Lupberger: Thank Your Suppliers, Thank Your Trade Partners
authors David Lupberger | July 26, 2021
There is a contractor I know who recently received a free trip to Toronto. He received the trip after he discovered that his lumber company awarded free trips to home builders when their annual purchase volumes exceed a certain level. After speaking with a local home builder to get the facts, he negotiated to get a similar benefit with his lumber company. Granted, this is a benefit based on volume sales, but you get the idea.
Let’s see if we can build a company strategy based on this “quid-pro-quo” idea. Begin to think about the cost of goods sold (COGS) on the projects you do. If you are doing full-service remodeling, you may find that in round numbers about 25 percent to 30 percent of your annual budget is going to trade contractors, with another 25 percent to 30 percent going to suppliers. You can debate those totals, but you will find that a substantial percentage of your job costs are going to trade contractors and suppliers.
Here is a revelation—you’re working hard selling jobs, and your primary suppliers and trade contractors are getting the benefit of your hard work. They just must show up and do the job. They didn’t have to sell anything. Besides building your business, you’re also helping them build their businesses.
As you already know, a primary issue today is that both suppliers and trade contractors are over-worked and, in many cases, understaffed with more work than qualified people to do the work. They are doing their best to meet the demands of contractors, people like you who need their services. In this competitive market we need to gain some advantage so that when they receive three calls from other general contractors, they respond to you first. Question—how can you build that competitive advantage with your key suppliers and trade contractors?
I wrote about this earlier but with present demand, I wanted to highlight the relationships that you possess with your key trade contractors and suppliers. While sales are robust, both your trade contractors and suppliers are struggling to keep-up. Supply-chain delays and labor shortages are rampant in the industry right now. Demand exceeds supply, and I don’t see this demand lessening as we move into next year.
With this in mind, let’s return to the very reason that you work with these folks. Simply, you like them. You have a good working relationship, one which has supported your company’s success. This is a mutually beneficial partnership. With that said, their professional capacity is being stretched to the breaking point. They are getting calls daily from contractor customers wondering why a trade contractor didn’t show up on a given day or why a delivery didn’t show up on time. You can only imagine that every time their phone rings, they are responding the best way that they know how – it’s coming! It’s coming! It’s as frustrating for you as it is for them.
What if your relationship with them was different? Acknowledging the problem is a start but begin to imagine the power of a simple “thank you”. Neither trade contractors nor suppliers are getting many of these calls now. What if you were the different?
Let me give you an example. A client that I work with who builds custom homes just outside Nashville is working with an over-worked framing contractor. He decided to show this framing contractor that he appreciated the work they were doing.
On a Friday morning, he picked-up a new Yeti cooler, and filled it with ice and cold drinks. In addition, he went to a local BBQ restaurant so that he could get lunch for the entire crew that day. Much to their surprise, he showed up on the jobsite with a cooler with cold drinks and a BBQ lunch. The framer and employees were pleasantly surprised because no other GC had done that before. To add icing to the cake, he let them know that he was giving them the Yeti cooler as a company gift. He wanted them to know how much he appreciated the work they were doing. QR