Alan Gayle is a sales and marketing consultant specialising in the construction industry. In this column he offers advice on how to make an impact in the market. This time he suggests: You should get on the bandwagon.
In this final article on up-selling and diversification, I want to look at a few opportunities for diversification in the construction industry. I know some of you are already growing your businesses by offering your existing customers additional products and services, but for those who aren’t there’s a good argument for getting on the bandwagon.
Many years ago, when I was a sales rep for Redland Roof Tiles, the whole sales team was targeted on selling ventilation products. Redland realised that many of their roofing contractor customers regularly fitted ridge vents and soffit vents as part of the roofing contract. They didn’t manufacture the vents themselves, they just bought them in, re-branded them and sold them to their existing customer-base for a healthy profit.
As sales reps we would routinely offer them on every job we priced and the roofers would happily buy them from us because it saved them the headache of sourcing another product. Placing yet another order, receiving yet another delivery, processing yet another invoice. It’s a pain they could do without.
This is up-selling and diversification in action in the construction industry. Redland had no intention of offering ventilation products on the open market, but for existing customers it made perfect sense. Regular readers will recognise this as Option Three from the three I introduced in January – increase the amount you sell to your existing customers. It is the most cost-effective way to build your business and raise your profits.
You don’t need to have all the resources and expertise in-house, you just buy it in when you need it. Even if there isn’t much margin, it may still be worth it. The added benefit of diversifying is that it can keep your customers away from potential competitors.
If you sell stone floor tiles but you don’t offer adhesive, grout and impregnators, where will your customer go to get them? You’d better hope they don’t start to offer floor tiles as well. What about de-coupling membranes, spacers and even basic tools?
For years ceramic tiling contractors have taken on natural stone tiling and bricklayers have installed stonework. How long before concrete repair contractors diversify into stone repair? You’re probably thinking “Those ceramic boys know nothing about stone. Brickies don’t have the skills.” Maybe they don’t, but is that what your customers think? These trades can just buy in the expertise on a project by project basis and eek away at the stonemason’s market.
When you take your best customers out for lunch, ask them what they buy elsewhere that they might be able to get from you. Screeds, blockwork, brickwork, render, terracotta rainscreen, block paving, wood flooring, joinery, windows, mortar, consumables, PPE, design services, product testing. The list is endless. Even if you’ve already diversified into new areas, it’s still worth asking the question (ie up-selling) because I’ll bet that in most cases even your very best customers don’t know all the products and services you can offer them. How many times have you heard, “Oh, I didn’t realise you did that?”
The trend for clients, big and small, to go for the convenience of dealing with one point of responsibility when they used to have two or three isn’t likely to change any time soon.
Talk to companies that don’t compete with you but can provide you with extra products or services to offer your customers.
Which brings me nicely to the subject for next month’s article. Strategic Alliances.
Incidentally, Redland (or Monier as they are now known) are still diversifying and up-selling. In these days of BREEAM and Code for Sustainable Homes, roofers can buy solar roof panels from them. I don’t know for sure, but I doubt they manufacture them in-house.
Alan Gayle is a sales and marketing consultant specialising in the construction industry. He spent 19 years with some of the UK’s leading building product manufacturers and has worked in the stone sector for the past eight years.
Alan now runs Gayle Associates, which provides a range of sales and marketing services for small and medium sized contractors and suppliers. His clients are seeking growth but the management are too busy to do it themselves and they don’t want the commitment of a full-time employee.