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Shaky foundations? Three key sales obstacles for building and construction suppliers

  • 25 Oct 2017

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The UK’s building and construction sector is an essential market, and a major contributor to GDP. That makes it more concerning that it’s under such sustained pressure: in recent months, commercial projects have endured slowdown, major investment plans have been delayed or cancelled, and overall output has slumped.

Reversing these negative trends will be a priority for building and construction businesses in the years to come – though as competition intensifies and market conditions remain uncertain, actually accomplishing this will be more easily said than done.

For builders’ merchants and other companies supplying goods to the industry, addressing the following three issues should be a priority.

Discounting

How does a building and construction supply firm become competitive? For many, the easiest way is to simply lower prices. Many clients will want the cheapest deal rather than the best – and, on the surface-level, they won’t be able to tell the difference between the two anyway. Price is something everyone understands.
Or rather, they think they do. In truth, it’s not quite that simple. Discounting might secure some swift sales, but it does very little to ensure customer loyalty or longevity. When you’re too eager to offer bargains, you risk becoming known as a ‘bargain brand’. Besides which, it’s often hard to win a war of escalating price reduction with the bigger players in your field. They’ll just undercut you right back until you go out of business.

Pricing should be determined by the needs and interest of your end-users – too often, it’s a decision left to an individual, rather than the business. Whether to mark a product or service up or down should be a matter of collective responsibility: the sales executive, the marketing manager, the finance director, and all other relevant stakeholders should be consulted. Compromising on price should be a last resort; done only when there’s a clear promise of returns.

Commoditisation

When you can’t compete on price, you can compete on value. In an age of increasing commoditisation, the ‘race to the bottom’ approach of discounting can seem less like an option and more a fact of life. But if you diversify your offering, you can avoid this – creating products that are clearly and unmistakeably different from those of your competitors.

Builders’ merchants may have the same core offering, but there’s no law saying you can’t diversify your list of products and services. Maybe this means modifying your product lines to better suit the needs of a specific target market; maybe it means creating new product lines entirely. It will require additional spending and it will come with some level of risk, and you’ll have to decide how much of both you’re willing to forfeit.
But there are always ways to add value for your customers. Throw in a free consultation, or add equipment training services into the initial contract. Offer referral fees. Create a bespoke stock management service to ensure that your clients never run out of the items they need the most.

In short, give them more reasons to come back to you, and they will.

Business productivity

Administrative work is at once very important and very annoying for your average salesperson. It’s vital to dot every i and cross every t, but why should it take away from your operational efficiency? The more time your best people spend on reports, spreadsheets, and meeting preparation, the less time they’ll have for business-critical tasks.

Adopt new technology and you’ll be empowered to solve this issue. Business intelligence and CRM software can help you automate frustrating, time-consuming administrative processes – taking hours of sorting through documents and arranging customer interactions and reducing them to the work of seconds.
Adoption won’t always be instant, of course: you need to think about mobile apps, data analytics, and a bunch of other things that have likely flown under your radar. The alternative, though, is continuing to undertake administrative and preparation work yourself.

This kind of choice is at the heart of the building and construction industry’s future. We can stubbornly choose to cling on to outdated customer attraction methods like discounting, or we can evolve business models to focus on building loyalty and value. We can commoditise products, or we can make them stand out. We can adopt technology, or we can let our competitors adopt it – thereby losing market share.
Whatever options you select will determine your business’ long-term prospects. So choose wisely.

By Paul Black, CEO, sales-i

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