ProBuild Raises the Bar on Technology

Jim Moody , CAE
President

Last week I mentioned my concerns about ProBuild as a competitor. This week, I’d like to comment on ProBuild’s new technology package and dig into the industry’s use of technology.

But first, I want to address comments made by some of you on last week’s entry. I’m thrilled that the column generated comments. Diverging opinions are welcomed – even encouraged. Thanks to all of you who posted. My goal is not to have the last word, and I certainly won’t pretend that I’m always right. What’s important to me is creating a meaningful exchange of ideas that provides some useful information and builds a sense of community. My only requests are that comments remain in good taste and free of personal attacks (whether aimed at me or other commenters). All commenters last week followed those guidelines.

Now, to the technology issue. ProBuild is spending millions on a new technology platform called ProEdge, according the May issue of ProSales. ProBuild has about 200 full-time staffers and 100 consultants devoted to IT and will spend about 2% of revenue (in 2008 that would have been about $88 million) on technology in 2009. The goal is to integrate the legacy systems of dealers acquired by ProSales onto one platform and then to provide data in more granular detail than is typical in this industry. Once the system is up and running, the technology spend will drop to 1.5% of sales, and the expected return on investment is 7-15%.

In contrast, ProSales notes that the majority of dealers in the ProSales 100 spend less than 0.5% of revenue on technology. Almost half spend less than 0.25%. And that’s the biggest dealers. My anecdotal experience tells me that even those low numbers may be generous for the entire industry.

I’m not suggesting that this is the year for a major technology spend (maybe it is for some, but I know so many of you are in survival mode this year), nor am I suggesting that technology is as important in this industry as it is in others. (In the ProSales article, one of the leaders at ProBuild notes that his previous experience at Fidelity Capital was in spending 22-30% of revenue on information technology. There would almost certainly be unfavorable return on that kind of spending in the lumber business.)

What I am saying, however, is that one member of the competitive pack is about to set the bar higher. This could quite possibly raise the expectations of customers. As you go forward, you might want to think about how you can get the most out of IT rather than viewing it as a necessary evil.

Have you invested in the training you need to get the most out of your existing systems? Do you have a website? Is it just a “brochure,” or can customers access their account through it? Can you track orders? What about online purchase orders? Can you invoice/receive payment online (assuming you want to do that)?

Craig Webb, editor of ProSales and a good friend of CSA, has posted a related article from Bob Wiltse on how to use IT as a sales generator on the ProSales website.

So, how do you view this information? Is ProBuild spending too much in an industry that has never seemed to need as much technology infrastructure as some others? Will they fail to see a return on the investment because the customers don’t care too much about technology? Is it wiser to minimize technology spending as much as possible?

NLBMDA News - CPSC to Ramp Up Testing of Chinese Drywall

CPSC to Ramp Up Testing of Chinese Drywall
During a May 21 hearing in the Senate Commerce Subcommittee on Consumer Protection, Product Safety and Insurance, Sen. Bill Nelson (D-FL) noted that the Consumer Product Safety Commission (CPSC) would be receiving $2 million in additional funding, approved in a supplemental appropriations bill that day, to ramp up testing of problematic drywall in homes in Florida, Louisiana, Virginia and other states. Read more.

NLBMDA News - EPA to Require Contractor Certification for Lead Removal Projects

EPA to Require Contractor Certification for Lead Removal Projects
Dealers should be aware that, beginning in April 2010, the U.S. Environmental Protection Agency (EPA) will require contractors to be certified to perform renovation, repair and painting projects that disturb lead-based paint in homes, child care facilities, and schools built before 1978. Read more.

NLBMDA News - New Credit Card Law Impacts Retail Gift Cards

New Credit Card Law Impacts Retail Gift Cards
The recently enacted credit card legislation, the Credit Card Accountability, Responsibility, and Disclosure Act contains a provision impacting retail gift cards and gift certificates. Specifically, the new law prohibits the imposition a dormancy fee, an inactivity charge or fee, or a service fee with respect to a gift certificate, store gift card, or general-use prepaid card unless certain disclosures are made. Read more.

NLBMDA News - House Committee Clears Energy-Climate Change Legislation Establishing National Energy Code

From NLBMDA....

The House Energy and Commerce Committee spent the week prior to Memorial Day considering nearly 100 amendments to the "American Clean Energy and Security Act" (H.R. 2454) before passing it out of Committee by a vote of 33-25. Four Blue Dog Democrats voted against the bill: Reps. Mike Ross (D-AR), Jim Matheson (D-UT), Charlie Melancon (D-LA) and John Barrow (D-GA). Rep. Mary Bono Mack (R-CA) was the sole Republican to vote in favor. The bill contains a section on "Building Energy Efficiency Programs" which calls for a national preemptive building code energy efficiency target that achieves a 30% reduction in energy use over current building codes at the date of enactment and a 50% reduction for residential buildings by January 1, 2014 (and for commercial buildings by January 1, 2015). Rep. Steve Scalise (R-LA) offered an amendment to strike the building code language but it was defeated by a vote of 31 to 20. Read more.

NLBMDA News - Health Care Reform

Senate Finance Committee to Take Up Health Care Reform This Month
With Congress resuming work this week, a lot of eyes will be on the Senate Finance Committee's efforts to pass a health care reform bill out of committee. While there are hundreds of issues, the three marquee issues are whether the government will offer a "public option" for obtaining heath care benefits, whether there will be mandates for individuals and/or employers to participate and some determination of the fate of the current exclusion from income of employees for the value of health care benefits received through their employers. Read more.

House Republicans Propose Alternative Health Care Reform
The House GOP Health Care Solutions Group, chaired by Rep. Roy Blunt (R-MO) last week unveiled an alternative to the expected Democratic plan that will likely include a government-sponsored health plan and mandates on employers and/or individuals. The GOP alternative aims to increase access to health care and to reduce health care costs by removing wasteful and fraudulent activity in our nation's entitlement programs and changing rules that allow trial lawyers to get rich off of medical liability lawsuits. The plan proposes pooling opportunities and incentives for states to form regional partnerships in order to help small businesses provide health care to their employees.

6 Top Rules of Advertising

By Bob Janet, Sales Growth Expert

Copyright Bob Janet 2009

1. Never run an advertisement unless you can measure the results.
2. The only reason to advertise is to make sales.
3. Only advertise in places your customers will see your marketing.
4. If your advertisement worked once it will work again.
5. The best form of marketing is 3rd party recommendations (referrals - word of mouth).
6. Make your advertisements look different than your competition. Be noticed and remembered.

Join Bob Janet's Profit Club for more FREE tips and ideas
Bob Janet will be speaking at the CSA Summer Management Conference in July. Click here for more information about the Summer Management Conference.

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NLBMDA is pleased to report that Reps. Dan Boren (D-OK) and Jim Jordan (R-OH) reintroduced the NLBMDA-promoted "Innocent Sellers Fairness Act" (ISFA), H.R. 2518, in the 111th Congress on May 20. The legislation would provide product liability protection to those businesses that only sell products but did not manufacture them. Read more.

NLBMDA News - SBA Announces New Business Loan Program

From NLBMDA....

On June 15, 2009, the U.S. Small Business Administration (SBA) will open up a new temporary loan program called "America's Recovery Capital (ARC) loans," which will be loans of up to $35,000 can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. Read more.

Summer Management Conference Registration Form

REGISTER NOW for the CSA Summer Management Conference.

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For detailed information about the Conference, click here. For more information, please call 678-213-2164.