How to Solve the 2 Big Challenges in Building Products Manufacturing

By Zilliant

Oct 21, 2021

In January 2020, we checked in on the building products manufacturing industry in detail. We found that a broad labor shortage in the space was particularly harmful to sales teams, who were seeing an ongoing “brain drain” of older sellers, a shallow pool of younger reps and a sharp learning curve for new hires. 

This problem, unfortunately, has not gone away. 

In fact, it’s gotten much worse since the start of the COVID-19 pandemic. First, plants shut down and workers were forced to quarantine. Then, even as vaccinations became widely available, many employees have not come back to the factory or job site. An already lean building products workforce has only gotten thinner.  

On top of that, the pandemic has sent material costs through the ceiling, while demand for home remodels, new home builds and commercial construction projects has come soaring back. What these manufacturers’ pricing and sales teams face then are compounding challenges:  

Customer demand has never been higher, but… 

Fewer sales boots are on the ground and little reinforcement is on the way, while… 

Raw material shortages cause an inflated price environment  

Is it possible to capitalize on demand in this scenario? We have seen it work, but only if a manufacturer’s pricing and sales teams are armed with the insights and tools to force-multiply their efforts. 

building products manufacturing

Solve the People Problem with Data 

Manufacturers are not going to be able to find and hire more well-qualified salespeople overnight. It’s a long-term issue. 

But they do have the means to empower their existing sales teams by harnessing the valuable customer data that already lives inside their business. Transaction data is poised to be exploited by intelligent software to deliver actionable insights in the form of pricing, sales and other commercial guidance for the sales team.   

Predictive customer insights help sales reps focus on the opportunities with the highest likelihood of closing and those that produce the best financial outcomes for the business. Seasoned sales reps can take advantage of actionable insights to increase their win rate on cross-sell, retention and win-back opportunities, among other campaigns. Data science also offloads the burden of bringing greener reps up to speed. Often, veteran manufacturing sales reps are called upon to mentor new hires, while still carrying their own quota. By leaning on AI and data-driven applications to highlight which customers should be called first, and what to talk to them about, new sales reps can instead get acclimated and start generating revenue much more quickly, without the overhead of months of training and knowledge transfer. 

In addition to uncovering new selling opportunities, data science can improve prices for each customer situation. The pricing history that is second-hand knowledge to a company’s best reps can be digitized and captured for every rep to use in every deal. This is possible much of the collective experience and wisdom of those older reps has already been captured. It is embedded in the transaction data companies have collected, regarding which customers bought which products, when, and for how much.  

Manufacturers can proactively mine this data to generate actionable information on what prices to quote for a given deal. Those insights serve as a guide for new reps, effectively shortening the learning curve, helping them to better meet customer expectations and sell more at the right prices.  

Decision-making that relies on data science simply outperforms experience-based decisions. The human mind is simply not capable of poring through massive amounts of data to come up with the best answer every time.  

Solve the Cost Problem with Intelligent Pricing Tools  

Supply chain disruption has reached a critical point, causing costs to climb across the board.  

“Supply chain challenges in the U.S. building products and materials sector are taking longer than expected to normalize, limiting companies’ ability to fully benefit from strong end-market demand and grow sales,” says Fitch Ratings. “The disruption is causing production delays, which have been exacerbated by ongoing port congestion, pressuring sales volumes and leading to higher raw materials and transportation costs.” 

Building products and construction materials manufacturers have not been spared from the cost problem. According to Probuilder.com, “construction materials remain 14% higher than at the end of 2020 and some materials are on upward trends. Steel mill product prices were up 5% in August from July, ready-mix concrete went up 2%, and drywall remained elevated but stable.” 

Our comprehensive examination of how to price in times of inflation urged decisive action informed by intelligent software tools. Given the current supply-demand dynamics, price increases are a must. But do you know how much to increase prices by? How do you govern whether sales teams are following price increase recommendations? And, how quickly can you react to new cost changes in a market that’s constantly in flux? 

The manufacturers in the best position to answer these questions are the ones able to exploit both internal and external data when responding to pricing triggers, or anything that necessitates a price change in the business. Equipped with price optimization and management software, they can test different strategies, quickly make updates, and gain predictive insights on the impact different price increases will have on margin and revenue. 

Conclusion 

Demand for building and construction materials is high, supply is low, prices are inflated, and thin salesforces are stretched to the limit. The smartest investment that manufacturers in this space can make is in software that transforms its data into a force multiplier for pricing and sales teams.  

Contact us today to learn more about how price optimization, price management and predictive sales analytics software powers intelligent commerce for building products manufacturers. 

Are you ready to learn how Zilliant can help you overcome your pricing challenges?

Reach out to us today to learn how we can help!