More About This Episode
The Smarter Building Materials Marketing podcast helps industry professionals find better ways to grow leads, sales and outperform the competition. It’s designed to give insights on how to create a results-driven digital marketing strategy for companies of any size.
Zach and Beth talk with Steve Yates, president of Buildxact, a software that’s used by small residential and commercial building teams to produce quotes and run their construction projects. The firm has helped building crews around the world manage billions of dollars in profitable construction projects for the last ten years.
Tools for Building Efficiency in Construction
Steve has almost 30 years of experience in the building materials supply industry, but now he spends all of his time on Buildxact. “Buildxact is a construction management program for custom homebuilders and remodelers,” he explains.
“It began in Australia; we launched in North America last February to quite extraordinary results. We've had a fantastic 12 months. And it's delightful to see that the pain points that the builders and contractors have here are the same as in our more mature markets,” he says.
Buildxact’s main customers are small builders: They do about ten projects a year, with an average home value “just shy of $200,000,” says Steve. Buildxact allows customers to set up estimates and takeoffs for their projects, and account users can also manage their accounting processes inside the software. There are also scheduling tools to help manage projects more efficiently.
The software is certainly robust, and Buildxact has a birds-eye view of the supply chain right now. It has to take into account “the supply chain and the importance and the relationship of the building materials supply chain to the success of the custom homebuilders and remodelers,” explains Steve. “It's very good to have that perspective to see the industry both from the factory floor and from the end-user demand. It's quite an interesting perspective.”
What the Construction Industry Needs Today
Builders today have a few different pain points that Buildxact is looking to solve, but there’s one problem that stands out for everyone: “They will say to you that time is the thing they're most deficient in,” he explains.
Many might consider price as one of the biggest challenges that builders have to navigate in their projects. But according to Steve, “There's so many things that you can do as a manufacturer or a distribution channel to serve these customers, to have them go past price into other attributes, other benefits. I can't remember the number exactly, but it's extraordinary, [the] high percentage of projects in construction are not completed on time. And if you're a contractor, there's no better way to eat your overhead and profit than be late on project delivery.”
Manufacturers can address this issue with builders by making their products more accessible and less risky for builders to install. But that means “you have to really understand that it's the risk equation that the contractor is going to be making when looking at bringing your means and methods into their job. Does their labor know how to install? If they have no history, are they increasing the risk quotient on their project?” says Steve.
“So when you're delivering a product idea to them, you're also controlling means and methods and guiding installation specifications, etc., that allow you to make it more likely or more probable than not that the contractor will take the risk on the new technology,” explains Steve.
For an industry that’s been dealing with labor shortages and time constraints, Steve says that manufacturers have to consider how their products will actually address those issues for their customers.
“I mean, there are solutions, and it's a question of how can I start solving some of those problems? Which gets us to a bigger conceptual idea, which is if we spend a little bit more time thinking about our customer and our customer's pain points, rather than our own pain points, that time can be really valuable in terms of driving results in the market,” he says.
How To Sell Change To an Industry That Resists It
Steve and the team at Buildxact certainly have their work cut out for them: The construction industry is one of the slowest to adopt changes and new technology.
According to McKinsey, other sectors of the economy have adopted technology to keep up with consumer habits: “In comparison, much of construction has evolved at a glacial pace. Take one example: construction is among the least digitized sectors in the world, according to MGI’s digitization index. In the United States, construction comes second to last, and in Europe, it is in last position on the index.”
For Steve, that means he’s not really selling Buildxact — he’s selling an efficiency and productivity solution. “I would argue that none of us really have sold anything to anybody, right? If you really think about the transaction process, these salesmen can push at the door all day, but the buyer has to be the one that makes the decision, right? So if you subscribe to that, then all we can do is create an environment within which people will buy from us, right?”
For product manufacturers who want to deliver solutions to their customers, not just sell to them, that means you’ve “got to draw back down and bring that into his world and his pain points and just marry them up. And if you do that, you'll create an environment within which someone will buy from you,” says Steve.
And that also means building relationships with them, especially if you’re guiding them through a new product or building technology. Steve points out that connecting with customers isn’t just showing up at trade shows with a fancy booth. It’s about staying engaged with customers, even when they’re not at your trade show stand.
“Do you know how many of those manufacturers actually follow-up?” asks Steve. “Almost none. They spend all that money on that booth, and they don't do the really important thing, which is to build on the relationship that they set out to establish.”
There are missed opportunities all around us in the building materials industry, but “manufacturers are in a better position than most to really actually drive innovation in the market,” suggests Steve.
But manufacturers have to ask the right questions about the people that buy from them and to see things from a contractor’s point of view. “What does it mean [for] my labor force? What does it mean to my insurance risk if I bring in an untested building component? How does this relate to the other building components that I'm bringing in? How does it affect my timeline and my project?"
How To Stay Ahead in Construction
The building materials industry is “ripe for reinvestment,” according to Steve. The World Economic Forum has deemed it the “Fourth Industrial Revolution,” which Steve explains further.
“Data and the use of data to better understand your customer. Communications technology to be able to interact with the customer with more authority,” Steve explains. “But they also spend a lot of time on advanced building materials and pre-construction technologies, etc. I think within the last [few months], the first-ever 3D-printed house was sold in North America.”
In fact, entire developments of 3D homes are in the works now. If you’re a manufacturer, it’s time to pay attention to those developments.
Steve points out how much disruption is going on in the construction industry, especially when it comes to new building technology. “This is serious capital coming in and it's capturing the housing stock in this country,” says Steve. “And of course, that's going to cut out a lot of component building pieces on a large volume in new home construction.”
Manufacturers can take advantage of these industry shifts by looking at the demand for new homes and offering product solutions that address the time and supply constraints that builders are experiencing.
“Even if you just take a more topical or tactical view of things, put our feet on the ground for a minute and just look at the kind of demand,” says Steve. “Just to try to keep everybody happy, because they're so constrained on supply. It's a one-time opportunity to come in and create a new relationship with a client that you might not otherwise have been able to create.”
Want Even More Insight?
While many builders are risk-averse, everyone in the industry knows they need to innovate to stay ahead in the industry.
“So if you can look at the risks involved in innovation from their perspective and solve for it, answer the questions in advance in your collateral, then you're going to go a long way,” says Steve. “And I think the other piece is also to understand you're a component piece of a system. So to understand the relationship with your product to the whole, I mean, which I'm sure most manufacturers do.”
Steve says manufacturers can make waves in this time of already-explosive growth by simply carving out time to reflect on how they’re connecting with customers, “Where you actually dedicate that time in your organization and say, ‘What's my customer thinking? What pains is my customer dealing with today? What problems do they have that we could solve that we don't evidently see?’ And I think if the organization gave 90 minutes of that once a month, they might see some real opportunities to move the needle.”
For more perspective on the changes we’re going through in the building materials industry, give the whole podcast a listen.
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