The Survival Strategy for Independent Dealers

By Jim Moody, CAE
CSA President

Strategy is something we don’t spend a lot of time thinking or talking about in our industry, but it’s really important. Strategy is a plan designed to achieve an overall goal, usually over a long period of time. It’s how you do what you do. It’s how you differentiate yourself from your competitors. It’s how you achieve your mission. (Mission is also important, but it’s another discussion for another day.)

When I look at marketing materials from independent dealers, I typically see one of two things. I’ll either see “locally owned since 19XX” or something along the lines of “We deliver service.” Frankly, both of these taglines stink as messages to your customers. Why do I say that?

Research with builders (who, for the vast majority of you are your key customers) tells us that they don’t give a flying fig about whether you are locally owned or not, and the length of time you’ve kept your doors open has zero impact on how you do business today. And as for “service,” what does that mean? Left by itself, it’s not a differentiator. Is there anyone who says “we have bad service” in their marketing? Of course not, so simply saying you offer service makes you no different than any other dealer.

Okay, I know that advertising messages are not the same as strategy, but your marketing efforts absolutely should flow from your strategy. After all, if you believe your strategy makes you different from the guy down the street, you want your customers and potential customers to know about it.

So what should your strategy be? Well, research shows us that the top two things builders look for are on-time deliveries and correct orders. Those may flip-flop in different markets, but in market after market, builders say the same thing. Low price is way down the list. Surprisingly “competitive price” is more important than low price, suggesting that what builders really think and what they tell your salespeople are two different things. (Imagine that!) The research comes to us from the Farnsworth Group, the leading market research firm in our industry. (Shameless plug: We have someone from the Farnsworth Group speaking at our annual meeting in Biloxi in September. You should plan to be there.)

How do you translate that into a strategy that is marketing friendly? Well, that’s your job. The exact execution of this has to be tailored to your market and your company. If I were an owner, I’d lean toward something like “Delivered Right. On Time.” It’s possible that’s already been taken, but I’d be in that ballpark. It’s clear, and it gets to the heart of what customers think is important.

It’s easy to change marketing; it’s far harder to change your company to execute that strategy. You can’t effectively make this your marketing tag line if your company can’t deliver it right and on time. I know many of you don’t measure your on-time, in-full success rate. A lot of you don’t even track returns. You have to ratchet up your sophistication to make this work. There are tons of web resources that can help you (just Google OTIF). Our good friend Ruth Kellick Grubbs (www.kellickandassociates.com) is the guru on this in the LBM industry and has helped many dealers across the nation – including some in the Southeast – implement this program.

So I’ve been deliberately a little harsh in my tone on this. If I’ve offended you, I’m sorry. I just know that so many folks will read this and not do anything different. When I first started in this industry, a wise man told me there were many dealers who were dead but don’t yet know it. It kills me to see independent dealers go out of business. While “locally owned since 19xx” isn’t an effective business or marketing strategy, it does say a lot about a company, and it matters to me. I want you to survive and thrive. But if you are still doing business the same way your father or grandfather did it in 19xx, you are dead but don’t know it. 

A great way to breathe life into your company is to sit down with your leadership team, develop a strategy, develop a plan to execute that strategy, and once you are seeing operation results you can roll out a new marketing plan that capitalizes on that operational excellence. That’s how independent dealers can carve out a long-lasting niche in a world that’s consolidating around them.