Are You Throwing As Much As You Can Into The Marketplace, Hoping People Will Buy?

Changing Your PerspectiveDoes your traditional way of selling − your “selling chain” − always start with your products?

Of course, you present them to your potential customer be they retailers, distributors, corporate buying offices, contractors, etc. And, I’ll bet you are telling great stories about how good those products are for your customers.

But let’s be honest. You are reactive to those customers. Too often, when they say jump, you’re asking how high.

You may be afraid to take price increases, wary of losing volume.  Your products and programs are all aimed at their needs. You wait and hope that they take your products and market them – for you – to their customers, and you hope even more that your products reached their final destination: consumers.

I’ll bet you support these efforts with elaborate marketing plans, POP materials, promotions, sales literature, and more. You also may communicate with consumers through TV, trade magazines and promotions.

Are You Throwing As Much As You Can Into The MarketplaceYou may call it pull marketing, demand generation, or selling through, but what you are really doing is simply producing and throwing as much as you can into the marketplace, hoping people will react and that consumers will buy.

That’s a lot of wasted money and effort. Some even call this the “black hole” of marketing spend. (Your Ops team may even claim that every dollar they save through cost improvement is squandered in marketing.)

Changing Your Perspective A New “Selling Chain”

Time For ChangeYou need to turn your perspective completely around.

Instead of starting with the customer, start with the consumer. Now we ask them what they need. Strive to understand their problems and concerns, and determine their needs, at the retail level.

Task your teams to provide products and solutions that meet those needs and drive everything from new product development to merchandising and POP materials.

The better you understand your end consumer’s needs, the easier it is for you to communicate, and the consumer to accept, your products as a solution to their problems. Only then do you focus on calling on the next level, contractors and builders, working your way up the chain.

Share with them what the consumers shared with you, and show how your products are meeting their customer’s needs. Then, just like you did with the consumer, find out what are the builder’s needs, and show them you can help them stand out from the competition and sell more homes by providing solutions to their problems.

Next, work your way up to the distributor and retailer. As before, share with them what the consumers, builders and contractors are sharing with you. Tell the distributor about the tools you provide to meet everyone’s needs, about the products, solutions and systems that will help them make more money − solutions and systems that apply all the way up the pipeline.

Task your teams to provide products and solutionsIf you’ve done your job, you shouldn’t have to tell distributors and retailers much at all. They’ll already know about your products and solutions from their customers. They’ll know you talk to their customers, and their customer’s customers, and are creating demand for products they sell.

And all you’ve done is reverse the direction of the “Selling Chain,” and changing your story from one that highlights product features and turned it into how you’re introducing a simple approach to solving consumer problems.

Differentiating Yourself on Something Other Than Price

Differentiating Yourself On Something Other Than PriceDistributor and retailers still buy “product” and think in terms of discounts, profit, and “What’s in it for me?” But now, instead of increased profits from lower cost of goods, you can bring them higher profits from increased sales.  You can demonstrate this by telling them:

  1. What the consumer is telling us
  2. What the builder is telling us
  3. What the contractor/remodeler is telling us

Then show them the tools you have to meet those needs, including products, solutions and systems to help them make higher profits. Because they know that you have been talking with consumers and builders, they will be receptive to your presentations.

Listening to the Future

Listening to the FutureThere’s an old saying in sales that says, “We never make a mistake when we make a decision in favor of the customer.” The basis for that philosophy is formed by putting the customer’s needs first.

Remember that you need to think about your customers broadly…consumers, distributors, retailers, dealers, contractors, builders, the investment community, and so on. A customer-driven company defines their customer as broadly as possible…opening up incredible opportunities and difficult challenges.

A customer driven company also knows what their customers want in their terms, not their own. They have an external focus and bias to all they do.  They will do things in the short term that are costly in support of their customer needs, knowing full well that they will repaid 1000 times over

Task your teams to provide solutionsIt’s good to have these perspectives as part of a company philosophy, but it’s equally important that you remember that if you listen closely to the customer and put their needs first, you will benefit from a preferred position and market share while achieving outstanding customer satisfaction.  And it will touch every aspect of your company, including quality, brand, service and value.

Focusing on the customer is a key to your future – for without them, you have no future.  Any time you hear a customer request, listen closely, that’s the future talking.

Good Selling!

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Are You Struggling to Stand Out To Your Customer?

Do ever struggle to differentiate yourself from competitorsDo ever struggle to differentiate yourself from competitors?

My guess is that this is a constant struggle but one that is not addressed often by your marketing team. That’s because it’s not on their radar.

Perhaps it’s because they are too focused on the new product development processes you have in place and not listening to the critical input from customers.

When you listen to customers, you sometimes get an earful

When you listen to customers, you sometimes get an earfulThe commercial interiors business at Owens Corning struggled to differentiate itself from competitors. Sales were architecturally specified and product driven. The product was designed to absorb echoes in school gyms and classrooms.

In making calls with the sales team, customers emphasized that schools demanded a high level of performance. And also that many architects were becoming increasingly sensitive to being as green as possible in their designs.

Turning a black art into a differentiator

be differentAcoustics, however, was considered a bit of a black art.

Specialists were needed to figure out how much absorption a space needed. Surprisingly, we discovered that no one guaranteed the acoustical performance of their products, let alone have an independent third party determine their performance level.

This led us to successfully seek UL certification for all of our commercial interior products, a first for both the industry and UL.

Because Owens Corning was also the manufacturer of the base fiberglass boards the products were made from, we knew that those boards had a minimum of a 35% recycled content. This was enough to earn the product line a third-party certification (SCS), which would allow Owens Corning products to qualify for green projects.

Not all innovation is new product innovation

product_innovationWe combined these elements together with the standard 3-year warranty Owens Corning offered to create a program called Performance Marketing.

For the first time, our sales team had the ability to clearly position and differentiate our product line from the competition.

This  not only increased sales but also allowed us to create a significant trade PR program around our efforts to demystify acoustical performance.

Innovation can come from anywhere in the company. It can be product innovation, process innovation or, in this case, program innovation.

All of which will help you be more successful in launching impactful products and programs to grow sales and profits.

Good Selling!

Are Your Product Margins Caught Between a Rock and a Hard Place?

"Rock, Hard Place" Road Sign with dramatic clouds and sky.Accomplishing a growth agenda often requires a significant paradigm shift.  You can no longer afford to simply “market what we make.”

Your perspective needs to shift from one that is internally focused to one that is customer driven.  The shift places an increasing emphasis on customer need assessment as the means to extend current your core competencies.  As a result, the imperative for growth becomes to “make (or source) what we can market”.

Develop the Equation and Discover the Opportunity

A Matter of Perspective

For a brand position to be compelling, it must contain more than a communications and/or merchandising program although it includes those components.  It must be, first and foremost, a business proposition.

The Key

The key to understanding the channel is to adopt their business perspective.  And for the channel, the business equation is fairly simple:

Selling Price = Costs + Profit

The goal is to keep selling price and profits up, and costs down.  But in an increasingly competitive market, there is constant downward pressure on selling price which, in the absence of a corresponding decline in costs, only serves to lower your profit.  To rely upon increased volume to offset declining margins is a much riskier bet.

The Business Equation

Assessing the Opportunities

Develop the Equation and Discover the OpportunityBased upon that simple business equation, there are a limited number of opportunities for building materials manufacturers to have a positive impact on their channel partner’s business.  “Profit,” for example, is determined by your customer and the level of profitability will vary from customer to customer if not even job by job.  “Selling Price” is controlled by the market.

The Point of Impact

From the customer’s perspective, the only variable element in the equation is “Cost.”

“Cost,” for your customer, is comprised of four elements:  marketing and administration, materials, labor and the cost of money (interest or carrying costs).  As the market place puts more and more pressure on your customer’s selling price and margin, more and more of your customer’s costs are pushed up the channel toward you as the manufacturer.

Therefore, the real opportunity for you lies in the channel partner’s cost structure.

The Elements of Customer Cost or Opportunities for Your Brand Position

Marketing and Administration

These, not insignificant expenses, can and are likely being addressed by you with extensive marketing tools such as merchandising, POS, identity programs, and other communication initiatives.  This is the easiest to way to cut your customer’s cost and, consequently, every other major manufacturer has developed their own dealer merchandising programs, builder programs and contractor identity programs.  By themselves, these types of initiatives are not compelling points of competitive differentiation for a building materials manufacturer.  They are table stakes and have become the cost of participating in the channel.

A Material Difference

Historically building materials manufacturers have focused on the materials component of the equation.

A materials focus offers a manufacturer three basic positions:

Products Promoted As:                              Opportunity for Manufacturers:

1. Lower cost                                                 Viable for only the lowest cost producer

2. Better performance at same cost             Advantages created through technological                                                                                                                                                                                                                                                    innovation erode over time

3. Better performance at higher cost             Profitable margins but limited volume

Labor Savings as Part of The Building Products Selling Equation

For both dealers and builders, labor is a significant cost.  In fact, as much as 30% of the cost of a new home is tied up in labor.  Some of the more aggressive manufacturers attempt to lower this cost burden by making labor more efficient through, for example, training programs.  But the effort at reducing the cost of labor has, to date, been tangential to the manufacturer’s offering which is primarily materials focused.  But with a new building products brand position . . .

 . . . labor savings doesn’t have to be tangential. 

One of the greatest challenges faced by dealers is labor productivity.  For the pro, it’s the shrinking pool of skilled subcontractors.  The goal for both is to manage material and labor costs effectively with as few headaches as possible.  Ideally, labor savings as well as product performance are key benefits.

Churn and Turn

For dealers and builders, in particular, it’s the cost of money which poses a particularly thorny problem.  With low inventory turn, both dealers and “spec” builders can watch their profit erode through monthly interest payments.  On average, 6% of the total cost of a new home is financing cost (a builder’s total profit margin on the home averages only 11-12%).  Regardless of how many projects the pro can churn, it’s the speed with which they turn that can spell the difference between a profitable year and a disaster.

For the channel, the relationship with the homeowner offers the “promise” of quicker inventory turns, particularly where that relationship is used by the channel partner as a point of competitive differentiation.  But to be truly valuable to the channel, your brand must be an assurance of quality for the prospective buyer.  The quality perception generated by your brand can then be transferred to the dealers who stock our systems and the pros who use them.

Addressing the Opportunities

Given that the opportunity for building product manufacturers lies in the cost structure of their customers, where’s the “meat” in a new program?  There are several approaches that you can develop around the four key elements of “Cost:”

1.  Marketing and Administration

2.  Materials

3.  Labor

4.  Turn

Marketing and Administration

Think about how compelling and customer-specific merchandising and communications programs can become through “mass customization.”

It means turn-key and off-the-shelf promotions to supplement national programs and to generate traffic and sales on a schedule determined by the channel partner.

Material

Since this is the historical basis of how a building materials manufacturer works to differentiate themselves, this type of innovation is more common to an organization’s branding efforts.

Labor

It means a “delivery system” that makes the pro more efficient through online design help, visualization and other tools that drive builder, contractor and dealer lead referrals.  And you can also provide online training videos and other tools to help the pro’s subcontractors become more knowledgeable and efficient.  Your product managers can also help this out by focusing on creating products that are easier and quicker to install.

Turn

For the pro, this kind of approach provides a brand in which the homeowner has confidence and which the pro can use as an effective point of differentiation.

In summary, the cost structure of your channel customers provides you ample opportunity for the development of a brand that extends beyond product alone.  Ultimately, this approach provides the bridge to the dealer, builder, contractor, remodeler and installer across which will flow an ever-increasing stream of products, services and solutions.  It’s a path that ensures long-term, profitable sales growth.