Insights on the Construction Buyer


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Key research findings from BuyerZone on how to successfully sell to construction businesses.

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Insights on the Construction Buyer

  1. 1. Insights on the Construction Buyer Key research findings on successfully selling to construction businesses What you’ll find inside: EXECUTIVE SUMMARY ................................................................................................. 2 W HO ARE CONSTRUCTION BUYERS AND WHAT ARE THEIR KEY CHALLENGES?................. 2 THE BUYING PROCESS ................................................................................................ 3 COMMUNICATION METHODS ........................................................................................ 4 CHOOSING A VENDOR ................................................................................................. 6 W HAT DOES THIS MEAN FOR YOU?............................................................................... 10 APPENDIX: ABOUT THE RESPONDENTS......................................................................... 11 ABOUT BUYERZONE ................................................................................................... 13
  2. 2. Executive summary Knowing how potential customers make purchasing decisions is a key to sales success – particularly in the rapidly changing world of construction equipment and services. We recently surveyed construction businesses that used BuyerZone’s Quote Connect service to learn how they make purchases and what’s important to them in the sales process. Our key findings include: 1. Determining what method of communication your prospect prefers is critical: the two most popular opinions on cell phones for sales calls are ―least preferred‖ and ―most preferred‖ – not a lot of gray area, there. 2. 79% of respondents rated responsiveness as ―very important‖ in a sales representative – more than any other characteristic. Other characteristics are important as well, but responsiveness is critical – and completely within your control. 3. Word of mouth is the biggest source of new vendors for these construction businesses, (75% of buyers) but general Internet searches are just behind at 71%. If you’re not a well-known name, you’d better be easy to find online. 4. Not only should your web site be easy to find, it should be easy to navigate and loaded with information – including prices. While it can be a challenge to provide pricing, it’s the number one piece of information construction buyers are looking for on your site. 5. You don’t need to jump on the social media train yet to talk to these buyers. They’re not technophobes – but they’re not using Twitter or Facebook when looking to buy, either. Who are construction buyers and what are their key challenges? Our sample included responses from 495 businesses that recently made a construction equipment purchase. About a third work for very small companies, with annual revenues under $500,000, about 10% work for larger firms with over $25M in revenue, the rest are in between. Note: detailed demographics are available in the Appendix. We asked an open-ended question regarding the biggest challenges these businesses face today. Predictably, the number-one concern is the economy, an overarching issue that seems to influence almost every other concern. Here’s a sampling of the most common answers: Staff. Finding and retaining good staff in unstable times is difficult. Fuel. Prices of fuel and other raw materials aren’t letting up. Wasted time. Whether it’s chasing leads that prove invalid, or bidding on a project only to be undercut by price-gouging competitors, wasting time on buyers that don’t lead anywhere is a primary concern. Lack of construction jobs and value. Large constructions jobs are few and far between and what jobs do exist are very small and pay less. There is a clear loss of perceived value in the market. Maintaining cash flow. With fewer jobs out there, paying recurring expenses becomes a challenge. Regulations. Banking regulations, government building regulations and safety regulations remain top of mind. Residential housing market. When the housing market slowed down, so did building. 2
  3. 3. The buying process How long does it take? Just over half of the construction businesses surveyed make purchasing decisions within one month— great news for vendors. Of these, the largest sector (34.5 percent) take between one week and one month to decide; the rest, 17.6 percent, report making decisions within a week. Who makes buying decisions? A little more than a third of the companies – 36.4 percent – leave purchasing decisions to management. Only 16.8 percent of businesses have their own centralized purchasing manager. Predictably, larger companies are more likely than smaller companies to have a formal purchasing process. Businesses working in commercial construction are also more apt to have a centralized purchasing structure than residential construction firms. The second-most popular method of purchasing is also the most disorganized: on an ad-hoc, as-needed basis—most common with the smallest companies. Only a very small number (6.5 percent) work under broad purchasing guidelines, where decisions are made on the department level or by subcontractors. 3
  4. 4. Communication methods Communication is the grease that moves the sales engine through to closing. Construction businesses not only have strong opinions about the best way to communicate, but these opinions change as buyers move through the sales cycle. Vendors should determine exactly how construction buyers want to be contacted, and when it’s appropriate—or even necessary—switch to a different method. Email is preferred overwhelmingly as the best method to use as the sale gets underway: 82% of buyers prefer or strongly prefer to be contacted via email early in the sales cycle. Office phone came in a distant second, with 44% saying they prefer or strongly prefer it; even fewer want an in-person visit or postal mail. Cell phones and instant messaging were the only two methods with the plurality of responses as not at all preferred,‖ the lowest rating. Communication methods preferred or strongly preferred by buyers 90% 82% 75% 80% 70% 60% 55% 46% 44% 50% 37% 33% 36% 40% 40% 25% Early stages 30% 25% 23% 16% Final decision 20% 13% 10% 0% Email Cell phone Office Mail In-person Instant Fax Phone visit Message 4
  5. 5. But wait: with cell phones, it’s not that simple. Cell phone communication is the reality TV of the sales cycle—people either love it or hate it. 37% of survey respondents prefer or strongly prefer cell phones, while 39% said it was not preferred at all. The lesson here? No matter what your customers’ opinion on this matter, you can guarantee it’s a strong one. We’ve already established that early on, the most preferred method of communication is email (except for the folks who adore their cell phones). But as the sales cycle moves along, something interesting happens: the likelihood that your buyers prefer being contacted by phone – both cell and office – actually increases. Aside from in-person visits, every other method decreases, even email. Email does, however, remain the most preferred method of communication with 75% citing it as preferred or strongly preferred at the end of the sales cycle. No matter what demographic or other data point you use to slice the data, this is true across the board. What this means for vendors Throughout the sales cycle, you should be in sync with your prospect’s preferred method of communication and prepared to communicate differently at various points in the process. Email. As we’ve established, email is the most preferred method of communication: it allows these construction equipment buyers to store proposals from multiple vendors, respond when they’re ready, and easily share information with other people involved in the purchasing process. Even with the decreased interest in email as you move towards closing, most still prefer it at the end of the process. And, with more and more people leveraging smart phones, we don’t see this trend changing dramatically anytime soon. Cell phones. The polarization of opinions on cell phones means salespeople should make it a point to feel out each prospect’s preference as early as possible and stick to it. Especially at the end of the sales cycle, knowing whether potential customers rely on or avoid cell phones can really help you build a good working relationship. Office phone. Interest in office phone calls also increases slightly as the sales process advances, indicating that direct contact is more palatable the further into the process you go. In-person visits. Construction buyers are more open to in-person visits as they near a decision. That said, there is a slight indication with mid-range sized companies that they’d rather not have an in-person visit even towards closing. Again, this indicates how crucial it is to find out how buyers want to be contacted at each stage of the sales cycle. To sum up: Find out which way your potential customers want to be reached, and when. Make note of it, and adjust accordingly. More about cell phones Let’s look more closely at cell phones. Are there types of businesses or purchasing agents that fall on one end or the other of the cell-phone spectrum? It seems to be so. Buyers in larger construction businesses, and to a lesser degree, buyers who have been in the industry the longest, seem to have a higher preference for office phone over a cell phone or other forms of communication. And here’s a data point to keep in mind: Fully half of the respondents to this survey—that is, half your potential customers—have been in the industry more than 20 years. Extrapolating from the data, the dislike for cell phones may be due to larger companies being more likely to employ a specialized purchasing manager, handling procurement from a dedicated office within a traditional 9-to-5 framework. With smaller companies, the individual responsible for purchasing decisions probably wears many hats beyond procurement. Contacting such people only on a dedicated office line might make less sense. 5
  6. 6. Choosing a vendor How potential customers find you When it’s time to find a vendor, word of mouth is still king – but just barely. Reputation is powerful, at least to three-quarters of these buyers of construction equipment. However, coming in just behind word of mouth (71.4 percent) is Internet searches, particularly with smaller companies and people newer to the industry. There’s a significant drop to the next batch of answers: listings in trade publications have a slight edge over quote request services (47.9 and 42.9 percent, respectively). Next in line are trade shows, advertisements, online directories, and the Yellow Pages, in that order. What construction buyers look for in a vendor We asked buyers to rank the overall attributes they consider when choosing a vendor. Once we take everyone’s favorite criteria, price, out of contention, what stands out across the board is a reasonably equal mix of factors. What this tells us: instead of one sweeping consideration influencing their decision, buyers weigh a few important factors with almost equal importance. These important factors include: responsiveness of the company company reputation trust in the brand name Responsiveness is vital. If you’re not prompt about fielding questions, you’re missing out on sales – and that’s the only one of these three factors that is completely within your control at all times. Interestingly, during the purchasing process, a buyer is far more likely to trust a brand name or a company’s reputation than a single recommendation from a peer or a colleague. This is particularly true 6
  7. 7. for people new in construction. The fact that a company has been around for awhile isn’t necessarily as relevant as it might have once been to someone with less industry experience. On the other hand, individuals that have been in construction the longest look for reputation first; they want a business they know well and can trust. Still in the mix, but less critical to this level of decision-making, is the technology surrounding the purchase. An informative, easily navigated web site and innovative, technologically advanced products and services shouldn’t be dismissed. Evaluating your products and services When evaluating what you’re offering, trade shows and professional publications are slightly more important to long-timers. People with less than five years’ experience are more likely to turn to the Internet, particularly when it comes to using online reviews. If you’re wondering whether you should jump on the social media train, establish a blog or hop onto Twitter, these buyers probably won’t care. Only 11 percent said any sort of social media was useful - and those who did were newest to the industry. So while it’s important to pay attention to trends, social media need not be a priority at the moment. 7
  8. 8. Improving the odds of repeat business We also asked how the vendors buyers have previously worked with could better meet their needs. Putting price aside—everyone would like to pay less—improving customer service after the sale got the most positive response: almost 40 percent included that in their top three. Construction buyers also like vendors to—here it is again—be more responsive. Better maintenance and warranty options are also high on the list, as are improved financing options. What matters most on your web site A theme that pervades the survey responses is transparency. Buyers want to trust their sales rep to be open and honest enough to give them the complete story. This theme also carries over to your web site. We asked survey respondents to indicate the top three most important aspects they looked for in a vendor’s web site. What matters—particularly as they’re making their final choice—is being able to easily find the information they need: spec sheets, a full range of your products and equipment with descriptions of each, pricing, and even contact information, which 21.7 percent of buyers thought was important. Not surprisingly, pricing was in the clear lead (55 percent included it in their top three). The actual design of your site is unimportant, as long as it’s easy to navigate. Even product demos and videos were helpful to only 9 percent of respondents. 8
  9. 9. What construction buyers look for in a sales rep When it comes to evaluating sales reps, responsiveness, again, is at the top. If you’re not responding to emails and phone calls from prospective customers quickly, you’re missing out on sales. Almost as important is establishing a trustworthy relationship. Openness and honesty is key. If buyers don’t feel they can trust your rep, you’re not doing the best job you can. It’s also vital that sales reps be easy to reach and available to field questions, especially as the sale moves toward closing. Actually, sales reps have their work cut out for them: none of the characteristics we listed were rated anything less than ―very important‖ overall. A good sales rep is one of the cornerstones of a successful sale. Evaluating choices for a final decision Construction buyers are like all buyers – they consult various sources as they make final decisions. No one source rose to the top. What this means: it helps to have your company’s information—the products and services you offer—accessible in multiple places. While no one source won the rating of ―most useful‖ (5 out of 5), coming in at a rating just below that were four almost equal sources: professional publications, manufacturers’ web sites, Internet searches, and word of mouth. In the second tier of usefulness were spec sheets, online reviews, and in-person dealer visits. At this final stage, online reviews fared highly compared to personal recommendations. People seem to trust the unbiased reviews of anonymous strangers on the Internet – who have nothing to prove by their choice and may have a personal stake in being honest – more than they do recommendations from colleagues. 9
  10. 10. What does this mean for you? Vendors and service providers who sell to construction businesses can take away several important findings from this report: 1. Social media is not a priority when selling to construction equipment buyers. Despite what you might be hearing, construction businesses aren’t turning to social media channels when making a purchase, so you shouldn’t either. 2. Cell phones remain a polarizing form of communication. Some construction buyers love them, some hate them. And some change their opinion as they approach a purchase. Make sure you find out how your prospect wants to communicate (cell phone or not) – and stick to it. 3. Responsiveness is critical in establishing a relationship with a prospect. Once you determine how to communicate, always be available to answer questions and provide information to help move the sale along. 4. Your company reputation can be a key factor – but don’t fret if you’re not a big name. Internet search is a close second, so while you may not be able to compete with the big boys on name alone, you can focus on ranking highly for relevant search results to attract the business you covet. 5. Your website isn’t only about looks – it’s really about being easy to navigate and providing product and/or service information to help facilitate a purchase. As they say, it’s about the substance, not the style. Selling to construction buyers – like anyone – is an evolving process. While implementing these findings won’t likely change your business overnight – they’re a good, holistic approach to increasing your sales. 10
  11. 11. Appendix: About the respondents The 495 businesses we surveyed have experience with both the residential and commercial construction markets. Just under a quarter of them (24.4 percent) are involved in the residential market only, while just over a third (34.7 percent) deal solely in commercial. The remaining 40.8 percent have a foot in both. Size-wise, a third of these companies are on the small side, with annual revenues under $500,000. On the other end of the spectrum, 10 percent have revenues topping $25M. The rest fall in between more or less equally, with no middle segment dwarfing the others. How long have the survey respondents been in the construction industry? 51.6 percent have been in the industry since the 1980s 13.5 percent have between six and 10 years in the industry 10.8 percent between 11-15 years 9.8 percent between one and five years Hardly any (1.3 percent) have less than 12 months’ experience What they’re buying Here’s how their spending broke down in 2009: Businesses serving residential projects spent less overall than businesses serving commercial projects, except when it came to advertising—the only area both groups seemed to spend equal money on. Purchasing equipment (32.1 percent) is more common than renting (17 percent), especially in the residential market. But it’s not cut and dried. About half (47.9 percent) say the method of acquisition depends on what the equipment is, while very few exclusively lease. 11
  12. 12. About their budgets Here is a breakdown of respondents’ 2009 budgets: After the drop-off we’ve seen in spending the past couple years, budgets seem to have stabilized. At the moment it seems that companies are expecting to stick to their (still conservative) 2009 budgets. The one exception to this is big-ticket items, which 36.7 percent of businesses expect to cut back this year compared to 2009. (For comparison, 31.5 percent expect to spend the same, and only 17.4 percent expect to spend more.) Most respondents expect to spend more on fuel and raw materials in 2010. The smaller the company, the more restricted the spending. And overall, the residential market (with smaller firms), seems to be softer than commercial; residential construction companies were, overall, more pessimistic about projected spending. 12
  13. 13. About BuyerZone Since 1992, BuyerZone has helped thousands of sellers win more customers by connecting them quickly and easily to their target buyers online. Our suite of online programs provide sellers with cost-effective, easy to implement, and results-focused solutions that deliver leads from buyers at every stage of the purchasing cycle. We generate leads for more than 8,500 clients, ranging from Fortune 500 companies to local businesses. Helping sellers connect with more than 3 million buyers in 150+ equipment, product and service categories, we have facilitated over $13 billion in purchases. BuyerZone is a division of Reed Business Information. Contact us We’d love to hear from you! Connect with construction equipment buyers like the BuyerZone ones surveyed here. 225 Wyman Street Waltham, MA 02451 Find out how BuyerZone can help grow your business with 888-393-5000 targeted lead generation programs: Join the conversation: Follow us on Twitter: @BuyerZone Read our lead generation blog: About Leads About the authors: This report was researched and written by a number of contributors, including freelance writer and former BuyerZone employee Sandra Hume, as well as current BuyerZone employees Jeff Gordon, Liz McInnis and Jeremy Sacco. Do you have comments you’d like to share with us? If so, drop us a line at © 2010,, LLC. 13