Helping hands: for an installed sales program to truly improve the supply chain, it must offer obvious benefits to both builders and dealers

Helping hands: for an installed sales program to truly improve the supply chain, it must offer obvious benefits to both builders and dealers – How To Sell Installed Sales

Rich Binsacca

John Doeden started with nothing. No leads, no crews, and no product in stock. And yet he and the management team at Stenerson Lumber in Fergus Falls, Minn., were confident that an installed sales program for exterior finishes, specifically site-fabricated seamless steel siding, would be a big hit with his pro customers.

That was March 2002. A year later, the Fergus Falls branch of Exteriors Unlimited, Stenerson Lumbers installed sales arm, had grossed $250,000 in revenue, with another $200,000 worth of work lined up. “I was hoping for a little higher |sales| number, but were at capacity, with jobs lined up,” says Doeden. the sales manager at Exteriors Unlimited.

Although Doeden claims his managers at Stenerson simply told him to “go out and sell” the new installed sales program, the success of Exteriors Unlimited can be attributed to market savvy, good timing, and experience. “There was a fair market for installed siding [in Fergus Falls],” says Don Husfeldt, manager of packaged sales for Stenerson Lumber, which also has operated an Exteriors Unlimited in nearby Detroit Lakes since 1997. “There was little competition for seamless steel siding, so we decided to test the market.”

Like most successful installed sales programs, Exteriors Unlimited offers advantages to both customers and the dealer. For contractors and homeowners (consumer customers), installed sales means one-stop shopping, a reliable and committed workforce serving the job, and stable pricing. For dealers, installed sales can boost overall revenue and help introduce, maintain, or grow product categories toward a sustainable business model for the entire company.

“It’s more than a stand-alone profit center,” says Roy Burleson, manager of installed sales program development at Guardian Building Products Distribution (BPD) in Greer, S.C., a division of Auburn Hills, Mich.-based Guardian Building Products Group. “It’s an overall program that provides solutions.”

The Pro Advantage

For custom builder John Averwater of Averwater Construction in Murfreesboro, Tenn., the installed insulation program at Stewart Lumber solves several jobsite and administrative issues. “It eliminates the risk of having materials on the jobsite, waiting for labor to arrive, not to mention theft and weather damage,” he says. “It eliminates extra trades, which means fewer checks to write and insurance issues to worry, about.”

Averwater also appreciates that crews from Stewart Lumber are tied back to an established business. “I “know they won’t be transient like other subs,” he says. “They’ll show up with the material and come back if I call with any problems.”

Builders like Averwater, who manages 12 to 15 custom and luxury spec homes a year, often are scattered among jobsites during the day. As a result, materials shortages or misorders often aren’t dealt with until after hours or the next morning, causing delays in production.

Dealers with installed sales programs, he says, help shorten or even eliminate such delays. “They realize they’ll make fewer trips to the jobsite if they have more control over both materials and labor,” he says. “Dealers have more incentive to finish the job and keep the materials moving [than a separate subcontractor].”

Similarly, Doeden found he was able to serve builders in Stenerson Lumber’s market when they got too busy to install siding themselves. “They were more interested in moving on to the next house and framing it,” he says, instead of delaying the next job to apply the siding to a current project. “They could make more money subbing the siding job to us.”

The Dealer Edge

In three years, the installed sales division of Stewart Lumber has grown from nothing to five categories, the latest being windows and exterior doors. Simply, Stewart Lumber believes installed sales is the key to the company’s long-term survival. “Independent dealers need to offer installed sales as a service to their builder customers and as a way to tie them to as many categories as possible,” says Guy Fowler, assistant general manager of the five-location operation based in Murfreesboro. “We can’t just focus on lumber and panels and let every other category go to specialty houses.”

Leveraging the support offered by Guardian BPD’s OpportunityPlus installed sales program, which is targeted to two-step regional and independent dealers, Stewart Lumber has grown its sales of blown-in and batt insulation from less than one truckload a year to more than $500,000 annually. “We’ve made huge gains because we offer it installed,” says Fowler.

The success of Stewart Lumber’s installed insulation program has spawned similar initiatives for roofing, kitchen cabinets, windows, exterior doors, and what Fowler coins “lock-outs”–a bundling of locksets, mirrors, bath accessories, and closet shelving systems. Bundling such products under one installed sales effort, says Burleson, allows dealers to sell niche categories that individually would likely not be worth the investment. “They also don’t require years of experience to become a competent installer,” he says, addressing a common concern among dealers about the liabilities of supplying labor along with materials.

A commitment to sell insulation, especially, also has given Fowler opportunities to bring new business to Stewart Lumber. “We’ve used installed insulation to approach new customers and then sell them on other categories,” he says. “If we can sell them insulation first, they get familiar with Stewart Lumber for other needs.”

As aggressive as Stewart Lumber wants to grow its installed sales (turnkey framing may be next), Stenerson Lumber and Exteriors Unlimited are content to serve the market with seamless steel siding and accessories, and the occasional replacement window job. “We don’t want to step on any toes,” says Doeden, echoing other dealers who are wary that installed sales might be viewed as competition.

Still, Exteriors Unlimited has provided a significant boost to Stenerson Lumber’s bottom fine. Rather than taking a cut of Doeden’s sales or profits, all materials and labor tickets are run through Stenerson’s books as direct sales by the lumberyard. “Those are orders we wouldn’t have gotten,” says Husfeldt. “It’s been a big plus to our sales.”

Sales Strategies

With a built-in stable of contractors already loyal to the lumber side of the business, both Stewart Lumber and Exteriors Unlimited have leveraged a least half of their installed orders from existing customers. Doeden, in fact, gives a $100 “finders fee” to lumber sales reps who bring him siding and replacement window business.

That said, he didn’t rely solely on that source to establish and grow the installed sales side. To build awareness and generate leads for Exteriors Unlimited, Doeden took out ads in a home-improvement magazine and the business section of the local news paper, and sponsored a weekly local radio show dedicated to home-related topics.

Doeden also is keenly aware of local competition from franchised operations, so he works to make sure Exteriors Unlimited is the last one to present bids in a competitive situation, and he routinely underbids other local companies. “We offer a set price that’s both fair and makes us money,” he says. “I simply saw that we could do it for less using the same product.”

Once word got out that Exteriors Unlimited was willing and able to do the work for perhaps two-thirds the price of its competition, Doeden saw sales and interest jump and competitive bid situations disappear.

In addition to promoting its installed sales programs through monthly mailers, periodic fliers, and coupons, as well as on its truck signs and on-hold phone message, Stewart Lumber relied on extensive support and training from Guardian BPD to help its outside sales force get on board with installed programs. “It’s critical that they buy into it and don’t shy away from selling services,” says Fowler. “It’s on the agenda at every sales meeting.”

Stewart Lumber also targets installed sales to builders most likely to respond, instead of shotgunning the program to every potential customer. “The builder who has come into the industry from real estate or banking wants to buy as much as he can from one place to make his life easier,” says Fowler, adding that such customers often are willing to trade price for convenience.

A builder who has come up through the trades, by contrast, may try just one installed sales category, such as roofing, if he gets too busy to sub it out elsewhere. To date, Fowler says, installed insulation is attracting both custom and production builders, while installed windows are being accessed more by tract builders and roofing more so by custom contractors. “That’s simply a function of the lack of skilled roofers in this market,” he says.

Whatever the market allows in terms of installed sales categories or interested builders, says Burleson, dealers need to define installed sales with their overall business plan. “Too often, dealers just focus on product, but it actually has very little to do with that,” says Burleson, who has been training dealers on installed sales for 15 years. “It’s about providing tangible solutions for builders,”

RELATED ARTICLE: Tips for selling installed sales.

Consider the following tips to establish and sustain a successful installed sales program.

* Be aware of under-served opportunities in your market.

* Make sure a program offers advantages to both customers and your business.

* Use installed sales to introduce, protect, maintain, or boost a product category.

* Consider installed sales an integral part of your overall business plan, not just a stand-alone venture or profit center.

* Sell convenience, as well as reliable installation and products, to pros.

* Be ready to serve builders in seasonal or ad-hoc situations.

* Look to manufacturers with installed sales programs to leverage support and marketing services.

* Consider “bundling” smaller but related product categories to amortize your investment.

* Garner sales from existing customers on the lumber side and bring in new customers from the installed sales side,

* Offer a finder’s fee or other incentive to encourage referrals from lumber sales reps.

* Investigate the competition and forge a distinctive reputation and/or sales angle.

* Promote the program liberally and through a variety of media.

* Know what kinds of builders are more or less likely to want installed sales.–R.B.

Rich Binsacca is a contributing editor to PROSALES.

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