Focusing on Customer Retention

[ SALES CONNECTION ]

By Bryan Rice

One of my favorite teachings growing up was, “Make new friends, but keep the old. One is silver and the other is gold.” It has served me well and remains true today, both in my personal and professional life.

After years with a leading internet provider, I noticed that the monthly charges increased from $55 to $105 without any prior communication. I called their customer service to inquire about this, as I noticed the same company continues to market their services at this rate. I had also just received some marketing materials from another leading internet provider, advertising their services for an even lower rate, with high-speed, unlimited data and a five-year plan with no contract.

I spent more than 20 minutes on the phone with the customer rep communicating my loyalty, the steep rate hike, their current offers, my other options and that I would simply like to stay with them at my former rate – the very plan they market in their national campaigns. Candidly, I am a loyalist and did not like the thought of changing providers, modems, billing, passwords and such. After two calls, unneeded bundling options, and a lot of rhetoric, they left me no choice but to switch providers. Ironically, after canceling my plan, returning their equipment and responding to a brief survey in a courteous but straightforward manner, the provider offered me an even lower rate, coupled with some free months. While I appreciated the gesture, it was too late, as the train had already left the station.

The internet provider experience prompted me to reflect on my over 45 years in the LBM industry, specifically on what I have seen and experienced that leads customers to choose a different direction, and perhaps some thoughts on how we can minimize such occurrences, as they are very costly for all parties. While there may be other considerations, I will give you six from my backdrop and perspective:

• Apathy: When customers review the goods and services they want and need, coupled with the business relationships they have, including yours, an emotional response will keep them loyal to you and your brand. A lack of emotion, however, will make them question why they are doing business with you. So, fight apathy by incorporating more positive feelings into your everyday interactions. (Paraphrased from Entrepreneur Daily).

A friendly “hello” at the store or yard, a call, a note or, better yet, an in-person job site (or office) visit gives you a leg up on the competition. We need to be careful of complacency or taking business for granted. Your customer is not, nor perhaps is your competitor.

• Capabilities/Competition: Just like in sports or life itself, competition brings out the best in us. A customer really does not care to buy something from you in and of itself, or anyone for that matter, unless it helps their end game. I cannot tell you how many times we felt “we had it rolling,” only to hear that a major big box was building a 150,000 sq. ft. operation, another independent or regional yard was entering our market, a metro yard was putting a satellite office up, or various one-steppers were sliding into town. In today’s mobile society, competition is all around us. Your customer has choices, especially in today’s mobile society. Be good at what you do.

Hopefully, your company has a commitment to value-added services such as design, estimating, delivery, installed services, breadth of inventory, project and special-order fulfillment, showroom selections and more that set you apart from the competition. In short, you need to be really good in our industry, providing in-house capabilities second to none. These value-added services are only good if we truly leverage them.

Customer Service

I think we have all seen a general decline in customer service across most industries over the years. I am not so sure ours is an exception, although I certainly hope not. I have communicated with builders and project customers who were disappointed in the level of service they expected, including timely estimates, prompt deliveries and returns, assistance with product selections, warranty follow-up and even a simple lack of follow-up on their calls or texts. Some let you know. Others walk with their checkbooks.

In his book, Good to Great, Jim Collins emphasizes that great people consistently excel at attending to the daily, little things. While we sometimes spend a lot of energy trying to develop something magical, there’s really no “big secret sauce” here. Good is the enemy of great. In short, build a culture of excellence.

• Integrity: Some years ago, we had the opportunity to bid on four 16-plexes that were going to be built almost in our backyard. We worked diligently to earn this opportunity, only to be informed by the builder that he would be staying with his local supplier. While we were disappointed, we understood, as we strived to be “that guy” ourselves. I recall thanking Bill for the opportunity, wishing him and his project the best, and letting him know that we would be there for him on anything they may need as a supplemental provider, no matter how big or small.

The first two 16-plexes were going up, and halfway through the initial process, I received a call from him saying he had changed his mind and asked if we would still honor the prices and terms we had provided to him. We did our diligence, and yes, we would love the opportunity to complete the initial two and the following two. Without asking, he mentioned that the lumberyard he had been using for years was not crediting him on returns, and this was discovered by the job superintendent on this project, whose job was to manage it. I have no idea if his former supplier retained any of his business in other markets, but I do know we furnished all four of the 16-plexes locally and 12 to 15 more in the next couple of years.

Integrity is characterized by honesty and a consistent, uncompromising adherence to strong moral and ethical principles and values. Integrity needs to be paramount in everything you say or do, not just when folks are looking, but 100 percent of the time.

• Salesperson/Key Personnel Transition: Salespeople are truly amazing and very valuable. After saying that, it is always disappointing to me when I hear a salesperson has left his or her place of employment and taken his or her accounts. Of course, sometimes it is not anywhere near the level one may think it will be. I have also experienced a scenario where, for whatever reason, the customer wants to part ways with the salesperson, but the break-up is just too uncomfortable, so they go in a different direction altogether. Both are challenging and costly.

It is essential that the work and relationships are not limited to any one person. Touchpoints with others, including design, estimation, sales support, millwork, cabinetry, delivery, AR and management, not only add significant value but also strengthen the overall relationship.

• Value/Price: Early in my career, a mentor shared his concept on pricing. It basically was to be very aggressive on bidding projects and get it back when not on a bid, through other products, other customers or wherever. Some others had a full retail plan, with builders receiving a significant discount, whether at invoice or at the time of payment. While they were successful in their business, I personally felt that going forward in an increasingly competitive landscape, coupled with emerging technology, we needed a different mousetrap.

Builders need to know that you are working hard to provide them everyday value, so they can be positioned favorably to meet the needs of their customers. It is important that you have a pricing model that is fluid, fair, competitive and profitable- with everyday integrity.

Hey, if any of you are good at hooking up modems and the like, give me a jingle. Or if there is anything else we can touch base on. Happy sales and hope you are having a great summer.

Bryan Rice is a building materials advisor/ consultant. Committed to sustainable and profitable growth, Bryan brings more than four decades of hands-on experience in the building materials industry, demonstrating expertise and insight. For more information, visit www.bryanriceconsulting.com.