#86: Pros and Cons of White-Labeled Building Products as a Marketing & Sales Strategy

by Smarter Building Materials Marketing

The Amazon Effect is oftentimes thought about as a need to sell direct to the customer. How do we get as close to them as possible? When we say “end customer”, we think about the contractor, the builder, the owner, but many people miss out on thinking about how they sell direct more effectively to the dealer.

More About This Episode

In this episode, Zach talks to TJ Norris, who is the Director of Sales and Marketing for PCI Construction Products about how they are white labeling their product and selling at mass quantities to dealers and helping them be more effective in the business that they're trying to grow.

Transcript

Zach Williams:

The Amazon effect is oftentimes thought about as a need to sell direct to the customer, how do we get as close to them as possible? Now we say end customer, we think about the contractor, the builder, the owner, but many people miss out on thinking about how do they sell direct more effectively to the dealer. On today's episode, we bring on a manufacturer who's actually white labeling their product and selling at mass quantities to dealers and helping them be more effective in the business that they're trying to grow. It is a fascinating story on how you can scale and grow without massive overhead all while still protecting your margins and building your true brand. This is an awesome episode. I'm excited to share it with you. Let's get into it.

Voiceover:

Welcome to the Smarter Building Materials Marketing Podcast, helping you find better ways to grow leads, sales, and outperform your competition. And now, here are your hosts, Zach Williams and Beth PopNikolov.

Zach Williams:

All right, everybody, welcome to Smarter Building Materials Marketing, where we believe your online presence should be your best salesperson. I am Zach Williams, and we have a great show planned for you today. We've got actually our first show almost or halfway on the job site. We've got TJ Norris, who is the director of sales and marketing for PCI Construction Products, and he is on a job site as we speak, but TJ, welcome to the show. We're excited to have you on with us.

TJ Norris:

Yeah, thanks for inviting me on the show.

Zach Williams:

TJ, you've got a pretty eclectic background. You are a bit of a Renaissance man/do-it-all in building products. For our listeners out there, why don't you just give us a little bit of background and your role at PCI Construction Products as well as what you do across the entire industry?

TJ Norris:

Yeah, so with PCI Construction Products, I've been with them for 10 years, and I started out doing some construction product testing for them. Basically, I was stuck in a room running tests on all the inbound goods that we were receiving and making sure that it checked out and everything like that. That's where I got started. Then the more that I did that, I was finding ways to improve the process, it allowed us to start reverse-integrating to where we didn't need a lot of the outside processing, so we started developing some of our own materials. What we realized was we were jumping into a lot of me-too markets, but in those me-toos, no one was adding value add, so that's when everything became the perfect plan. They said, "TJ, we need you to run this division. We need you to keep doing what you're doing, and just keep using your mind of how we can add the value adds to these commoditized items." That's what I do today still.

Zach Williams:

Forgive me. What are you actually producing and selling, and then who are you selling to?

TJ Norris:

All right, so we are kind of a niche. We work with the insulation world, and we do a lot of the commoditized items. If you're in spray foam world, we manufacture a lot of the spray foam suits, and we do every kind you can imagine... There's actually, currently, there's seven material differences out there, and then each one has the ability to be customized with hoods or boots or wrists, ankles, cuffs, whatever. That's one of the little commodity items.

TJ Norris:

We also manufacture the insulation removal bags for a lot of the retrofit and pest remediation guys that go in and have to vacuum out all the old, existing insulation in an attic space before they go in and put the new insulation in. We manufacture that little throwaway bag. Those are two like super commoditized things.

Zach Williams:

That's like super niche.

TJ Norris:

Oh, man. Yeah. They're like, "Wait, there's someone in United States that does that?" That's what we do. We do the down and dirty pieces that not a lot of people do, but what you'll find is, traditionally speaking, it's all non-woven and split-film woven, polypropylenes, polyethylenes, and polyesters, and that's what we do. That's our bread and butter. The parent company for PCI Construction Products has been around for 30 years as a material manufacturer, converter, and packager in that realm of product line.

TJ Norris:

Then I guess our claim to fame is our Insul-Guard fabric. We work with the blown-in insulation. There's a couple of trademark terms I got to be careful not to say, but basically, Net & Blow, dense pack, fiberglass, cellulose insulation where it's the most high performance, most cost-effective insulation system on the planet. We work with a lot of the insulation manufacturers and a lot of the mainline distributors out there to provide those wall fabrics for custom suit applications.

Zach Williams:

Gotcha. You oversee sales and marketing for PCI. The thing I thought it was really interesting, if you would mind sharing with our listeners, you are the only true rep, is that right? Are you the only true rep for PCI?

TJ Norris:

Just me. Yeah.

Zach Williams:

It's just you. How much business are you guys doing? How much are you doing just with one rep, and share with the listeners all the different territories, and what's the size of book of business you guys are dealing with just one rep?

TJ Norris:

In the PCI world, we're covering most of North America with the majority being in the United States, and then second would be Canada. We also do a little bit in Europe with the same style products. Basically, what we've done is we've tapped into this methodology that I came up with because it made my life hard in the beginning, but I was willing to kind of eat crow and to make sure that we got set up the right way, and it's a push to the top because what I figured was if I could make my relationships at the top with these organizations and prove the concept showed the quality, get in front of the right people with the value add that they would allow me then to turn around and train their regionals, who would train their districts, who would train their locals.

TJ Norris:

Then all of a sudden, we would have this trickle-down effect of our products winding up in all these different markets. That's exactly what's happened, and it's still happening. Like I say, it's a slow start, but you would be amazed at how quickly you start growing the more you keep pounding the pavement, so to speak, at the top.

TJ Norris:

We have a huge market, a huge market, and it's a little overwhelming, so what we've done... I'm the only rep, but I do have a team of two people that sit in an office and answer the phones and direct people to product literature and get orders entered and make sure you keep the wheels moving. I'm proud to say we're the leanest division of the parent company that there is. The whole operation, I have seven people in the manufacturing side, two people on the office side, and myself.

TJ Norris:

In a company that employs hundreds of people to run other divisions, we really hang our hat on the nail that we created this opportunity to be streamlined, lean mean, and virtually unseen in the trade show world. We don't have a lot of connection to the contractor. Now that we've developed these big sales channels, we're redeveloping how do we now go talk to the contractors, provide trainings, and start doing some of that all through marketing.

Zach Williams:

TJ, it's pretty remarkable how much you guys have grown, and it's just basically you. You guys are just killing it. Talk to me a little bit more about this methodology because you were sharing with me how you think the building products space is changing. A lot of manufacturers, they don't even know it. They could potentially be going out of business because they're not changing the way that they build relationships and connect with people and sell through them. Talk with us a little bit about that.

TJ Norris:

Well, I know everybody says it, "The Amazon effect," but the way the Amazon effect hit the construction industry is completely different than the way it hit retail. What ended up happening is, is they educated the buyer.

Zach Williams:

Oh, yeah.

TJ Norris:

They educated the end user. Like I say, it doesn't correlate 100% over to the construction products world the way it did in retail. Man, I'm sure there's a lot of big retailers that would love to go back and punt and start over, but in construction products world, what's happened is the market is smart-

Zach Williams:

Oh, yeah.

TJ Norris:

... and they want to buy cost-effectively. They want to know that they're getting the best deal that they can possibly get. What's happened is, is they get smarter, and they realize what products are commoditized. They know what products are the most available, and they love to create competition.

TJ Norris:

I mean, you've already seen... you've seen it in the real estate world. Look at lending, the Rocket Mortgage people, "Hey, when banks compete, you win." The last 15 years has done nothing but educate people on how to buy better. When that comes back into the building world, you have a lot of things happening. The distributors are overwhelmed right now with products, and there's, for every one solid product, there's 15 me-too, me-too and a penny cheaper.

TJ Norris:

That mentality's crazy, and so what you ended up doing, and this happened over and over and over, is you come in and say, "Hey, me-too for a penny less," and then the next guy comes back, and he cuts his price, and you get these bid wars. Nobody wins. Nobody wins. Contractors getting a far less quality product today than he was five years ago because we've continually down the cost of ourselves, and in order to maintain our facilities, we've had to degrade our products from what they were when we initially started to what they are today. It's crazy. Then because the distributors understand that there's too many products, they're getting smarter. For me, to be a guy that's out developing products... and I rely 100% on distribution. We don't sell contractors. I would have to have a thousand reps if I dealt with contractors. It would be crazy.

TJ Norris:

My model, I rely 100% on distribution. I won't even talk to a contractor about pricing, but they are smart, and they want to put their name on products, and they're learning how to source products and create their own brands and offer these especially in the commodity markets. My methodology of being of the top and working down allows me to have those conversations with these distributors a year in advance of them implementing it. I guess let's back up and talk about the traditional way, and you stop me if you need to, but [crosstalk 00:10:00]-

Zach Williams:

No, this is good that... Well, what's funny about this is we've interviewed a couple distributor-dealers recently, and the common thread is that a lot of these guys are starting to produce their materials. Now, they're not producing everything they sell, but they're starting to because, man, their margins are getting squeezed, they're saying, "How do we keep our profit where it needs to be?" and they're just looking at space and saying, "What are we selling that we could replicate?" I want to hear from you really break down this methodology in how this could apply to any manufacturer who might be listening.

TJ Norris:

Absolutely. Yeah. That's what I was getting ready to say is let's talk about the traditional beat the streets. You've got a product, you've got a manufacturing facility, and you've got millions tied up in this, and you got to run your machines. You got to make product, so you got to go hire people to get it out into the distribution hands, into the contractor's hands, however. You go in, you hire a bunch of reps, and some of them will be direct employee. A lot of them be 1099 rep groups, whatever.

TJ Norris:

That's a dead horse in my opinion. You go in, you give one guy a territory. You give him a list, and he goes around. He knocks on all the doors. Let's just say he's a hell of a closer and does a great job. He could be the most successful rep and really be the backbone of your sales in a certain region or maybe even the whole country. What happens is if you're focusing on beating on the doors and building the smaller relationships first in today's economy, what happens when your product's in there and you've built your brand rather than your service and your product? You've built your brand, and you go in and you're door-knocking, door-knocking, door-knocking, and you're building it small sales, pallet sale, pallet sell, pallet sale.

TJ Norris:

Now let's just say that you're doing 10 times the amount that I'm doing, but I'm doing truckload sale, truckload sale from the top down, and you're out there killing the market. All of a sudden someone in corporate, they have a meeting, and they say, "You know what? I believe we can reverse-integrate here. We can offer this as our own private branding." They're not going to go put in the millions of dollars to make the product you're doing right now, but they're going to go back to one manufacturer, maybe two, and they're going to say, "Hey, guys, put this at our box, our label, our thing, and we're going to buy it truckload direct. We're going to put it through our distribution hubs, and we're going to break it down all the way down to the bottom." I'm going to get that business, and you're going to miss out. Even though you were king yesterday, the whole thing can crumble if you don't have those right relationships.

Zach Williams:

You're talking about selling direct, like you're going to sell it to this dealer-distributor. You're going to allow them to basically white label your product, right?

TJ Norris:

Oh, yeah.

Zach Williams:

Because you're going to give it to him on the truckload. Why is that working today? Why is it not something people have done in the past? Instead, they've got this old way of thinking. Why is that something new?

TJ Norris:

Well, because they go to Amazon, and they Google a shirt, and they see the shirt they want, and then right beside is the Amazon Basics version, and it's $3 cheaper. Look, again, it's a trickle-down from what has happened in retail. You want me to be real frank? I think the distributor's conversation is how do we stay relevant-

Zach Williams:

Oh, yeah. It's true.

TJ Norris:

... because what prohibits someone from doing to our industry what's happened, and it's going to happen. I think the only way distributors are going to be able to stay relevant is to continue to offer a value-added service platform to handle those materials effectively, get them on the job sites, and do the things that us as manufacturers, we aren't going to do that. We run machines. We have a product that we're making, not a service necessarily out to the contractors that use our products. A lot of times my products are used in conjunction with several other products before to do the whole project.

TJ Norris:

That's where the distributors have to focus is how can we continue to have service, how do we continue to educate our customers and teach them that our services are warranted... that you don't buy direct. But here's what's happening: A lot of manufacturers... I'm seeing it every day, and it's more and more prevalent. I had a conversation with a huge national distributor back in January out in Vegas, and he was saying, "Our problem is this has become such a commodity. Now, there's so many people that are selling a pallet at a time to the contractor."

Zach Williams:

Oh, yeah. They're selling direct. Is that what you mean?

TJ Norris:

Yeah.

Zach Williams:

They're just going directly to the contractor.

TJ Norris:

Sales direct, cut the distributor out. He's like, "What do I do to combat that?" Here's what I'd say. You're never going to combat it. It's always going to exist in today's market. But I think if you're smart enough to say, "Let me sell you my service," you could win that conversation a million to one. You want me to tell you why this exists right now in our field? It's not because of the man. There's not an overwhelming populous of contractors going to manufacturer saying, "We really need to be able to buy direct because we're just not able to live off our margins." It's not true.

TJ Norris:

Even when they're paying distributor markups, it exists because manufacturers have created it, and it's because they're under the old system, they've got all these reps, they went out, they pounded the pavement, but they lost the big goal. They lost it because they didn't know the people at the top. They didn't know the people that were going to be making those corporate decisions. They didn't know the people who were going to create the white-label products. They weren't in that conversation.

Zach Williams:

Hold on a sec. When you say people at the top, who are you referring to? Are you saying people top of the dealers, the distributors? That's what you're referring to. They don't have relationship with them.

TJ Norris:

Yeah, man. I start, literally... and it takes forever, but... and I'm not saying I don't go see the local level guys, but I'm always asking them, "Hey, who's your district manager?" When I talk to that district guy, "Hey, who's your regional? Who's your supply chain director. Who's that guy... Who's his boss?" I'm always building the connection. I'm not doing it to talk down or come across as bolster. That's not what I'm doing. I'm simply building the bridge because I go out and get pallet business all the time. I'm sorry I say pallet and truck. That's just the way we talk, right?

Zach Williams:

It's okay. That's good.

TJ Norris:

We've got sell, big sell. But I'd go out and get the pallet business all the time, but when I'm doing it, I'm building the bridge back to the office that houses the guy who could potentially have this conversation. I want him to know.... Honestly, my sales, when I come in with my products, I come in and sell my company first, my product second, and my brand as a fourth option. I sell myself as I have the best product, we are the best company, we can be very cost-competitive, and I offer them the white-label program before I even mention my brand.

TJ Norris:

A lot of people would be like, "Oh, my gosh. What are you doing?" But instead of investing millions of dollars in marketing my brand, I invest that money into marketing my product. I don't care what box it's in, it's still better than anybody else's. I don't care what label it is. That's the secret to the business. That's how I can service multiple distributors at the same time and maintain an equal balance for my products. It's a different name. It's a different brand from this side of the street to this side of the street. It's a smarter way to approach the market, I think. It ain't like I'm just some genius that thought of this. It was I was on a budget, man. It was just me. I had to be creative.

Zach Williams:

Well, let me ask you this. Let me play devil's advocate with you. You're going to the top of these dealers. You're finding the boss, if you will. You're trying to build relationship with them. You're white labeling your product. You essentially are cutting yourself out from owning that customer and saying, "Hey, dealer-distributor, you own the customer, I'll supply the product." What's stopping that dealer or distributor from saying, "Hey, we've worked with TJ in the past, but there's another cheaper product that might be of equal quality," and then your book of business has gone because that's exactly what I would think is you don't really own the customer, you just own that relationship with that dealer. How are you holding onto that so that you don't get cut out and you're continuing to build your business?

TJ Norris:

Okay. That's super fair. In the beginning, you're rolling the dice. When we first started rolling out, the first customer was a regional pilot guy that I was ecstatic to get. The second one was a global conglomerate that wanted a white label, and to this day, they buy more of my product than I sell of combined everything else. You know what I do? It's the same thing. I do own the customer, but see, I got to take my brain out of it. I can't let their customers be my customer. That's not what I'm here to do.

TJ Norris:

My job is to make them my customer and treat them like so, not like they're the middleman of my product. What I treat them like is, "You're the customer. I want you to understand why I'm a huge service to you. Let me show you how my distribution centers interact with your distribution centers. Let me show you how my ERP setup... Let me show you how streamlined I can be. Let me show you how quick I can deliver."

TJ Norris:

Now, go find that cheaper. You can't. I don't sell off the dollar. I sell a service platform, so much like I would say the distributors need to focus their customers, that's how I focus on mine. I sell the fact that I know there's no one else that has a better product, and there's definitely no one who can offer the service that we'll give you, and I believe that. That's how I maintain it. Yeah, dude, I get it all the time. They'll open up RFQs for my product category, but what's really cool, and I'm enjoying it right now because not a lot of people are doing what I'm doing, is I go to these things, no one even knows who I am. There's seven or eight guys there with their brand, and they've got...

TJ Norris:

I mean, I've got a brand. This is my brand. But they're sitting there, they spent the millions at the trade show. They've got posters on the walls of every store. They do all these things, and it's just me. I roll up with blank, white pieces of paper and my product demo. I've created a stress-free environment for me. I don't have to compete on who's got the better marketing literature, who's got the better packaging. I literally compete on... I can offer as good or better products as anybody in the market, but I blow everybody away with my service opportunities, and I'm strategically located.

TJ Norris:

What I've done is... Again, thinking small, is we're big now, but we didn't start that way. What I've done is... Marketing is key in anything you do. It is the key, but I learned a long time ago I don't want my brand to be known. I want my service to be known because at the end of the day, if the brand went away, my plant's still going to be here. We still got to run machines. That's the bread and butter to the organization.

Zach Williams:

Well, you're marketing your service. You're not marketing your product. That's a beautiful thing, like-

TJ Norris:

Well, let me ask you a question. You asked me, "TJ, how do you do it? How's one guy do the whole thing?" How many contractors are in the United States of America?

Zach Williams:

Oh, hundreds of thousands.

TJ Norris:

How many distributors?

Zach Williams:

Couple thousand.

TJ Norris:

I'm not talking about branches. I'm just meaning names. That's a hell of a lot smaller list, isn't it? I made my life easier.

Zach Williams:

You did. Now, here's what's interesting too is you basically take the Amazon... What makes Amazon special? It's speed. It's service. It's ease. Right?

TJ Norris:

That's right.

Zach Williams:

You're taking that, and you're saying, "Hey, our product is great. We're not going to compete on product because you could splice it any different way, but when I can give you something they can't. It's a platform. It's... " You know what it is, TJ, and you haven't even said this word? It's technology.

TJ Norris:

Yeah.

Zach Williams:

You've got a technology platform. You've got a service-oriented business that's helping you get in with companies and sell at a volume that other people can't without as much overhead or that many people, and that, to your point, it's making your life easier. It's brilliant. It's brilliant.

TJ Norris:

The funny thing is, is when I knew brand wasn't a sales factor anymore was when my dad bought a Ford pickup.

Zach Williams:

Tell me more. What do you mean?

TJ Norris:

You're talking about a man with a heartbeat of America Chevrolet T-shirt on. When I realized that was, he goes, "Man, it was a good value, the lot that... It was closer to my house. They got competitive on the numbers," and the fact that he no longer cared what was on the front of his truck, it blew my mind. I realized, man, everyone I talked to, they don't care what's on the box. You know what? Nine out of 10 of my customers use my brand, and they've helped promote it. We'll do that, but I want to offer you my service and my product alone to start. That's the secret sauce. That's me.

Zach Williams:

Well, TJ, man, thank you so much for coming on. I mean, I literally see concrete trucks, big dump trucks driving behind you. I know you're busy, but this has been awesome. If someone wants to connect with you, what's the best way for them to do that?

TJ Norris:

Anywhere on social media. I'm on LinkedIn. I'm a big player on the Instagram market.

Zach Williams:

Oh, you are? Tell me.

TJ Norris:

I know that that's not-

Zach Williams:

What's your Instagram handle?

TJ Norris:

@iamtjnorris. You can find me on Twitter, Facebook, Instagram. Instagram, I mean, that's where I live every day. I just found that to be a really good inroad for product knowledge because all the guys are on there posting stuff all the time, and I get a one-up on finding what's the big problem that I can solve.

Zach Williams:

That's cool, man. That's cool. Well, TJ, thanks so much again. We'll make sure we link to that in the show notes too, but again, if you want more great content like this, go to venveo.com/podcasts. Until next time, I am Zach Williams. Thanks, everybody.

Voiceover:

You've been listening to Smarter Building Materials Marketing with Zach Williams and Beth PopNikolov. To get the resources mentioned in this podcast, visit venveo.com/podcasts. Thank you for listening.

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