Service at a price
Acme Construction's Night Owl delivery service is one way the firm responds to demands for high customer service
By John R Johnson -- Industrial Distribution, 5/1/1998
How important is service when it comes to selling to the commercial construction market? Just ask the folks at Acme Construction Supply in Portland, Oreg.The construction supplies distributor has invested more than $135,000 in its Night Owl delivery service, a program where Acme personnel deposit orders into lock boxes at construction sites during the nighttime hours, so materials are available for contractors first thing in the morning. Each box costs about $200, and Acme Construction has close to 700 in service at construction sites in Seattle, Wash., and Portland. It's just one more service offered by the company, which caters to the commercial construction market.
"Service by far is most important," says Gary Nuttall, regional team leader for Acme's Portland branch. "People that are very, very price sensitive don't do business here. But people who see the overall value we provide do. And it's very intimidating to our competition. They have to walk around our delivery boxes every day to make their sales calls."
Service, it seems, is the top priority when dealing with customers in the commercial construction arena. In fact, in an exclusive poll conducted last month by Industrial Distribution magazine, manufacturers and distributors agree almost exactly on what is most important to the customer.
According to the survey, which polled 100 distributors and 100 manufacturers of construction products, expedient service, on-time delivery, pricing and a well-educated sales force were all rated as the "most important" factors when selling to the commercial construction marketplace. Distributors, for example, placed quick service first (78 percent called it "very important"), followed by on-time delivery (76 percent), pricing (58 percent), and an educated sales force (52 percent).
Eighty-five percent of manufacturers called on-time delivery "most important," followed by service (70 percent), educated sales force (62 percent), pricing (43 percent), and technical support. Ironically, the use of technology ranks low in importance by both manufacturers and distributors. Distributors ranked it last, with just four percent saying it's "very important." Thirty percent classify it as "somewhat important," and 45 percent say technologies like EDI and bar coding are not important at all.
Manufacturers put a little more stock into the value of technology, as nearly half (49 percent) say it is "somewhat important" or "very important."
The unique approach taken by Acme Construction addresses the on-time delivery and service issues in one fell swoop. As long as the customer order is received by 4:30 p.m., Acme guarantees delivery by the start of business the next day. Locker boxes are free to the customer. Nuttall says the $200 cost for each locker box is rolled into the firm's cost of doing business, but that the investment is well worth it.
The program is catching on so quickly that many customers take the lockers to new construction sites when work concludes at one project. And the longer the boxes stay in use in the field, the more of a payback Acme receives through increased business.
The fact that pricing was rated "very important" by only 43 percent of manufacturers -- and by 58 percent of distributors -- doesn't surprise Shannon Worthington, vice president of sales at Dixie Construction in Atlanta, Ga.
"I would think pricing would be last on the list,'' says Worthington, whose firm caters heavily to the construction marketplace. "Certainly you always have customers who hammer you about price, but if you watch the records good, you usually don't have a great relationship with those people anyway. They usually want the cheapest price, the best service and they pay the slowest. It's not that we don't have pricing pressures; we just can't afford to be the cheapest person in the market."
Worthington says it's tough to compete on price alone in the construction business, mostly because of the "I need it today" mentality of many construction project managers. Unlike the MRO industry, when products are often ordered a few days before they are needed, many construction orders are rush jobs.
"You need instant service," says Worthington, "because in that market typically they don't order things three days before they need it. They order it the day they need it, and that's pretty unique in itself. So you need to call on the contractor job site and give good service and a fair price."
Dixie Construction also provides promotions that "incenticize" the end user to buy from them. For example, the company might offer a free jacket to anyone ordering 500 anchors, for example. Or, they will offer a free Louisville shirt for customers ordering a pre-determined amount of ladders.
Many distributors don't take full advantage of co-op dollars available from their manufacturing partners, which means they are bypassing additional sales opportunities as well.
"My idea of a promotion is something that's good for the customer and good for us," says Worthington. "That doesn't always equate to being the least expensive. It's more about having the best service, the best products, and the best support."
Distributors say personal relationships that salespeople build with foremen and other workers at construction sites are also crucial. Ironically, many selling techniques being used today are being driven by reaction to mass merchants like Home Depot. When the giant Atlanta-Ga.-based retail chain first emerged in the 80s pumping new low prices, many distributors feared the worst. But as time went on, many learned that busy contractors don't want to wait in long lines to save 15 to 20 percent on certain tools. Many contractors found that they also missed their personal contact with their distributors.
"It's the service they need the most, and that's what we try to provide," says Billy Knoles, sales manager at Contractors Equipment & Supply. "We try to personalize things and tailor them to the customer's individual needs. We have one person handling accounts whenever possible. That way, sellers form a working relationship that is tried and true, and the customer knows when they can lean on you. Somebody might call and say, 'if you can get me this product in a rush just this once, then the price isn't the object.' And that happens fairly often."
However, without great customer service, chances are that money would be spent at one of your competitors.
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