Improving the digital experience yields wins for
both retailer and customer.
The Beinecke Rare Book & Manuscript Library is one of the world’s largest libraries devoted entirely to rare books and manuscripts. In its collection resides The Voynich Manuscript, an ancient book that many consider to be the strangest in the world. The hand-written and hand-drawn tome contains hundreds of bizarre drawings and pages full of a language that cannot be deciphered. Scientists, researchers, and engineers have attempted to make heads or tails of the manuscript, and theories of what it contains include a phonetic transcription of a Turkish dialect or an ancient Proto-Romance language. Sadly, none of the theories have been proven true, and the book remains as mysterious today as when it was rediscovered in 1912.
Luckily for the LBM industry, its information and data are far easier to translate, thanks in no small part to the tools created by today’s technology providers. This isn’t to say that there aren’t ongoing challenges. The last year certainly brought technology changes to the LBM industry. Developments such as the growth of e-commerce and the rise of artificial intelligence (AI), all after coming out of the disruptions of the COVID-19 pandemic, rising interest rates, and an unstable housing market have caused LBM dealers to re-think how they do business.
No surprise, the next twelve months are poised to be even more transformative for both the customer and the dealer, especially as more pro customers expect to interact with their buying experience like they do in other retail environments.
“The last 12 months have highlighted the need for LBM dealers to create a strong digital experience for customers,” says John Carrico, vice president of product management for Epicor. “We continue to see a consumer-like demand when it comes to technology, meaning dealers increasingly need to create a strong online presence, provide self-service account management options, and even give customers the ability to view orders, delivery, and sales through mobile apps.”
Grant Morrow, director of ecommerce for Orgill, agrees in regard to how the purchasing experience and expectations are evolving for the pro LBM customer. “Customer expectations have evolved, driving the need for enhanced customer experience (CX) strategies,” he points out. “Dealers may be investing in technologies like customer relationship management (CRM) systems and personalized marketing tools to deliver better services and drive customer loyalty. Loyalty programs are at an all-time high right now.”
Part of the evolving experience includes not just an e-commerce option but also the availability of virtual simulations, technology experts say. Not only does it lead to a more satisfying end result, as the customer will know exactly what the project will look like, but it adds up to significant increased revenue. “Another trend we are seeing emerge is virtual configuration—the technology that allows customers to interact with 3D models of products, like building materials, customizing them in real-time,” explains Epicor’s Carrico. “This tech can make the configuration process faster, easier, and more engaging for customers. In some cases, it’s leading to a 40% increase in conversion rates.”
Harnessing big data
The machine that makes an improved technology experience is big data. Just those two words alone are enough to set fear in some hearts, but rather than being a tool of Big Brother, big data is what enables an LBM dealer to provide services that are customized to the individual customer.
Generally speaking, big data refers to sets of information that are too complex to be effectively analyzed by traditional data-processing applications. Ask the experts, and they’ll say big data is defined by the three “Vs”—anything that can analyze data that contains high levels of variety that arrive into a system in high volumes in increased velocity.
In other words, big data is larger, more complex data sets, derived from new data sources. What does this mean for the LBM dealer? In short, when properly analyzed, big data gives dealers valuable insights into consumer preferences and behavior by analyzing vast datasets, allowing dealers to customize their offerings more effectively.
“I wouldn’t say it is a new trend, but data is at the forefront of many conversations,” points out Jason Niemi, vice president of product strategy for DMSi. “There is a lot of power in your data. Savvy managers use data and reporting to find patterns in customer behavior, opportunities for up sale, operational inefficiencies, and more. Now, combine the raw power of data with the daily improvements in artificial intelligence where computers are identifying patterns and trends not typically recognized by humans. Suddenly these efficiencies and opportunities increase by an order of magnitude.”
Steve Yates, executive vice president for Buildxact, also sees the potential power of big data for LBM dealers. “One of the most immediate technologies that dealers need to invest in is big data,” he advises. “That investment has a couple of components. First, it means having data captured in the right way, and then it means giving it the right context to learn from it. Finally, it means taking both parts together to then make more informed strategic decisions. This is an incredibly difficult thing to do but has tremendous pay off.”
Yates goes on to explain how creating dashboards can help dealers be more efficient and better service the pros they serve. “Part of creating that ideal customer experience is providing e-commerce tools,” he says. “The pros that dealers serve are looking for labor savings and efficiencies, so dealers have to find ways to deliver seamless, fast, easy experiences for pros, including online ordering and jobsite delivery. After ecommerce is put in place, data will again be able to dictate future investments and resource allocation to strengthen the parts of the business as needed, to reduce inventory, and to reduce wait time.”
Specific LBM solutions
While many of the technology needs of LBM dealers are similar, there is no such thing as a “one size fits all” solution. Fortunately, technology providers have gone to great lengths to understand the unique needs of not only the LBM industry as a whole but also of the individual dealer.
“The reality is, LBM dealers have unique workflows and documentation requirements that will never be addressed by generalist solutions,” explains Ryan Ayers, co-founder of Suppli, a technology provider that υ helps dealers and suppliers build differentiated, stickier relationships with modern construction material buyers. “In the credit world for example, generic A/R platforms like Billtrust and VersaPay don’t account for construction-specific tasks like managing lien waiver requests or designing customer interfaces to work seamlessly from a jobsite. Industry specific solutions let dealers use software that works with their native processes, rather than having to change their workflows or customer experience to fit into generic tools.”
Nauman Hafeez, co-founder of NetNow, a technology solution used by credit and finance professionals to streamline and automate credit applications and credit accounts, sees a massive technological shift happening in the LBM industry. “Business leaders in the industry are starting to shift their attention to emerging technologies that can help them run their business more efficiently,” he comments. “We’ve seen the key areas for technology adoption have been ERP systems, E-commerce, Digital Payments, Accounts Receivables, and of course Credit Management. We expect this trend to accelerate over the next few years as more dealers, owners, and C-suite leaders realize the cost-savings and productivity benefits of adopting key technology for the finance, A/R, and operations departments.”
Echoing Hafeez’s comments, Connor McCarra, director of customer marketing for TOOLBX, sees a noticeable shift in the LBM industry towards technology that aligns with the advanced operational complexities and tech proficiency of today’s pros. “These builders, who are deeply embedded in technology for their business management, prefer suppliers whose digital tools integrate seamlessly with their workflows,” he says. And in speaking about e-commerce solutions, he notes, “We see the emergence of customer-first e-commerce as being key for digital adoption in the LBM industry. These solutions are built from the ground up with the dealer’s unique operational needs in mind, ensuring they are not only functional but also engaging for users. The aim is to provide an online experience that contractors are not just willing but eager to use, fostering greater digital engagement and stream- lining business processes.”
These customized solutions provide independent LBM dealers the tools to complete with the big box stores, says John Maiuri, division president of LBMH for ECI Software Solutions. “The retail industry, especially within the traditional LBM sector, is facing major changes that are reshaping how small and medium-sized businesses (SMBs) work and compete in a world tied to internet connection and mobile devices,” he reports. “In the last year, e-commerce has skyrocketed as an opportunity to meet modern customer expectations, compete on a level playing field and thrive in this digital era.”
The bottom line, Maiuri says, is that cloud, AI, and e-commerce technologies remove the burden of having to manage software infrastructure, security, integrations, and upgrades onsite, allowing business owners to remain focused on core business functions and their customer engagement. “This means unlocking the ability to service online customers with the same vertically specific functionality in the ERP solution extended outward to customers web presence. Features—such as delivery or in-store pickup, browsing products, and vendor catalogs with enriched content—create an endless aisle experience, provide B2B account management, as well as the ability to build self-service quotes, pay by invoice and more. For LBM businesses, these technologies can level the playing field in a competitive landscape where historically the chains, big boxes, and online platforms are dominant.”
At times, the technology landscape for the LBM industry can seem as indecipherable as an ancient book. Thankfully, technology providers—and the ones highlighted here are only a fraction of the options available—can help make what seems a daunting challenge more like a business win. As ECI’s Maiuri puts it, “The rise of retail technology is not a threat but an opportunity to meet modern customer expectations, compete on a level playing field and thrive in the digital era. LBM dealers are no longer tied to the store to get work done because their system is in the cloud, which is accessible securely from anywhere that has an internet connection. This not only provides freedom unknown before, but it also improves quality of life for dealers.”
