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Higher interest rates and building costs may be cooling a red-hot U.S. housing market. Yet, dealers and their pro customers still have a huge market opportunity to fill a housing gap that one published report pegged late last year at 5.24 million homes.
The U.S. Census Bureau reported that single-family home sales dropped an unexpected 16.6% from March and nearly 27% from April 2021 as higher mortgage interest rates and purchase prices push potential buyers out of the market. However, new single-family home construction is expected to remain in high demand for the foreseeable future despite this recent drop.
Dealers and builders are working together to maintain the needed high pace of construction while protecting profitability. The challenge is that it takes time to help builders negotiate the current supply and labor shortages that have pushed project completion times to almost a year in some parts of the country.[i]
The most successful dealers are working more efficiently to carve out the time sales representatives need to consult with their customers. Buildxact and The Farnsworth Group conducted a recent study of builders and dealers that identifies six common practices successful dealers use when collaborating with builders:
- Don’t leave them waiting
Use digital tools and customer portals to publish material price lists to customers and be sure to quickly respond to a customer’s Request for Quote (RFQ). The study found that builders ranked quick response times as more important than price when deciding where to purchase materials. The same study found that it takes the average dealer almost three days to provide a quote back to the customer–which is too long in today’s market of fluctuating pricing. Online pricing means a builder can plan and place an order 24/7, whenever it’s most convenient to them, so they can spend more time at the job site or bidding on more work.
- Track admin time and sales cycles
Only 15% of pro dealers say they have detailed data that tells them how their sales representatives spend their time, and only 25% of dealers say they know how long it takes a sales representative to close a sale. To better understand the sales cycle, dealers are using business management software to track their sales pipeline. Many dealers have adopted modern, integrated ERP systems like Epicor BisTrack to keep track of a wide range of services and sales activity. Systems like BisTrack can easily link to online construction management tools to frequently publish live material catalogs and pricing to customers. Three-out-of-four dealers agree that having more data insights into how their sales team spends their time would boost profitability.
- Cut down on emails and phone calls
Too many dealers handle questions primarily about pricing using email or the phone, and often it can take up to six replies to complete the conversation. Sometimes dealers are handling these conversations from walk-in traffic as well. According to the same study, this takes more than 40% of a sales rep’s time. This is time that could be better spent talking with customers about the quality of materials, suitable material replacements and delivery schedules. Successful dealers also find that construction management software gives them access to item assemblies, which reduces a significant amount of back-and-forth and ensures builders never miss items. This, in turn, opens the door for new categories of sales and increases wallet share for the dealer.
- Focus on the customer’s priorities
Successful dealers provide a high level of customer service. But too many dealers lose focus on what their customers value the most. The Buildxact/Farnsworth Group research indicates that dealers may need to rethink how much time is invested in some services, like takeoffs. Roughly 53% of builders said they would be willing to do their own takeoffs, while only 20% of dealers agreed with this statement. Meanwhile, more than a third of dealer sales reps reported spending too much time doing takeoffs for their customers. Many dealers have solved this problem by using construction management software, making it easier and faster to do takeoffs–no matter if the builder or the dealer chooses to perform the task. In one case, a dealer reduced the time needed to do takeoffs by 85% using a digital takeoff tool that also generated a material list.
- Reduce time and expense spent quoting customers
According to recent research, dealers spend an average of $900 each time they supply a customer quote. This administrative cost, which can add up to millions of dollars per year, can be reduced by cutting the time needed to research and send quotes. Dealers report many of their sales reps spend up to 40% of their time completing customer quotes and that it can take up to three days to return a quote request to the customer.[ii] To reduce this time and expense, dealers use digital construction management tools that integrate material pricing and allow homeowner bids to be created directly from material and labor estimates. This creates more time for dealers to spend with builders on item selection, scheduling optimal material deliveries and prospecting for new customers.and prospecting new customers.
- Anticipate builder needs
Successful builders are finding that they can use online construction management software to gather data across a broad spectrum of customers to predict the types of materials builders need and when they need them. Some leading construction planning software captures billions of dollars in customer quote data monthly. Data-driven decisions about inventory and supply help dealers better negotiate the current challenges with material shortages and allow them to send estimates to customers automatically rather than waiting for the RFQ. Data also can be used to create pricing tiers that reward a dealer’s best customers. Simply put, dealers are using software and past buying patterns to make better business decisions.
The steps outlined above are just some of the more common ways dealers and builders use digital tools and online software to improve their working relationships in a challenging, turbulent economy. Digital tools provide a collaborative environment whereby dealers and builders can cut out the noise created by administrative tasks so they can focus on what is truly important to get jobs done both on and off the construction site.
The key is finding the right digital environment that provides end-to-end job management–from pre-construction planning and material scheduling to the final homeowner invoice–all at an affordable price. Increasingly, comprehensive subscription-based software is filling this need over expensive custom solutions, as the tools are available instantly, are easy to use, and offer 24/7 support and training. The most competitive software also increasingly provides integrations with third-party accounting and enterprise management software, making it increasingly easy for the dealer and the builder to digitize their relationship.
[i] U.S. Census Bureau, Average Length of Time from Start to Completion of New Privately Owned Residential Buildings
[ii] Hidden Profits, p.24