4 Steps to Building Better Builder Relationships
Business expert Paul Boucherle weighs whether its worth working with commercial and residential builders.
The value of building stronger relationships with the builders of facilities and the entire real estate development ecosystem may seem like an impossible task to many salespeople of systems integrator companies.
Here are some concerns from our clients: barriers for entry are too tall to scale; relationships take too long to build; they only buy the lowest price bid anyway; they are not loyal; they are too darn demanding; they want it when they want it without any excuses; and nothing is ever their fault so we end up losing money.
Any of these sound familiar? They should sound familiar because they are true, but not for the reasons you may initially think. It is a matter of whose perspective you are looking at, and what cycle you are at in the business relationship.
It is also a tale of two different business models and biases, depending on who is telling the story. Perhaps a storyteller with a very different perspective can enlighten you — that would be me. Let’s gather around the campfire. It was a dark and stormy night …
… And a good time to address impediments to building stronger relationships one at a time, from two perspectives. For clarity, I’m lumping together commercial/residential builders, and general and electrical contractors, into a “Builder” category. Be advised there are subtle differences in each of these categories.
1. Barriers to entry are just too tall to scale.
Integrator: Ask yourself if you have the internal resources to do business with this customer segment? This will include spec readers, estimators, CAD personnel, technicians who can commission projects quickly, and very strong project managers who are used to the rough-and-tumble world of new-construction jobsites.
Builder: Come prepared to do business the way we need to do business in the construction world. We do not have time to babysit you, nag you or chase multiple contacts to get information. Give me one contact with decision-making horsepower!
2. Relationships take too long to build for us to actually win projects that will justify investing valuable sales time and resources.
Integrator: The first question is, “Do you have a strategic plan (long-term) to add this segment of potential customers to your book of business?” Then determine if the market you serve has enough projected new construction and growth to support a long-term investment of time and resources. Do you have the patience to learn and compete in this market?
Builder: Do you understand my bidding, buying and construction process needs to help me make money? It’s not about what you do. It’s about me and what I do. To build a relationship, I need to trust that you can deliver, and you need to be competitively priced.
3. They only buy the lowest priced bid on a project.
Integrator: We can’t sell at the margins they want to pay for projects. Thus, you must understand the margin range, be comfortable with “buying into the business,” and have control of your estimating accuracy and project management disciplines. If not, don’t play in this sandbox because you will get sand thrown in your face!
Builder: All things being equal I will take the lowest price. However, if an integrator goes the extra mile, is responsive, and under-stands my business and challenges, a competitive price may earn my business — especially if I have a relationship with your sales team.
4. Builders are not loyal and will take advantage of us.
Integrator: How do I pick the relationships that will be loyal to us? Some builders will and some will not. It really depends on their culture and reputation. That takes time, patience and experience to select the right builders to partner with that match your culture.
Builders: We are loyal to those that earn our loyalty over time based on how we work together. If you show concern for my business, I may do the same for your business. When I get behind the eight ball, will you step up your game to help me out?
Make Due Diligence, Communication & Patience Priorities
My recommendations for building relationships with the building community are to make sure you are ready to do business in a “parts and smarts” environment, at lower margins, and in a very competitive marketplace. Once you’ve wrapped your head around those realities, you can then carefully learn builders’ business from their perspective first before you dive in.
- Do your homework to find out what builders are winning more than their fair share of work, especially in the vertical markets you play in. Narrow your focus on them.
- Don’t just communicate — over-communicate often to ensure everyone is always on the same page. This will significantly reduce misunderstandings and pointing fingers.
- Be ready to pay the tuition for “lessons you will learn.”
- Be patient and have a long-term strategic plan.
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