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Tough Call - Rock Bottom Builders

In a competitive housing market, Rock Bottom Builders has carved a niche in extremely inexpensive entry-level housing. With its homes priced at least 20% below the competition, Rock Bottom has struck a chord with first-time home buyers, who believe that they're getting much more home for their money. Based on the products Rock Bottom buys, and the construction methods you've witnessed on their job sites, you know these bargain shoppers are getting exactly what they pay for.

Unlike your other clients, Rock Bottom buys purely on price. Even if spending a few dollars more in key areas would make the house significantly better, they refuse to spend any more than is absolutely necessary to complete the project. This penny-wise, pound-foolish attitude carries through to the job site. Their workers are the lowest paid in your market, a fact reflected in their skills and work ethic. Rock Bottom's tight-fisted owned refuses to spend a dime on training. In fact, he won't even let his guys attend your free contractor breakfasts, which always include 30-45 minutes of product training. "I'm a businessman," he explains, "I'm not paying them to learn. I'm paying them to build."

Here's the problem: You've read that mold and moisture in new homes is usually caused by shoddy building methods. The construction-defect lawsuit that follows often names the lumber dealer along with the builder. Defending your company in a lawsuit could cost anywhere from tens of thousands of dollars (in legal fees) to the hundreds of millions (in a settlement). You don't want to lose Rock Bottom's business, but you don't want your company exposed to a potential lawsuit.

What do you do?

	Fire Them:	Rock Bottom buys a lot of products from you, but the margins are minimal. Their contribution to your bottom line pales compared to the potential hit of an expensive lawsuit. You can't afford their business. Stop selling them product, and tell them why.
	Enlighten Them:	A lawsuit would hurt your company, but it would destroy Rock Bottom Builders. Sit the owner down and explain how cheap products and sloppy workmanship cost less upfront, but can lead to financial ruin. Back it up with articles and facts, and offer to help
	Train Them:	Since money is all that matters, team with your vendors to offer Rock Bottom a small financial incentive if they let you train their workers on product installation for an hour or so each week. That protects you while retaining their sales.
	Build It For Them:	If you want it done right, do it yourself. Offer to install the products you sell. That way, you can document that the materials were a) in good condition and b) installed correctly. More work, but more money too.

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