That’s a wrap! This past week, dozens of building material manufacturers and suppliers gathered for two days of collaboration at The Building Products Customer Workshop, hosted by our team at The Farnsworth Group in partnership with Venveo.
Attendees partook in deep discussion and debate on how to define customers, how customer behaviors are impacting supplier and product decisions, and how to improve the interaction of sales and marketing. Ultimately, manufacturers and suppliers know they can’t just keep doing what they’ve done for the last couple of years.
Between now and the end of the year, we will be releasing more in-depth reporting on key findings specifically among each audience segment studied in the 2024 Building Products Customer Guide. But first, here are a handful of hot takes from the workshop.
It’s Time to Teach.
Teach the humans. Invest in educating all customer types, especially via how to videos. One of the most creative (and increasingly effective) ways manufacturers are teaching customers involves implementing strategic initiatives that enable peer-to-peer learning opportunities, such as leveraging influencers. We heard from one workshop participant that their collaborations with specific Pro influencers are the basis of their social media marketing strategy.
Teach the robots. Because 7% of building product customers (from homeowners to commercial professionals alike) report using ChatGPT and other AI tools to conduct product research, it’s also time to teach the robots. ChatGPT and similar AI tools are stealing share of search from home improvement store websites when it comes to comparing online sources of information. One workshop participant shared the creative ways in which his team is training ChatGPT to understand the true and false product use cases for their SKUs in order to get ahead of this trend and ensure that DIYers who use AI to research how to use their product are getting accurate information. Teaching AI how to accurately describe your products and product applications is another emerging tactic for product and marketing teams to consider for 2024.
Economic Hot Takes
The tumult of 2023 (between global inflation, Fed rate hikes, wars, and elections) will contribute to lingering consumer uncertainty in 2024, putting a manageable degree of downward pressure on both DIY and DIFM home improvement activities and spend. Despite this, and because of the lingering skilled labor challenges, contractors are more relieved than disappointed in current demand levels for remodeling. (More on addressing the skilled labor shortage in a moment).
And where is this demand being driven from, primarily? The aging housing stock plus retained high home equity are equating to positive tailwinds for the repair and remodeling sector despite a cooled new construction environment.
The current housing stock is an average of 40 years old, and in need of upkeep. The “lock-in effect” given high Federal Funds rates, which will indeed linger for longer, is forcing homeowners to make the best with what they have and adapt their property and homes to better fit what they want. It is most probable that in 2024 the Fed will hold onto the high, 5.5%, Federal Funds rate for the entire year, if not introducing another 25 to 50 basis point rate hike.
Further, the constrained housing supply has created an environment for increased home values and accelerated multi-generational living, both with younger generations living with their parents longer, but also retirees and parents moving back in with their children.
To gain market share, align your marketing and sales messaging in 2024 with these types of stage of life realities.
Innovate Products to Ease Impacts of the Skilled Labor Shortage
Findings from the 2024 Building Products Customer Guide continue to align with an industry wide understanding that the skilled labor shortage is not going away anytime soon. Workshop participants heard from nearly all of our honored speakers about how to start to address this challenge, both head on and through alternate means using product development efforts to innovate product-level solutions to human resources level problems.
From a high-level view, the construction industry is up against a record number of job opening, yet, like the entire nation, there are roughly 40% more job openings than there are job seekers. We heard the sobering annual income figures among the bottom three income quintiles, which provided a heightened level of clarity as to why this is occurring. Put simply, the market wages earned and current tax code combined do not create a financial motivation for income earners in the bottom quintile to pursue working a traditional, and labor intensive, job to reach the next quintile. Further, as there is a shortage of new workers coming into the industry, the rate of retirement of skilled construction professionals is widening the gap.
Because these labor challenges will not be resolved anytime soon by initiatives that are design to tackle this challenge head on, the pressure is on product development to create short-term solutions. Busy Pros need time savings and underskilled Pros need error-free installs that require little troubleshooting.
The success of brands over the next 5-10 years will hinge on how manufacturers design (and then market) their products to enable error-free install, quicker install, and reduced labor needs. Ultimately, it’s not that your products should be easy to install correctly. Your products should be impossible to install incorrectly.
Specific Ways to Win in 2024 and 2025
So, with all this in mind, what should you do to win sales in 2024?
Offer strategic rebates, and other point of purchase incentives, to Pros and consumers alike, to increase sales in a market environment of price sensitivity. For most product categories, it will be important to be perceived as the “best value” option, and POP incentives can help with that.
To know exactly what constitutes “best value” in the minds of your customers, ask them. There’s no time to guess incorrectly when the competitive environment is as strong as it is now heading into 2024. Find out exactly what your customers value by conducting custom U&A market research.
Stop waiting to deliver educational video content. Keep your video content authentic, direct, and uncomplicated. The use of Youtube for product information is high among all building product customer segments. Youtube is used by:
- 3 in 5 Architects/Designers
- 2 in 3 Builders, Remodelers, and GCs
- 1 in 2 of Specialty Trades
- 1 in 5 DIYers
Develop digital tools that reduce purchase friction and increase DIYer confidence that the right product is being purchased. “The Amazon Effect” is very real and has real implications in how your channel, marketing and sales teams need to go-to-market in 2024 and 2025.
You can treat the development of these digital tools similarly to how you would treat new product development, starting with gathering customer insights. Gain more tool acceptance and increase sales by understanding customer pain points, feature preference, and messaging for the customer experience tools.
Compete and Collaborate
Your entire company must again compete for share of wallet, which requires a strong, omni-channel approach to building products marketing and sales. You have to be everywhere, with a consistent message. This means, for example, that
- Your physical messaging should match your online messaging
- Your in-store packaging should match your online product imagery.
- Influencers should be identified and activated to bring a peer-to-peer level message to your target audiences.
- What AI tells researchers about your products should be true to its actual uses.
- You must ensure it’s straightforward for Pro and DIY customers to understand exactly which product option to purchase should become a top priority.
We know that resources are limited, which requires prioritization of your marketing dollars. You can reduce the risk of failed campaigns by first studying your customer’s path to purchase in order to invest more into the most promising channels.
Internally, take the initiative to foster sales and marketing alignment by becoming “smarketers,” which will enable success as an entire organization. Align your sales, marketing, and customer service departments around common revenue goals in order to serve customers better as “smarketers” rather than just teams of sales, and teams of marketing, and teams of customer service. The data shows that lack of adequate communication is the primary reason for brand switching among Pros, which is largely preventable. Ultimately, better customer facing communication will be the result of better internal communication, place emphasis on cross-departmental communication and strategic initiatives that bridge between marketing, sales, and customer service.
To round out the workshop, we asked workshop participants to share what specific action they would be taking this week to enable “smarketing” in their company. One participant shared with the group that she would be leveraging the time in the marketing team meeting to document a list of what assumptions the marketing team has regarding what the sales team would find helpful. Then she would bring that list to the director of sales and validate or debunk each line item, creating space for the marketing team to better support sales initiates and bring additional value to the end-customer experience.
Now it’s your turn. What specific action will you be taking this week to enable “smarketing” in your company to enable success in 2024?