Blog/What building materials dealers should do when a sales rep leaves for a competitor

What building materials dealers should do when a sales rep leaves for a competitor

Nov 139 min read

When a sales rep leaves for a competitor, sort their accounts by open work and risk, call about real jobs, protect open quotes and check purchases weekly.

Sales Strategy
What building materials dealers should do when a sales rep leaves for a competitor

When a sales rep leaves to sell for a competitor, some of their customers will at least listen to the new offer. You cannot stop that call. You can make sure your dealer reaches each important account first, with a specific reason to keep buying. In the first few days, pull the departing rep's accounts, sort them by open work and by how much each relationship rests on that one person, and have a manager and the new account owner call the riskiest ones about real jobs and quotes. Then check purchases every week until buying settles.

This guide is for sales managers, GMs and owners at lumber yards and multi-category dealers, window and door dealers, drywall and insulation dealers, and millwork suppliers. It also applies to a hardware store's pro desk when one person handles most pro accounts. It covers the selling decisions after a resignation. Questions about employment agreements, what the former rep may do or what they took with them belong with your attorney, not your sales team. For the knowledge-transfer steps of a planned transition, see how to hand over accounts to a new sales rep.

How much is at risk

Research outside building materials gives a sense of scale. A study of a Fortune 500 company published in the Journal of Marketing found that sales rep transitions led to losses of 13.2% to 17.6% in annual sales. That is one firm in another industry, so treat it as a reminder that turnover costs money rather than a forecast for your branch.

Building materials has its own examples. The law firm that represented Builders FirstSource describes a Central Texas dispute in which two salesmen left for a rival windows company and, according to the firm, "transferred virtually all their accounts." The opposite view is common too. Rick Davis wrote in LBM Journal that dealers who hired competitors' salespeople often found that "promises to bring large books of business along usually fail." And when a dealer told LBM Journal's Ask the Expert column that departing salesmen would likely take their customers, Scott Hartmann answered: "Not true. Unless you let them."

Both can be right. Whether an account follows depends on how much of the relationship lived with one person, and on how quickly and how well your dealer acts.

Sort the accounts in the first few days

Start with the departing rep's account list and the records behind it. For each account, look at four things.

  • Open work. Open quotes, jobs in progress, permits pulled in the customer's name and orders not yet delivered.
  • Recent purchases by category. Which categories the customer buys from you, and whether any slowed in the months before the resignation. A drop that started earlier may mean the customer was already shifting.
  • Depth of the relationship. How many people at the customer deal with your dealer, and how many of your people they know. An account where the owner, the buyer and the superintendent all know your inside sales team and your estimator is safer than one where everything ran through the rep's cell phone.
  • Origin. Whether the rep brought the account from a previous employer. Those customers have followed this person once already, and Hartmann's column makes the same exception.

Then sort the accounts into three lists.

  1. Call now: large open quotes or active jobs, plus relationships that ran through the rep alone.
  2. Call this week: steady buyers who know several people at your dealer and have no urgent open work.
  3. Watch: small or occasional accounts. Give each an owner and check their purchases, but do not let them crowd out the first list.

Keep the first list short enough that the manager and new owner can reach every account within days. If they cannot, tighten the sort.

Make the first call about the customer's work

Customers notice who calls first and what that person knows. Neeli Bendapudi and Robert Leone studied what business customers worry about when a favored contact leaves. In their Harvard Business Review summary they list three concerns: attachment to the person, doubt that the replacement will be as good, and wanting to know how the change will be handled. A good first call answers all three without saying much about the person who left.

Have the sales manager or GM join the new owner on the call or visit. Open with the customer's current job or quote: "I have the window quote for the Maple Street house in front of me. Let's go through where it stands." Tell them who now owns the account, who else at the dealer knows their work, and how to reach both. Then ask whether the former rep promised anything you should know about.

Do not criticize the former rep or the competitor. The customer may like both. A pharmaceutical sales director quoted in Bendapudi and Leone's Journal of Marketing study said that when a rep goes to a competitor, customers "may not immediately follow but they will at least give it a look." Your job is to make that comparison easy for your dealer to win.

Protect the open quotes

Open quotes deserve their own pass, because the former rep knows exactly what was quoted and at what price. For each one:

  • Confirm the scope, the decision date and who decides, with the customer directly.
  • Check whether anything the former rep promised, such as a delivery date, a price hold or an option, is in your records. If it is not, ask the customer and settle it with your own manager before you confirm anything.
  • Requote where the job has changed or the quote has gone stale, and set a dated next step.

Window, door and millwork quotes often carry selections, options and revisions that only the rep tracked, so bring the estimator or specialist who worked on the quote into the conversation. In a drywall or insulation account, find out which bids the contractor is waiting to hear on. The next award is where a competitor will try to start.

Choose who takes each account

It is tempting to give the whole book to a new hire, especially when you are hiring to replace the rep. The research points the other way. In the 2017 Journal of Marketing study, existing reps limited sales losses better than new hires, and existing reps whose industry experience resembled the departing rep's did better still. Reps with high past performance did no better than average performers.

In practice, that suggests:

  • Give the call-now accounts to current reps or specialists who already know that kind of customer, such as a rep who already sells to production builders, or the window and door specialist for showroom accounts.
  • Start a new hire on accounts from the watch list, with a manager involved.
  • Do not hand the biggest accounts to your top seller by default. Pick the person whose experience matches the account.

For the wider question of which accounts each rep should hold, see how to decide which accounts each sales rep should keep.

Record the new owner in your CRM the same day. If your system routes new leads and follow-up to the assigned rep, that keeps new jobs from landing with an empty seat.

Widen the relationship on both sides

The accounts that stay are usually the ones that know more than one person at your dealer. Hartmann's advice was for managers to contact good accounts personally, introduce other key members of the team and ask how the dealer could do better. Bendapudi and Leone quote a manufacturer that has several reps deal with each major customer so the relationship never depends on one person.

On your side, that means the account owner, an inside sales rep and the relevant specialist each have a reason to talk to the customer. On the customer's side, it means knowing the owner, the buyer and the people running jobs, not only the person who calls in orders. Keep it useful. Some customers in the same study said they felt overwhelmed when too many people from a supplier contacted them, so give each person a clear reason to call. Record who you met and what they care about in the account record, where the next person can find it.

Check purchases every week until buying settles

A friendly first call is not proof of the next order. For the first few months, review the former rep's accounts weekly:

  • Did orders arrive at the usual pace and in the usual categories?
  • Did any open quote go quiet past its decision date?
  • Is the customer pulling permits without placing orders?

When a category drops off, call about that category and a specific job. Ask directly whether they are buying it elsewhere now. If an account has moved, ask what would earn the next job back, record the answer and set a date to follow up. Some accounts will move anyway. A lost account with a known reason and a scheduled next call is still worth more than one nobody noticed until the year-end review.

An illustrative example

The following example is illustrative, not a real customer.

A multi-category dealer's outside rep resigns on a Friday to join a competitor across town. On Monday the sales manager pulls the rep's 60 accounts. Eight have open quotes or jobs in progress, including a custom builder with a large window and door package awaiting a decision. Five more have only ever dealt with the rep. Those 13 become the call-now list.

That week, the manager and the dealer's window specialist visit the custom builder, walk through the open package and confirm the decision date. The builder mentions that the former rep had offered to hold pricing until month end. The manager checks with the GM before telling the builder what the dealer can do. Two production-builder accounts go to a current rep who already sells to builders, not to the new hire starting next month. Each week the manager reviews orders by account. In week six, one framing contractor stops buying trim, and the new owner calls about the contractor's next house and gets the trim quote.

Where connected data helps

All of this depends on finding the open work and purchase history quickly, in the same week the rep leaves. In SalesJack, quotes and project leads from supported ERP, manufacturer, permit, website and email sources sit together with connected customer and jobsite information, and reps log conversations against each account. Managers can assign owners and reminders, and permit leads matched to existing customers route to the assigned rep. With SalesJack Radar, a manager can ask questions such as "Show my largest open quotes that have not been followed up" or "What has this builder purchased across its jobsites?" and get answers from connected ERP, quote, permit and CRM data. What it can show depends on what your ERP and CRM records contain.

Learn more about SalesJack's CRM for building materials suppliers. If you want to see it on your own data, you can book a demo.

Sources

More blogs like this