Turbulent is an apt adjective to describe the Building Materials Distribution market. Factors, such as weather, interest rates, and source material availability, are beyond these suppliers’ control but dramatically impact their business. To thrive, they must focus on items they can manage. Customer service is an emerging area that they can leverage to strengthen their organization. So, lets take a look at how and why they take that step.
The Current Business Landscape
Construction materials are literally the foundation for all new and existing building improvements. This industry plays a critical role in the US by supplying needed items, such as lumber, cement, roofing materials, and flooring products, to contractors.
Consequently, Building Materials Distribution is not only well-established but also extremely competitive. As a result, distributors face many financial and business hurdles in running their operation.
Supply Chain Disruptions
Supply chain volatility has been a significant challenge, especially since the global pandemic. Covid dramatically disrupted traditional market ebbs and flows as well as product movement. Raw materials, like lumber, have been in short supply, which has driven up pricing. In many cases, building projects have been delayed or cancelled because of a lack of such materials or their high prices.
New Construction Tumbles
Inflation and interest rates have had a chilling effect in the construction market, especially in the consumer segment. As the numbers rise, potential buyers find themselves unable to afford to move and demand for new construction drops. The number of new homes fell 14.7% in March 2024. Housing starts dropped to an annual pace of 1.32 million from 1.55 million in February.
Building Materials Distributors Search for an Edge
During such downturns, reduced construction significantly impacts sales, squeezing cash flow, and many businesses struggle. In such markets, suppliers need to keep their current customers since growth is hard to find.
Every Building Materials Distributor wants to provide excellent customer services, but most are not able to. Why? Their operations rely on 20th Century technology, which puts them at a competitive disadvantage and hinders their organization in many ways.
An Incomplete Picture
They lack needed visibility into their operations: Customer information is scattered in many different systems that do not talk to one another. Pieces of information reside in QuickBooks, Excel spreadsheets, financial systems, sales documents, and databases. Consequently, the data is siloed, available to select applications, departments, and individuals. Lacking a complete picture, customer support is delivered in an ad hoc manner. A customer talks to a sales rep one time and a finance person the next.
Technological Integration
Furthermore, their technology is limited. The legacy financial systems run on-premises. Therefore, the company maintains the hardware and provides technical support. They are building material distributors and not technology experts, so they run into problems ensuring client systems run properly. Also, their employees’ attention is diverted from their day-to-day business responsibilities to keeping the computer systems running.
The end result? These companies need to update their IT infrastructure to improve customer service quality. So, how do they move from where they are now to where they want to be?
Modernize your Technology Infrastructure
The best way to improve distributors’ business is to deploy modern, digital tools: they break down legacy barriers. A good place to start is with a modern Enterprise Resource Planning (ERP) system, such as Acumatica Cloud ERP Software. With it, Building Materials Distributors gain visibility into inventory management and forecasting. What features do they need in such a system?
As noted, customer data is generated in many different types of applications. Therefore, the solution needs an open architecture, one that easily integrates with other applications. In fact, the system should work with
- eCommerce portals such as BigCommerce, Shopify, and NOMAD.
- Shipping solutions
- Marketing platforms, such as HubSpot
- Sales applications
Industry-specific products, like Construction, Manufacturing, Distribution, and Field Service.
Embrace Cloud Technology
The ERP solution should be cloud-native and delivered via a SaaS business model. As a result, Building Materials Distributors do not have to maintain the infrastructure themselves. The system must be intuitive and work with modern devices like smartphones, so user input is simple.
The software needs to scale and grow with the business. Building Materials Distributors do not want to start with one system and then need to swap it as their business expands because it cannot handle the higher volumes.
Invest in a Customer Relationship Management System
Building Materials Distributors also need a place to consolidate customer information. Customer Relationship Management (CRM) systems are technology platforms that manage interactions and relationships with current and potential customers. They provide a single, integrated system that supports sales, marketing, customer service, and support.
Such solutions need tight integration with ERP systems. Ideally, both applications were designed by the same vendor, so they were built from the ground up to work with one another like Acumatica CRM Software.
A combined ERP and CRM platform streamlines customer service. It delivers real-time, anywhere access to insights about each customer. Employees gain a complete, 360-degree view of customers, and the system delivers actionable insights in each step in the customer journey. Employees track customer histories from first contact to final delivery and more, including quotes, sales history, problem issues, delivery, and service.
The CRM includes sales and marketing functions, so all of your data resides in an integrated suite. The solution keeps the sales pipeline full and conversions high, Managers can quickly assess how individuals and teams are performing across the entire product line and a wide range of initiatives. They gain real-time insights into sales and marketing performance and customer behaviors, so they generate leads and close more business. Internal business processes improve:
- Automate manual sales processes so employees work more efficiently
- Key Performance Indicators illustrate:
- Fastest moving items
- Marketing campaign results (# of leads)
- Prospect to opportunity conversion
- Percentage of opportunities closed
- Revenue/region
- Profitability/region
- Revenue/salesperson
- Profitability/salesperson
- Average % discounting
With such information, Building Materials Distributors see what’s working, what’s not, and why. They calculate the cost of customer interactions, provide accurate price quotes and delivery dates, and Identify areas in the sales cycles where prospects abandon a sale and strengthen such areas.
What are the Benefits of Improving Customer Service?
Building Materials Distributors have a number of areas in need of improvement and limited funding. Investing in customer service improves operations in many ways.
Streamline Problem Resolution
Issues and problems often occur during the purchasing and delivery process. Products can encounter delivery delays in delivery, goods can be damaged, or orders are entered incorrectly. An integrated ERP/CRM system enables them to quickly address these issues, minimizing customer dissatisfaction and potential negative consequences.
Create More powerful Bonds
Top notch customer service fosters loyalty and trust. Distributors who prioritize customer service often develop long-term partnerships with contractors, builders, and other clients, leading to repeat business.
Grow Revenue
Satisfied customers are willing to work more closely with Building Materials Distributors. They know they can count on their partner to deliver needed materials in a transparent way. When they require additional items, they call their partner.
Building Material Distributors are in a highly competitive space. Many are now hamstrung by older systems and unable to deliver superior customer service. They need to modernize the business. Adopting integrated, cloud ERP and CRM solutions lays the foundation for the transition to a more efficient, one that thrives no matter how challenging the business landscape becomes in the future.
Want to learn more?
Reach out to i-Tech to talk about how Acumatica Cloud ERP has enabled the wholesale distributors of building materials we work with to improve their customer service.
