Blog/How building materials dealers can set new-business targets that account for lost sales

How building materials dealers can set new-business targets that account for lost sales

Oct 257 min read

How building materials dealers can set rep new-business targets that cover lost sales, count real leads and track prospect close rates separately.

Sales Strategy
How building materials dealers can set new-business targets that account for lost sales

Start a rep's growth target with the business they are likely to lose. Measure how much of last year's customer spending did not come back, using your own purchase history, and add that amount to the growth goal. Then turn the total into a monthly new-business target that counts real leads, values them honestly and tracks them separately from repeat orders.

This guide is for sales managers and outside reps at building materials dealers, including multi-category dealers, lumber yards, drywall and insulation dealers and hardware stores with pro accounts. Manufacturers face similar arithmetic with their dealer accounts, but their sales data and buying cycles differ, so the examples here stay with dealers selling to contractors.

Why the growth goal understates the new business a rep needs

A 10% growth goal sounds like a request for 10% more business. It usually means more than that, because some of this year's customers will buy less next year or stop buying.

An April 2018 LBM Journal article on sales KPIs works through an example. A salesperson who sold $4 million, at a company targeting 15% growth, needs to reach $4.6 million. With 10% expected attrition, that salesperson must replace $400,000 of lost business and add $600,000, so the real new-business requirement is $1 million rather than $600,000.

LBM Journal columnist Rick Davis wrote in 2020 that his studies show most LBM dealers can expect attrition between 10% and 20% in a flat economy. In his words, "you need to replace lost business just to keep sales flat." Columnist Bill Lee lists causes a rep cannot control, including death, bankruptcy, credit disasters, defection and retirement. Treat these ranges as experienced practitioners' estimates. Your own rate is the one to plan with.

Measure lost business from your own customer history

The KPI article points out that the data already sits in your business system and suggests looking at the trend over the last three years. Before running numbers, agree on definitions so each rep's figure means the same thing.

  • Compare each buying entity's purchases with the prior year, so a contractor billed under two account numbers is not counted as one lost customer and one new one.
  • Separate customers who stopped buying from customers who bought less, and look at product categories as well as totals. A builder that still buys framing but has stopped buying doors is a partial loss.
  • Separate price from volume. Commodity price swings can hide or exaggerate a real change in what a customer buys. Our guide to separating price and volume in a sales forecast covers that adjustment.

Count customers as well as dollars. A Distribution Strategy Group report on distributor sales notes that a company can grow revenue while its customer base shrinks, and that defector studies often find neglect behind a lost relationship. One large contractor's growth can hide several smaller accounts drifting away.

Then sort the losses by cause, because the cause decides the sales response. A contractor that closed or no longer meets credit terms is not a sales opportunity. A drywall dealer's commercial contractor whose big project has finished may return with the next award, so check open bids before writing the account off. A hardware store pro account that moved its repair work to another supplier is a candidate for recovery. Keep recoverable accounts on a separate list, and use our guide to recovering revenue from inactive accounts to work them.

SalesJack's analytics maps product classes into key categories and provides dashboards customized by role, so a manager can review purchase changes by customer and category. Settle the definitions with your team first. A dashboard shows what changed; the rep still has to find out why.

Turn the number into each rep's new-business target

For each rep, add three figures: last year's sales multiplied by the measured attrition rate, the growth the company expects, and any adjustment for accounts moving into or out of the rep's book. The result is the business the rep has to win from new customers, new categories with existing customers and recovered accounts.

Decide in advance how a recovered account counts. If it offsets attrition, it should not also count as new business, or the target will be met on paper and missed in sales.

Some coaches use a simple floor. Bradley Hartmann, whose firm partners with SalesJack, uses a mark he calls the Mendoza line: at least 10% of a lumber rep's sales should come from new business, as described in a SalesJack article published by the NRLA in July 2026. Use a floor like that as a check on your own calculation, not a replacement for it.

Break the annual figure into months. Rikka Brandon, writing in LBM Journal, recommends reverse-engineering the annual goal into daily, weekly and monthly activities and metrics. Her advice is aimed at new hires, and it works just as well for an experienced rep whose book has shrunk.

The KPI article also turns the target into a prospecting total. Assuming prospects close at 10% to 15%, it says $1 million of new business requires between $6.5 million and $10 million of prospecting. Those rates are the author's assumptions. Calculate your own close rate on prospect quotes before using the method.

Count leads, not names

A list of contractors is not a pipeline. Davis gives a practical test: buyers willing to take a price but unwilling to meet are "merely suspects rather than true prospects." The KPI article adds that an invitation to bid may only be a buyer checking a competitor's price. A target becomes a lead once the buyer has agreed to a real conversation about something you sell.

Permit records follow the same rule. The NRLA article recommends filtering raw permit data by project type and value, geography, builder profile and existing relationships before it reaches a rep. A qualified permit gives the rep a reason to visit the jobsite. It becomes a lead after that conversation.

Give each lead a value the team agrees on. The KPI article separates one-time project leads, valued at the project sale, from relationship leads, valued at annual potential. Its example is a builder interested in buying windows for 12 houses a year, which should be valued for all 12 houses instead of the next quote.

Record a separate lead for each product category. A multi-category dealer's framing customer who agrees to discuss windows is one new window lead. A drywall contractor who is open to quoting insulation is a separate insulation lead. Keeping them apart shows which categories are producing new business and which are only producing conversations.

SalesJack's CRM brings quotes and project leads from supported ERP, permit, website and email sources into one view, with customer and jobsite information, logged conversations, assignments and reminders. Permit leads can be filtered by project type and region, matched to existing customers and routed to the assigned rep. Agree how your team will mark the move from suspect to lead before relying on the counts.

Review repeat business and new business separately

Close rates mislead when all quotes are mixed together. The KPI article notes that a rep who closes 80% of quotes may be doing no prospecting, while a rep who closes 40% may be quoting prospects aggressively. Report at least two rates: quotes to existing customers for products they already buy, and quotes to new customers or for new categories.

In the monthly review, compare each rep's new-business results with the target and look at the steps that lead to it. The NRLA article suggests reviewing leads contacted, visited, quoted, won and lost every week, and counting qualified opportunities worked, new quotes and new sales instead of records opened.

Brandon's distinction between activity and results helps decide what to change. If a rep is not doing the agreed prospecting work, start there. If the work is happening and results lag, review the leads together. Are they real conversations, are the values honest, and is the rep asking for a specific quote?

Recalculate when the facts change. A large account lost in March raises the new business needed for the rest of the year, and a recovered account lowers it. Keep the target tied to what the customer records show.

Start with one rep's book

Pick one rep and calculate last year's lost business from your own records, sorted by cause. Add the growth goal, split the total into months and agree what counts as a lead. After one review cycle, the method will be easier to extend to the rest of the team.

SalesJack connects ERP data, customer relationships and project leads for building materials dealers. To see how your purchase history and leads could support this review, book a demo.

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