback driver Al Thompson, a fella so service-savvy that he's requested by name from customers and upon occasion invited to their parties. "That's excellence beyond your wildest dream," Dave testifies. "And we're working on expanding it; the plan [for investing others with that mentality] is coming together."

A few more surprises: Remodelers, the Squad has come to learn, are inclined to leverage sophisticated technology. "They use it to look up invoices and prices. We offered six training classes, once a month to all our customers, to educate them in how to use it, and these remodelers were pretty hot at wanting to get better (which puts continual pressure back on us," he laughs.)

Custom builders routinely welcome assistance with their model homes. But what about the remodeler, with no such advertising vehicle? Scherer has thought that through, too. "We partner with these guys to offer marketing initiatives, like we do for model homes," Dave explains.

The Remod Squad puts its money where its accounts are. "We're big on supporting associations, not just joining them. Big difference," he exhorts in his convincing, cheerleading style. "It's critical. For instance, we are a big sponsor of both the National Association of the Remodeling Industry (NARI) and active participants in its educational efforts, and of the Remodeler's Council, an arm of NAHB-the marketing arm." The Squad also plays a huge role in Scherer Brothers' annual Product & Services Expo, held to entertain and inform its customers, and distributes its own newsletter, Scherer Remodeling Essentials.

The Squadsters also sponsor in-house roundtables twice a year, focusing on subjects participants suggest, such as technology, customer service and millwork. The program has 67 members, and 20 may attend any event, based on a first-come response by email. The two-hour sessions include a working lunch; after hashing over issues, results are made available via email to the total membership ("and they burn my ears if I don't come through," Dave notes. "They re always pushing us to elevate our services.")

Bright Future

Like the space-age fellas roaming the skies, Dave is engaged in exploring new horizons, too. "We're building credibility that this [niche] is huge and sustainable, but people don't want to believe that this industry is here to stay," he finds. "We're pioneers, doing this. Like Lewis and Clark: What's around the next bend? Will it end here…or here? It's beyond belief where salesmen can take this; there's plenty of opportunity to grow. They're a force to be reckoned with if we all keep on taking risks, minimize our mistakes and keep moving forward." Impatient to change the world, he has to remind himself that sustained progress is measured like running a marathon, not a hundred-yard dash. "We don't spend enough time reveling in our victories. We've got to keep up the enthusiasm."

May the Squad be with you.

[Sidebars]

Mark Brick, CR
B&E General Contractors, Inc., Milwaukee
President, NARI

"Remember that we're different from custom builders. We live with a client; they don't. We work in finished areas; they don't. We provide the least disruption to a client, so there's more cost involved. Because a custom builder needs to make money, he doesn't always use the best products; while we give people their dreams and don't settle for anything less."

Here's how dealers can help. "The most irritating thing is the changing faces of your staff; when they're transient, they don't understand and remember our needs and we can't build relationships. We also appreciate help with marketing dollars, discounts for paying on time, and referrals. You're more than happy to sell us product, so have it readily available. When your Outside salesmen follow through, do take-offs, we like that." Bottom line: "We have great relationships with independents [rather than boxes] because they're flexible and willing to do things for us."

Dan Bawden, GMB
Legal Eagle Contractors
Texas Remodeler of the Year

"People will be shocked to hear how different from custom builders we are in that we're more focused on service than price. We'll spend more if you provide better service. Another difference: We have a closer relationship with out clients, which is a different stress level, more micro-managing than the custom builder, and a different approach from your subs. Also, how would you [homeowner] feel if the cabinets weren't delivered when promised? So we'll pay more to get them on time.

"I also like to establish relationships with one person I can use repeatedly. I'll come in, meet your staff, pick someone and send all my clients to you. There's a comfort level if they can ask for you and you say, 'Dan? Oh yeah!' and that person will educate my client for me, like why to have a temperature valve in the shower, so it doesn't look like I'm pushing [for a bigger sale].

A gripe: "It's hard to reach the Outside guys when there's a problem; they don't pick up on their cell phones. We rely on you to put out fires. Communication is vital.

"Delivery is an issue, too. With new construction you can deliver at 7 a.m., but my customers are still in their underwear, so arrange for 10 or 11. And your drivers need to be house-trained-things like their language, smoking-to be more genteel and able to communicate with the owner. (The yard I use delivered on a Saturday to a church and the guys got out of the truck and carried the lumber inside. Home Depot would never do that!" he adds in gratitude.

"I find myself doing business with people I see at builders and NARI meetings. It's networking-and the smart ones have figured it out. I also like it when you sponsor classes. We value education; it's a big deal. It helps us stay on the cutting edge."

Mike Weiss, CGR, GMB, CAPS
Weiss & Company, Carmel, Indiana
Chair, NAHB Remodelers Council
Remodeler of the Year (Indiana), National Remodeler of the Year (finalist)

"How are we different from custom builders? Attention to detail. On the smaller jobs, coordination is more difficult; it takes communication, organization, complicated instructions to follow, so pay attention to our care and feeding. For instance, accessibility, staging areas, parking arrangements. If we need concrete, most drop trucks carry nine yards, which is pretty hard on the average driveway, so we ask suppliers to deliver five yards maximum. And whatever the product, most remodeling jobs have more deliveries and in smaller quantities. Dealers don't charge us more for that service (but it would be okay if they had to).

"Suppliers kick and scream to learn that remodelers are more interested in service and supply than price: 'Gee! When did that happen?' Back about 17 B.C.," he laughs. "But, stop and think: The owner is on the premises, so you've got to make arrangements to hand-carry material from the truck (and I'd be glad to pay extra for that, though I'm not going to volunteer). And when it comes to your Outside salesmen, they can reach a builder in his office, but remodelers aren't in their offices much, so a much more sophisticated level of communication is needed, because we manage more people. Remodelers also have a higher degree of computerization."

Product knowledge is "20/80. We have to scrounge it out-and that's one reason to be active in associations, to network and hear about stuff before it gets out. However, I won't use my clients as lab rats for a new product; I'll wait for feedback."

New-home builders are a remodeler's best source of business, he says. "If a builder got it right the first time, we'd be out of business. But," he chuckles, "we're not worried."

Vince Butler, CGR, GMB, CAPS
Butler Bros. Corp., Manassas, Virginia
Trustee, NAHB Remodelers Council

"We're not price-sensitive," Vince Butler agrees. "We're more interested in the sales process and customer support-the critical factors in how we pick our suppliers. It must be a personal relationship. I want to deal with a specific rep-one who comes out and looks at the jobsite every couple of weeks. (I followed the same rep to three different lumber companies; he was more important to me than the operation. He knows the type of customers I have, the level of products I need-not bare bones). They're there for problem-solving, like finding a door company that will cut a unit down for us or tracking down products to match something existing. (You won't get that service at the boxes!)

"My supplier just got Internet capabilities, so now I have access to products in stock 24/7 and can look up invoices and print them out to bill my customers. (We remodelers are usually working after-hours.) And a showroom is helpful, even essential, for things like cabinets.

"Remodeling is all about relationships, so joining our associations is vital. That's where they're developed. But it's no longer the 'good old boys' club, where the business comes to you as a given. Now, what happens is, you stick with your supplier until he trips up and hasn't done anything extra for you. Then's the time I'll bring my business to you-but not overnight; we're in it for the long haul. First develop a solid relationship."

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