Source: The Kula Ring

It’s Not About Price or Product: Solve Your Buyers’ Problems

Announcer: You’re listening to The Kula Ring, a podcast made for manufacturing marketers. Here are Carman Pirie and Jeff White.

Jeff White: Welcome to The Kula Ring, my name is Jeff White and joining me today is Carman Pirie. Carman, how’s it going? Happy Friday.

Carman Pirie: Happy Friday indeed, it is going well. I’ve got to say the people listening to this it may not be Friday for them.

Jeff White: No, it’s probably Tuesday.

Carman Pirie: There is a six out of seven chance that it will not be Friday for them and therefore we apologize.

Jeff White: But I think that’s okay. I think you’re allowed to record one day and release on another, it doesn’t have to be live.

Carman Pirie: This is true. I think what’s so interesting about today’s show is that, well, it’ll be interesting to see if we offend some people along the way. But it’s that we’re really bringing in an expert strategist that works with a particular niche of manufacturers. So we often talk to manufacturing marketers, client side. But we’re taking a bit of a different approach today. So, I’m excited about this. Jeff introduce him.

Jeff White: Yeah, me as well. So today we have Mark Mitchell with Whizard Strategy. He’s a strategic marketing consultant to the building material company industry, pretty interesting stuff.

Carman Pirie: Pretty specific. Mark, welcome to The Kula Ring.

Mark Mitchell: Oh, thank you. Thank you Jeff and Carman. I’m really looking forward to this.

Carman Pirie: Fantastic to have you here. Why don’t you just introduce yourself a bit to our listeners and tell them what you’re up to, and then we can start going from there.

Mark Mitchell: Well, I’m a consultant to building material companies, to help them grow their sales. I have been in this industry for 40 years. Started out in my early 20s working for an advertising agency that only did building material companies, and have stuck with it ever since. So I’ve worked with over 100 building material companies, and helping them solve their problems of how do they grow their sales. And everything in building materials is about the channel of distribution. If you don’t have the architect, the contractor, the dealer, the distributor, the big box buyer, the facility’s manager, the home builder, whoever you need on your side, it’s not going to happen.

Carman Pirie: I love the focus, Mark, and I really was excited in one of our earlier chats when you just told me that one of the things you find you help your clients with is that they just don’t know who they’re trying to sell to. And there’s an awful lot of discussion of course in the space of B2B. More broadly manufacturing marketing or what have you, around the expanding buying committees that people are faced with. There’s more people influencing the process, and it’s leading a lot of folks too, I think sometimes be confused about who they ought to be selling to and directing their messaging to. So, tell me more about that.

Mark Mitchell: Well, in the case of building materials, and I always start by looking and saying are we talking about, is this a product used in a new home? Or used in a new building? Or is this a product that you use when you need to replace your roof, or you want to new windows or something? And I start there and then I map out, how do we get from you, the manufacturer, to it being installed in the building? Who are all the people that have to touch that and what order does it happen?

Mark Mitchell: Who actually makes decisions, but who has tremendous influencing power over those decisions? And so, I find many times that an example is, I will go to the home builders show every year, and I will sit there with a client and I will watch my client sell a builder on their product. And their builder’s like, “Wow. This is fantastic, this is going to help me build better homes, faster, cheaper,” whatever it is. And he walks away from the booth with a brochure in his hand or whatever, and the sales person’s got a big smile on his face.

Mark Mitchell: I’ll make a habit of maybe six weeks later, I will reach out to that builder and just say, “Hey, I met you at the builder show, and I met you at this booth, and you seem really enthused about this product. Are you using it?” “You know what Mark? I’m not.” “Well, what happened?” “Well, it is a great product but I got back and I told my framing contractor that I wanted to start building this way, and he looked at me and he said, ‘Well, I’m going to have to charge you more, okay?’ And he’s like, ‘Yeah, but it takes less labor to do it. He goes, ‘yeah, but it’s different. So I’m going to have to charge you more.’

And so Mark, I don’t have time to go, I know I could fight this through. But I’ve got 100 other things. It’s a nice idea. I just don’t have time today to deal with this. So we’re just going to keep doing it the way we’ve been doing it.” So all of a sudden, it’s like, wait, was it really the builder? That’s the customer? Or is it the contractor? And you run into that all the time about, who really makes the decision? And who has, maybe has an influence? Or who has power over that decision?

Carman Pirie: So in that example, what are you going to suggest to your client who’s showing their wares at the home show?

Mark Mitchell: Well, I had this, it’s so funny, the same exact thing happened this year. I always had, at the home builders show, the architecture show or whatever show I’m going to, I will try to get a home builder and say, “Hey, will you spend a few minutes with me, I’d like to walk around and show you some things. I want to get your take on, is this a good idea? Is this product going to help you?” And I walked him to look at a plumbing product. And I walked him to look at a drywall product. And both builders, they all said to me, “Oh, this is definitely better than what we’re doing today.” And then their next thing was, “I wish our drywall contractors, or I wish our plumbers use this system.” And it’s like whoa, can’t you just tell them? Nope.

Mark Mitchell: I tell them, you need to install drywall in this many houses. What’s your quote? And if there’s a problem, you’re going to make it right. So you’re going to guarantee I’m going to be happy. I’m not going to tell the guy how to do his job. And so, what I have found is that you first need to go to the contractor in this case. You need to go to the contractor first and show them why their business will be better if they will use this product.

Mark Mitchell: Because frequently we also make a mistake about thinking that, the product benefits are the reason why this product is better, is enough to sell it. And it’s usually not. People will frequently look and say, “oh, Mark, yeah, that’s a that is a better plumbing system. It really is. But I don’t need it. The old fashioned one I’m using is just fine. Or builders won’t pay.”

Carman Pirie: I think it was Seth Godin that said that basically being better isn’t enough. That you have to be kind of 10 X better. The kind of threshold that something needs to get to in order to be worth the change. And I don’t know if there’s any science to that 10 X number.

Mark Mitchell: I agree with that. I think that, but I think that’s the one I found with my people. I deal with that’s kind of a scary number, that they can’t fathom. And I think that also in my mind has to do is if you’re just looking at product alone, and I also look at many times that people focus so much on the product, the manufacturer. The sales and marketing people focus on our product, our product, our product. And today, there’s also more and more, the customer looks and says, “You know, I know you want to hear this, but your product pretty much is comparable to your competition. You have a couple little things that are better. They have a couple little things that are better. But in the end, you’re both good enough. Okay? Now the next thing is how easy or hard is it for me to do business with you?”

I literally, this morning noticed a contractor installing glass walls to create a conference room in a building. And I saw him install it last week and I saw him yesterday take it back down. And I stopped him on my way to meet with you this morning. I said, “what happened?” He said, “Oh, well the manufacturer drilled the holes half an inch wrong. And so we had to take it this whole thing apart and they had to ship us all new glass panels.” And so I said, “How often does that happen?” He says, “oh, more often than who you know, you believe.”

Mark Mitchell: And so right there, it’s like he doesn’t, he’s not having, just because their glass is better doesn’t matter. If I send you a drawing and you can’t ship me the glass that’s accurate. You just cost me probably my profit on this job. Because I can’t go back to the owner of the building and say, “Oh, they shipped the wrong glass, I’m going to have to charge another $300 to reinstall it.” That’s not going to happen. So the point, so there’s, the how easy or hard is it for you to do business with me? And then, the next element that I find is if you understand my business can you help me to be more successful or solve other problems that I’m facing right now.

Mark Mitchell: Can your product, if I’m a builder and I can’t get enough labor? Can your product help me? Does it take less labor to install? Can you show me, I’m really afraid of concern. We have an industry that hasn’t changed in decades, that in the last few years is going through massive disruption in terms of sourcing materials, designing buildings, how buildings are built, they’re being built in factories now instead of on job sites. This is scary stuff. And so I’d like to partner with the manufacturer who understands what’s happening, and can guide me and work with me. To help me to move through this transition.

Mark Mitchell: And then the fourth element I find people miss, is they think that it’s my company selling a product to your company. And they don’t stop a minute and say, okay, there’s an individual making the decision here. What’s the persona of this individual? If they’re at an architectural firm, is this person, a young person who’s trying to get promoted to become a partner? Are they a senior person that’s already a partner? And they’re worried about how do we get the next project? Well, I start to understand that, now I can look and say gee, how will my product help you look better to your bosses. So you’ll get promoted to partner? And how will my product help you get more hotel product design projects?

Mark Mitchell: And, so people forget about, there’s also an individual, and you want to have that somebody be your champion, within that buying committee. Someone who’s really going to believe in you and fight for you. But we tend to step back and keep a kind of antiseptic looking like a company to company, product, and price. And that’s it. Make sense?

Carman Pirie: So there’s kind of two, yeah, absolutely. There’s two pieces to that. I mean, there’s the notion on the one hand that, what you’re telling me is manufacturers are a lot more comfortable talking about the specs of their product or what have you. And less comfortable, perhaps messaging around the more nuanced benefits, like you say, industry is undergoing massive disruption. I’m looking for a manufacturing partner that can help me navigate that. I don’t know, I think part of what you’re saying is that the manufacturers aren’t used to having those conversations. And then going one step further, they have to have those conversations with a human, not company with a company.

Mark Mitchell: Right and, so one of the ways that I help manufacturers get around that, is I will always when I meet with an architect, a builder, distributor, dealer, anybody. One of the questions I always ask them is, who are your three favorite suppliers? I don’t care what they sell you, but who are they, and why? And they can immediately name three companies. And literally, I would say so, if somebody came to you and they were 10% cheaper than these three, would you switch? And they look at me like, probably not. Because, these companies, it’s the company itself and the sales rep really understands, what’s going on in my business and my life.

Mark Mitchell: What is it like to be a home builder? What are the challenges a home builder is facing today? What can happen, what is most likely to happen to turn a profit into a loss? How worried am I about homeowners complaining about me on Facebook? Why am I, who’s my competition and how do I differentiate myself? What are my goals for next year? Do you know those, do you know my business plan? You should. And, so what I find is those top three know all of those things. And so sometimes it helps people to go, oh, okay, I know those people. All right, I can use that as a benchmark.

Carman Pirie: So my question is, for those top three suppliers said it in that moment, of course, chances are, that’s been a relationship that’s been cultivated over a number of years, whereas the challenges of course for marketers, potentially even bringing new products to market, would be how do they communicate that ease of doing business. How do they communicate that, they’re going to be able to get to that trusted partner status that you just described? Without already being there?

Mark Mitchell: So, one is it does not, people can get mixed up and say, okay, there’s a great sales rep in Ohio. And all of his builders love him and it’s the rep, it’s not the company. And there are reps like that. But when you’re really doing it, right, the company itself has the philosophy. And it’s just how the company operates. Marvin Windows is a company that to me has a reputation like that. It frequently pops up on when I ask, who are the top three. I will hear Marvin. And it doesn’t matter who the local rep is, I mean, they certainly are important, but they know that it’s the core of the company. It’s their mission, that’s how they do business.

Mark Mitchell: And, when we do something, Jeff, there’s things that you do, that you do very well. They just come naturally and so you’re just kind of like, well, duh! How hard can this be, if I can do it? And so I many times follow that same problem. So, last year, a sales rep for a client of mine called me. And he said, “Mark, I’m going to meet next week with 15 lumber dealers. They’re having their state convention, and I paid $350 to be a sponsor. And that entitles me to 15 minutes sitting at a table with these 15 lumber dealer owners. Mark, what should I do with that 15 minutes?”

Mark Mitchell: And I said, “Okay, well, the last thing you should do is talk about your company or your product.” And he’s like, “Huh?” And I said, “Okay, I’m going to send you talking points. I’m going to send you just a series of things to just talk with them about.” And, so, I sent him, I think was like six different points. It’s kind of like, wow, how do you guys as lumber dealers, how do you continue to succeed, in the face of people like Lowe’s and Home Depot wanting to take all your customers? How do you succeed today when builders are getting bigger and more sophisticated and more demanding of you?

Mark Mitchell: And, I went through like, and how do you succeed when your largest manufacturers all of a sudden, you’re not very important to them? Like, you’re a second class citizen now compared to Lowe’s or Home Depot, or maybe selling directly to somebody. How do you do that? And he was just curious, just asking questions. So, he called me that afternoon. And I said, “Well, how’d it go?” He said, “Mark,” he said, “two hours later, I had to leave. Because I had another meeting. So my 15 minutes turned into a two-hour discussion.”

Mark Mitchell: “So I started talking, and these guys heads were nodding up and down. I didn’t have answers. I was just like, wow, how do you, wow the challenges you’re facing? How do you do that? Because I want to know how we can help you.” And so he said the 15 lumber dealers said three of them, we currently have as customers. And so 12 of them we don’t. And he said, three of the people sitting at the table, handed me their business cards and said, “I want to talk to you, any company that understands our business, the way you do is somebody we should be doing business with.”

Mark Mitchell: He never once talked about their prices, never once talked about why their product is better, or anything. That’s all he did. And 15 minutes turned into two hours. And all of a sudden, these people go, this guy, and I think this company gets it better than most of the companies we buy from. And we need to be dealing with more people like this.

Jeff White: It sounds like, we often say and we’ve heard other consultants mention this to us before, you want to you want your customers to feel like you’ve had a camera in their office, and have heard the kinds of conversations that they’ve been having about the struggles that they have. And, that you’re able to pinpoint those and get them thinking about it. It’s a little voyeuristic, but.

Mark Mitchell: That’s a great way to put it. Yeah, that’s a great way. I’m going to, well, I mean, you want to be careful how you put it. But, that’s, a great way to put it because I first tell people, well I’m just naturally curious. And I guess, maybe that’s different. But, I’m just naturally curious. And so, the idea of learning a little bit more about the business, the business of being a lumber dealer, then learning about that lumber dealer versus the other. Who his competition is. Just Google checking any news articles. Did they acquire somebody or they were just acquired? Any of those things now provide me great information to have a discussion.

Mark Mitchell: And the other problem is, it’s okay to go in there and not be an expert not have answers. It’s going in there with questions and the right attitude and interest and concern, is really what gets them.

Announcer: The Kula Ring is proud to be a media sponsor of the 2019 ManufacturED Summit conference being held September 16-18 in Chicago, Illinois. Carman and Jeff will be live on site recording interviews for future episodes of The Kula Ring. Save $200 now with the discount code KULAPARTNERS200 at manufacturedsummit.com. That’s manufacturedsummit.com.

Carman Pirie: I think this is fantastic sales advice. And provided you’re having that conversation with somebody that’s reasonably senior in the firm and is somewhat responsible for future value creation in the firm, and has to be challenged to dealing with those problems. And of course, I think you’re going to be well positioned to set yourself up for a good conversation. And to come across as a thought leader, along the way, simply by asking smarter questions than others.

Carman Pirie: But, I guess I’ll push back a little bit. And just to say, I’m not sure how,marketers aren’t always the ones in those conversations.

Mark Mitchell: And that’s the problem.

Carman Pirie: And I do think that in some ways, marketers are challenged with how do they communicate. They’re the type of company that will ask smarter questions. Without actually having the person in there doing that at the $350 sponsored a 115-minuteconversation.

Mark Mitchell: Right, so this is a very big problem, particularly in building materials and maybe across, across the manufacturing universe. But, but, where we’re building materials I always make a joke. Well, it’s like I say, it’s run by too many old white guys. And, it’s like the marketing in building materials is 10 years behind the rest of the world.

Mark Mitchell: And, so marketing many times, it’s called marketing, but it’s really an art studio. And so that’s run by the sales manager, and the sales manager tells the marketing department what to do. Like we’re going to this trade show. I need to design a booth. I need another brochure. I don’t, nobody uses social media, that’s what my kids use. We don’t need a social media program. Marketing in many cases is not, what do I say, it’s not appreciated or respected as much as it should be.

Mark Mitchell: And then there are some companies that, it’s getting better every day but it’s still. I can, twice a year I do a workshop where people come for two days to Boulder, to learn how to be a better sales or marketing person in building materials. And marketing people, they’ll say, “Mark, everything I’ve learned is last two days exactly what we need to do. How we need to improve our digital marketing. How we need to do this or that but help me argue with the owner, about why we need to do this. What, how do I do this.”

Mark Mitchell: And then, the second one they’ll say is like, “Mark we’re not, we have no connection with the customer. We can’t get, we can’t ride along with the salesperson. They’ll go, ‘Oh, that’s a waste of time and money. We’ll tell you what this customer needs.’” And so what I’ve told them is, you create your own panel of customers. You go meet, on your own go meet a builder, and just say hey, I’m in marketing for this roofing company. I really want to learn more about home builders and roofing. Could you help me? And you’d be surprised in 90% of builders will say, please, how can I help you?

Mark Mitchell: So you can create your own little panel of customers as a marketing person, and that you make sure you’re doing a better job.

Carman Pirie: So basically, the instruction to marketers is, they can pretend in some way or at least get themselves into conversations that are more-

Mark Mitchell: … research.

Carman Pirie: And not sales in nature, but are the types of conversations where sales people get the insights of course. Yeah.

Mark Mitchell: You’re doing market research, you’re not selling anything. You’re doing market research on your own. And don’t ask for permission, go do it. And, if you go to a trade show, don’t stand around and worry about if the carpet was vacuumed last night, start talking to the architects or builders that are at the show.

Carman Pirie: And then, of course, the act of doing that can’t help but inform the marketing that is produced. So I think that’s a fair point.

Mark Mitchell: Yes. Well, I think that you get the senior leadership of the company and senior sales people start to go, wait a minute, this marketing person’s asking surprisingly good questions. They’re having surprisingly good observations.

Jeff White: Maybe this company does get it.

Mark Mitchell: Yeah, maybe I don’t know. In some companies, it can be quite frustrating as we all know.

Jeff White: For sure, I want to get into a little bit, and you’ve alluded to some of this around the challenges and changes that are going on in terms of, how, in the case of your industry, how building materials are being distributed and sold and how that is not going through the traditional channels so much anymore. And we’re seeing that with other manufacturers that we work with. Where their distribution channels are getting disrupted and shaken up. What do you think is the next state of distribution for building materials? And where’s that going?

Mark Mitchell: That’s wild, it’s really, if you want to see what’s driving it, there’s a company called Keterra. K-E-T-E-R-R-A. And they would say that they’re a technology company, that happens to be in construction. And, so they bring a Silicon Valley mindset to construction. They went to Wall Street and said, you know, the one industry in the whole world that has not had any productivity improvements ever is construction. We want to change that. And Wall Street sat there and said, “Wow, wait a minute. Yeah, when I bought my first flat screen TV, how much did that cost? And how much is one cost today? How come a house or a building still cost 30% more than it should, and takes a lot longer. And I have to put up with a lot of questionable quality workmanship. Why is that in today’s world?”

Mark Mitchell: And so, this whole, the whole shift is now moving toward reducing waste and inefficiency. It’s not about build it cheaper. It’s not about, how much does your product cost. And so the industry’s been stuck in a thing about, these are my product features and here’s how much it costs. And so they think the customer only cares about, can I buy it cheaper? If you want to sell something, just have a cheaper price. And, there’s still large parts of the industry that are stuck in that mindset but, the people that are going to turn the world upside down, don’t really care about the price of an individual product. They’re looking at the whole picture.

Mark Mitchell: In Manhattan, Marriott has announced two weeks ago that they’re building a 168 room hotel. I forget how many stories it is, 20 or so stories. And they’re going to build it in 90 days, and unheard of, by, tradition how you build a hotel. Which is probably more like two years. Now the hotel is being built in modules, and those modules are being built in Poland. So there’s a factory in Poland making every bathroom every guest room, every room that goes in that hotel and shipping it over. And then a crane will sit there in 90 days, put this thing together like a bunch of Legos.

Mark Mitchell: So, if I’m a hotel developer going, let’s see, if I could build my hotel in 90 days, I’d be paying my construction loan for only 90 days, instead of for two years. And I’d have customers paying, renting, reserving rooms and paying me money. A year and a half sooner. Mr. architect and contractor that’s built the last 10 hotels for me, what are you going to do about this? Can you compete with this?

Carman Pirie: And a 10% reduction on a couple of building materials and all of that mess doesn’t make much of a difference, does it?

Mark Mitchell: No. And so what happens is they’ll say, if I say, a new measure, there’s another really interesting guy to follow. It’s a company called Entekra, E-N-T-E-K-R-A. And they’re in Northern California, but they come from Ireland, and there’s this crazy Irishman named Gerry, G-E-R-R-Y McCarthy. And he is the Pied Piper, or the Evangelist for, I call at the factory built construction industry.

Mark Mitchell: And, four years ago, my sister who was a VP of Marketing for a home builder in Ohio that built 600 homes a year, she called me and said, “Mark, I went to this Builder Association luncheon. And, there was this crazy guy from Ireland who came in for one hour insulted us about what stupid builders we are. And what horrible homes we build, they cost too much. It’s just, I’ve never paid to be insulted like that.” She said, “Mark, you’d like this guy.”

Mark Mitchell: So now, I encourage you to like just follow him on LinkedIn. It’s amazing. It’s just amazing. And so Louisiana Pacific, I think just made a huge investment in his company. And he keeps every day driving home the point about, Okay, gee, this home got built in this much time, how long is it taking you to build your own? Oh, let me show you the quality control we have on how we build. What’s the quality control on your home? And she’s just relentless. So this is like waking people up.

Mark Mitchell: And so you as a manufacturer can either say, “Okay, I can get out ahead of this.” And I can be saying to my builder customers, “wow, look what’s coming. We’re working to find ways to help you be more competitive as this world changes.” That builder’s like, “great, glad to hear somebody selling the case. Because I don’t know what to do.”

Carman Pirie: It does seem that those builders in some way, maybe fighting a losing battle, though, doesn’t it? I mean, with that level of disruption.

Mark Mitchell: It’s, well, I think if we go, I think it’s going to happen. Some people tell me, 20 years, but I think the way change happens today. And I think the biggest problem is there’s there’ll be a capacity issue, for how much Keterra I think is going to build, like six more factories around the United States, in the next two years. But even then, they can’t put a dent in how many homes are going to be built. But it’s going to just keep happening.

Mark Mitchell: And so the home builder himself, the whole way the buildings are constructed is going to dramatically change, in the next five years. And so, if you’re a builder, you probably aren’t, need to be focused on I’m really going to be a sales and marketing company. I sell homes. It doesn’t really, like I’m a car dealer. It doesn’t really matter who makes the home. Or I mean, it does but not, it’s no longer me out there in my boots in the mud, worrying about, if Henry showed up today, to do that, to put the doors in.

Mark Mitchell: And so there’s interest this, Gerry McCartney told me like, the new metric, he says when a builder comes to me and says, “I’d like to talk to you about building my homes.” And he’s like, “and by the way, Mark, I can’t take anybody, I’m sold out. I can’t take any more customers, so I’m not looking for, but builders still come to me.” And I will ask them, how much does it cost you for every extra day it takes you to complete the house? And, they can’t answer that question.

Mark Mitchell: And, if they can’t answer the question, then I say, I can’t help you. Till you understand, because that’s the value that I bring to you. So until you understand that, that if you right now, you buy a new home from a builder, it’s going to be at least seven months till they’re going to hand you the keys to move into your home.

Mark Mitchell: And, so that everyday cost that builder, I don’t know. $300 a day, Gerry would say that it’s $500 a day. Which I’m not sure that seems a little high to me, but so if it takes 30 more days to build a home, that means it cost me $15,000 more. If I could sell a home 30 days faster, that means theoretically I save $15,000. So what do I care if these faucets are $25 more each, if they can, if the bathroom can be built faster?

Carman Pirie: So beyond changing in some ways, who the manufacturer selling to, and how they think about is basically pushing the building material manufacturers to also think about more modularity or in what they make or just help me understand that a bit.

Mark Mitchell: Yes, there’s going to be a lot more, well, the industry right now is trying to wrestle with, what are the terms. But you hear terms like factory built, prefab, modular, penalized, volumetric modular. But the whole idea is, it’s not built on site. And it’s all about reducing waste and efficiency getting it built, cheaper, faster, better, that they would say. You get all three. And so your mindset needs to be on how am I going to do that?

Mark Mitchell: There will always be custom homes that are built from scratch. There will still be, famous buildings, art museums and so forth or statement buildings, that will be built from scratch. But more and more, you’re going to be building, mock parts of the house and the building are going to be built in an automated fashion.

Mark Mitchell: In 1950s, a carpenter came to the job site and he made your windows. He built your windows, he had pieces of glass, cut wood, he took word cut it, and made windows on the job. He also made your kitchen cabinets in the 1950s. Well, we wouldn’t think of doing that today. But that’s how we did it. And so we’re just now taking on I think what I’ll call the structure of the building.

Carman Pirie: Yeah. And I see it very clearly.

Mark Mitchell: You ask if I can just, you asked at the beginning this thing about distribution. So now another issue with these people, well say like Keterra and Entekra, who are trying to drive waste and inefficiency out.they’re looking and saying, Okay, what role does the distributor play? How much does it cost me to have my product go through a distributor and are they providing value? A commensurate amount of value? And, if not, then I’m going to go to the manufacturer direct, and I’m going to buy it directly from them.

Mark Mitchell: Or if I can’t get the value of product from manufacturer, I’m going to make it, I’m going to go to China and make it myself. So like Keterra makes all of their own kitchen cabinets, lighting, flooring, bathroom, faucets, and more. And it’s not like they first sit down with the manufacturers and say, this is what we’re looking for, can you deliver this? And if they say no, then they go, Okay, we’ll go figure it out ourselves. And so that, it’s also disrupting. You really have to be you know up your game about the value you’re delivering.

Mark Mitchell: So at the end, it’s going to be interesting the role of the distributor as we go forward, both from if I’m now buying direct, I don’t need a distributor. I think the distributor will have a role in certainly retrofit and remodeling and repair. They’ll have a role when they do things like job site delivery of something heavy, like roofing or drywall. But you brought up also the advent of Amazon. I’m seeing more and more my clients are saying, “okay Mark, we sell through Home Depot and Lowes.com and now we want to get on Amazon, what should we do?”

Mark Mitchell: And so Riddick products, I would never order online. People are, they’re doing, their business is doing quite well.

Carman Pirie: Yeah, it’s interesting to think, if you’re sitting there in the distributor shoes, they’re really challenged to figure out how do I add value in this situation, and they’re kind of getting it from both ends. Like you say on the one end is the pressure to buy direct from manufacturer and on the other end is more digitally savvy distribution models like Amazon. I think the challenge for the manufacturer of course is, not every manufacturer is set up. Or even has the sensibility of how to deal with people directly. One of the-

Mark Mitchell: Or they’re not.

Carman Pirie: … things they’ve loved about distributors over time is that it keeps them from the great unwashed customer.

Mark Mitchell: That’s right. You’re, oh boy, you’re so right there. Yeah.

Carman Pirie: So, it’s a real challenge for this manufacturer to figure a way to pivot and to make that a more natural part of their DNA.

Mark Mitchell: Right. No, it’s going to be a challenge for all of them. And I think the one that, I think just some of them unfortunately, think short term. They’ll just think about an order, versus they think about what am I really doing here? So, you have to kind of choose, are you going to be loyal to your distributors? Which you can, but you have to recognize, what are you going to do. And, or are you going to, let’s say do, you’re going to sell to distributors, and sell direct.

Mark Mitchell: And that, okay that can be fine too. But, you need to figure out, how’s that going to change your relationship with the customer? And to your point, are you staffed to deal with that? You’re going to have these pesky questions that you’re not used to getting. Are you prepared to deal with those?

Carman Pirie: Asked by people you’re not used to dealing with? Yeah.

Mark Mitchell: Yeah.

Carman Pirie: Well, we haven’t provided a solution to every problem in the last 30 to 40 minutes. But I think we’ve-

Jeff White: … we’ve identified lots of them.

Carman Pirie: Yeah, and had a robust conversation around that, which has been fantastic. Mark.

Mark Mitchell: I’ve really enjoyed this.

Carman Pirie: Yeah. Thank you very much for taking the time to chat with us today. And thank you so much for your insights.

Mark Mitchell: Sure. Glad to share them.

Carman Pirie: Wish you all the best.

Mark Mitchell: All right, thank you. Thank you.

Jeff White: Thank you.Announcer: Thanks for listening to The Kula Ring, with Carman Pirie and Jeff White. Don’t miss a single manufacturing marketing insight. Subscribe now at kulapartners.com/thekularing. That’s K-U-L-A partners dot com slash The Kula Ring.

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