Profit centers: committing to a line of exterior siding—and making it a lucrative investment—requires digging deep to identify and market its true value to contractors

Profit centers: committing to a line of exterior siding—and making it a lucrative investment—requires digging deep to identify and market its true value to contractors – How To Sell Siding

Rich Binsacca

Of all the exterior finish products he could have stocked at Klinger Lumber, Gary Reed chose vinyl siding for one simple reason: Customers of the Elizabethville, Pa., store demanded it. And after 20 years of dealing with the material, he knows how to sell it.

Having overtaken aluminum siding as the market leader in central Pennsylvania during the 1980s, vinyl can be found on everything from starter homes to high-end residences throughout the 60-mile community served by Klinger’s single location near Harrisburg, where Reed is a sales rep, among a variety of duties, for the $8 million, 22-person yard.

Throughout its relatively recent history, vinyl siding has lived a fairly, carefree existence. Sure, the material took some heat early on when darker colors faded over time, and only in the last five or so years has it truly moved up from its entry-level housing roots to a desirable spec for higher-priced homes. And occasionally, Reed still has to coach a contractor or DIY customer who tacks the panels a little too tightly to the wall.

But overall, vinyl doesn’t give Reed a lot of trouble. “It’s very user-friendly,” he says. “Installers like it because it’s easy and offers a lot of variety [in profiles].” He keeps about 800 squares in stock at any given time, and will sell about 5,000 squares this year, far more than any of Klinger’s two-step competitors.

In Tampa, Fla., Mike Walker’s siding and window branch of Bradco Supply Corp., a 90-plus-unit wholesale behemoth (No. 8 in the PROSALES 100), is in the same position as Reed was in the early ’80s–trying to boost the market share of a new siding material. In Walker’s case, it’s fiber cement.

Fiber cement, which is durable and moisture-resistant, is particularly appropriate for Florida’s hot and humid climate. It’s also heavier and more expensive than some other siding products. “The fact that it does not absorb moisture is a big selling point in this market,” says Walker, ah inside salesman for Bradco, which currently is selling two brands of fiber cement siding.

Bradco recently made big strides in its commitment to fiber cement siding when it opened Walker’s shop as its first siding and window-only distributorship early last year. The location will pilot the profitability of those categories without the mainstay of roofing materials offered at the company’s other locations.

Bradco also struck a deal last fall to supply fiber cement siding to Dixie Building Materials, the materials purchasing affiliate of Tampa-based Jim Walter Homes, a pioneering proponent of fiber cement and one of the nation’s leading builders, with 4,021 housing starts nationwide in 2001.

Next, consider Ray Jansma, an architectural representative for CALPLY in Anaheim, Calif., where he sells a brand of synthetic stucco, or EIFS. Propped up in the 1980s as a more reliable alternative to stucco, EIFS–exterior insulating finishing systems–came under public and legal scrutiny a few years ago when dramatic system failures led to defect litigation and plenty of unfavorable publicity. “We’re still affected by it,” says Jansma of the negative press. “People have a jaundiced eye and there are lingering questions [about EIFS’ reliability]”

A Common Thread

While it appears that Reed, Walker, and Jansma are at different stages of success with their respective siding lines, they all approach the pro market with a similar sales pitch: value. “The buyer or contractor must be convinced that a product’s value outweighs any risk,” says Walker. “You have to present the value beyond just the product benefits so that the buyer recognizes its worth.”

For Walker’s pro customers, the value of performance and/or aesthetic characteristics must be promoted while taking into consideration factors such as extra time that might be needed to install fiber cement siding, or uncertainty about whether a builder will earn back a premium cost for a high-end material that is installed on a home in a lower price range.

When Walker encounters such situations, he might suggest several siding alternatives to a pro customer. “Fiber cement siding is [best suited] for a builder looking more long term or at volume,” he believes, pointing to the material’s popularity on multifamily, attached, and larger custom home projects. “You can’t [always] make your money back on a small [house].”

Another hurdle the three dealers can relate to is a builder’s reluctance to try a new product, especially given the recent onslaught of construction defect lawsuits. “People are always afraid of change,” says Walker. “That’s why we push value vs. just cost or any particular feature.”

For Jansma, addressing the EIFS mess was made easier by support from the product’s manufacturer and the fact that most of the problems were concentrated in the Southeast, far away from his dry, left-coast domain. More important, he benefited from CALPLY’s practice of selling the system only to active and manufacturer-certified EIFS installers, which mitigates errors (and latent defects) in the product’s application.

“Ninety-eight percent of [EIFS failure] cases had to do with poor installations,” Jansma says. “We have rigid quality assurances to the point that we won’t sell to customers who experience a lot of call-backs of other problems. Some distributors still have no criteria at all besides a contractor’s ability to pay.”

To make sure builders are on board with such standards, Jansma works upstream with architects to stamp the words “certified installer,” along with his supplier’s brand-name spec, on the plans. In addition, CALPLY and its manufacturer reps also coordinate hands-on training four to five times a year with contractors, covering every aspect of an EIFS installation, from the exterior sheathing to the finish coat. “There’s lots of variety and complexity with these systems,” says Jansma, who considers residential EIFS applications among the most complex on the market.

While hanging vinyl siding is arguably less complicated than even the easiest EIFS job, Reed still faces anxious builders and their homeowner clients who want to know how the product will perform, he says, noting they have lingering concerns about color retention and vinyl’s propensity to buckle or show waviness (called “oil canning”) along its length if not properly installed.

Product Improvements

Vinyl siding may have overcome its new-product woes, but occasional product improvements still help dealers like Reed sell the line. Three years ago, for example, Reed was able to further distinguish his yard’s vinyl siding category when a manufacturer added an insulating backer to a four-course panel profile out of the factory. “It’s a one-step installation,” Reed says. The siding panels “still hang loose, but you don’t have to worry so much about tolerances.”

Reed has been able to push the new product, especially into remodeling jobs where traditionally framed walls benefit from an insulting layer on the siding instead of requiring a more intrusive–and expensive–tear-out to insulate the wall cavities.

He’s also witnessed continual improvement in vinyl’s colors, profiles, and complementary accessories, which allow Reed to upsell vinyl into higher-end housing. “We find it being used on all types of housing,” he says. “There are a vast array of colors and profiles, and the maintenance-free message crosses over [every market segment].”

For Jansma, improvements to EIFS were essential for the product to remain profitable. Today, each of CALPLY’s synthetic stucco systems includes one or more moisture drainage systems, similar to those required in traditional stucco applications. “Even if moisture intrusion is unlikely with a proper installation, it still needs to be anticipated and managed,” Jansma says.

With fiber cement siding’s climbing market share, suppliers like Bradco currently are concentrating more on how to improve their storage, handling, and sales efforts than on product enhancements. In fact, the decision to allow Walker to stock only siding and windows without Bradco’s usual roofing inventory was, in part, to effectively accommodate the movement of fiber cement around the yard and warehouse. “There’s a different risk of damage to the product as opposed to roofing materials,” says Walker, who points to the moving 30-foot-long panels instead of packaged shingles on a palette.

Supplying Value

What really distinguishes Klinger Lumber’s vinyl siding category among central Pennsylvania dealers is the fact that Reed stocks the product at the yard, while his competition prefers to buy it from distributors only when a customer custom-orders it. “We could not sell vinyl siding without stocking it,” he says.

Sure, Klinger had to make room for special racks to hold an inventory of 800 squares, but Reed says having a complete line on site pays back that investment. “Contractors like it because they don’t have to wait until next Tuesday to get a replacement J-channel if they need it,” he says. “With us, they just come in and get it.”

As part of an extensive store expansion, Klinger added a vinyl siding showroom to the yard, which allows pros and consumers to view the products in better context. “Homeowners will spend an hour in that showroom, especially do-it-your-selfers,” says Reed, who estimates that 75 percent of Klinger Lumber’s customers are pros. “Before we had the showroom, we had a lot of people asking to see it on a wall. Now we can provide that.”

After successfully marketing and selling vinyl siding for seven years, Klinger remains a lone wolf in its market. Other dealers “still say stocking the product doesn’t work,” Reed says. “I guess they’re satisfied with being just a lumberyard, selling 2x4s and plywood.”

Tips for Selling Siding

Consider the different properties of the following siding categories when you debate adding or enhancing a siding line:

Fiber Cement

* Resistant to moisture absorption and insects.

* Replicates the look of wood clapboard and panel products with high durability.

* Low maintenance (periodic painting and cleaning).

* Won’t crack, tot or delaminate.

* Low/no-flame spread potential.

* Heavy weight; may require additional time and labor to install.

Vinyl

* Low/no maintenance (no painting required; periodic cleaning).

* Wide variety of colors, profiles, and complementary accessories.

* Low cost.

* Lightweight.

* Simple installation, provided allowances made for expansion/contraction cycles (especially with darker colors).

* Durable/impact resistant.

Exterior Insulating Finishing Systems (EIFS)

* Lightweight and lower-cost alternative to traditional stucco.

* Performs best with moisture management/watershed provision.

* Precise, multiple-component installation process.

* Integral insulating and thermal mass values.

* Finishes smoother/cleaner than traditional stucco.

* Foam structure and variety of finishes allow creative flexibility in architectural detailing.

For successful sales:

* Address all customer concerns head-on, preferably with several options or solutions.

* Take steps to ensure proper applications and to rely on qualified installers.

* Keep an inventory to quickly respond to ad-hoc needs and requests.

* Sell value ahead of particular features and benefits to lessen a builder’s risk.

* Be aware of customer concerns (real of perceived) about the product, and be ready to answer questions about overall performance.

* Be up-front about a product’s limitations, and offer alternatives if an application is risky.

* Ask the architect to stamp your brand on the plans and specify if in the bidding process.

* Partner with manufacturers of established brands to gain marketing, sales, and training support, as well as responsiveness to customer demand.

* Add a dedicated showroom to display your line in better context.–R.B.

COPYRIGHT 2002 Hanley-Wood, Inc.

COPYRIGHT 2003 Gale Group