Outperform in an Era of LBM Sales Growth
The lumber and building materials (LBM) market appears to be picking up. That’s good! But is it good enough? Here are a few strategies and tools used by top LBM dealers and distributors to capitalize on periods of growth to become more efficient, more profitable, and better positioned competitively:
Measure Your KPIs and Track Improvements
Implementing the following strategies may boost your revenue, increase profitability, and reduce the cost of delivering your products and services. But you'll never know for sure unless you measure Key Performance Indicators (KPIs) and monitor the results. Ideally, you can put in business systems so that measurement is automated, changes are easily identified, and problems and successes are quickly highlighted. Graphical dashboards, scorecard displays with green-yellow-red color-coding, and instant alerts are effective tools to watch KPIs.
Arm Sales People with Information for Better Quote Conversion
Whether at the counter or in the field, your sales people are your ambassadors for your business. Their performance can significantly impact your growth and profitability. Use your business management software to give them the information they need at their fingertips, no matter where they are. Proactive touch points let your customer know that their business is important to you and remind them why you should be their preferred supplier.
Be Available When Your Customers Want to Buy
Woody Allen once said, "80 percent of success is just showing up." Though that statement is a bit oversimplified, the premise still holds true for LBM dealers. It’s important to be open for business with point of sale (POS) systems at the ready when your customers want to buy.
Use Sales Performance Metrics to Empower and Motivate
A modern business software system with built-in, easy-to-use business intelligence tools makes it easy for managers and salespeople to know how they’re doing in real time without waiting for month-end reports. Let sales people know in real time how they’re tracking against it. Use dashboards to display quote conversion rates, percent of quota achieved, or average margin by salesperson. Salespeople are competitive by nature, this is how you can show them the scoreboard.
Use Business Intelligence to Pinpoint Prospects
Stretch your marketing dollars by targeting your efforts on those prospects most likely to buy. If your business management system is not up to the task of easily giving the information you need to target sales and marketing expenditures with pinpoint accuracy, consider upgrading the system. Modern business management systems have easily accessible data that can be queried for quick answers to what-if questions. No waiting for the IT department or vendor to create a report. No waiting until the end of the month. Be sure you can have answers, not questions, in your planning session.
Sell More Value-Added Products and Services
Pro dealers recognize that they can increase the dollar value of a sale by offering special orders and value-added services. With minimal capital investment, a dealer can add cut-to-length, delivery, and installation services. Partnerships with suppliers and contractor customers can quickly expand the range of installation services and custom or special order offerings.
Specialized manufacturing facilities for wood treating, millwork, doors and windows, and other manufactured products present opportunities for product lines and inventory planning optimized for higher margins.
Embrace the Weekend Warrior
Many pro dealers are looking to retail clientele—the do-it-yourselfer, the weekend warrior, the walk-in handyman homeowner—as a way to increase sales revenue. Chances are you have mixed clientele now, and the mix may vary from branch to branch. Make sure that your business systems can support the rapid POS expected in the retail sector, including credit card and loyalty card support. Most importantly, make sure that your pricing structure continues to reward your pro customers for buying higher volumes.
Have an Online Sales Strategy
As pro dealers, creating an online presence might not have been top priority before. But now, as the era of growth is underway, preparing an online strategy is key—even if you don’t expect a significant amount of revenue to come directly from online sales. Millennial contractors, your retail customers, even your employees are going to expect to be able to find more and more information online.
Add Another Location for Economies of Scale
With mergers and acquisitions still commonplace in the industry, and market activity starting to rebound, now is a great time to add undervalued locations and scale your operations economically by putting in place the business practices and business systems to support centralized, efficient operations. Full-featured, industry-specific business management software can offer a solid foundation for growth.
Business management software and other technical solutions can provide you with the insight to target opportunities for sales growth, as well as the efficiencies to optimize operations and grow profitably. To read the full "How to Outperform in an Era of LBM Sales Growth" white paper, click here.
Posted by Graham Rigby, Director, LBM Sales, Epicor Software