Over the last 3½ years, I have worked with many lumberyards in the USA and Canada, and one of the more popular topics they want me to present on is “Prospecting for new customers”. This is why I think hardware, building materials and timber dealers in Ireland might be interested in ways to prospect for
more business.
With over 40 years’ experience working for independent lumberyards in Northeast USA and with the last 12 years as Senior VP of Sales for a large regional dealer (14 locations; four states; 45 outside salespeople; 750+ employees; truss plant; custom millwork shop; and more), I found there are three main approaches to prospecting for more business.
First is what I believe to be the ‘Low Hanging Fruit’, as it is the easier of the three approaches. Don’t misunderstand me, I’m not saying it’s easy, but rather I’m saying it’s not as difficult as the other two. I like to call this first approach “Growing Wallet Share”.
In other words, sell more product groups/categories to existing customers.
In order to get started, you need to identify what product group(s) your existing customers are NOT buying from you. For instance, you may have very good customers who buy all their timber and exterior building materials from you, but do not buy interior doors, hardware, mouldings, etc. By identifying what they are not buying from your company, you or your salesperson can then ask the customer why not.
Perhaps it’s due to a long-standing relationship with their current supplier for those products. Perhaps it is just due to habit. Perhaps your company never asked. Perhaps the customer thought you couldn’t be competitive. You’ll only know the answer to “why” by asking the customer.
Since you already have a strong relationship with the customer, as you’re selling them other product lines, the chance of the customer listening to you regarding the product line(s) they’re not buying from you greatly increases. I’m not saying that they’ll automatically buy the product category, but I am saying the chance is much greater than if they didn’t have a relationship with you. This is why I say it’s the “low hanging fruit”.
While approaching your existing customers regarding product lines they’re not buying from you, stress the strong relationship you already have with each other. Let them know you can indeed be competitive. Tell them that it’s more efficient for their company to consolidate venders, as they’ll reduce the number of payments they produce, they’ll deal with less salespeople overall, combine deliveries, etc.
But, first you need to identify those customers and product lines! The Second approach is what I call ‘Vertical Growth’. Which is identifying your customers who do not give you the majority of their purchases. An example would be a customer does €50,000 with your company, but they buy a total of €250,000 annually. This means you are only getting 20% of their annual purchases and 80% is going to your competitors.
Perhaps it’s because the customer has had a much longer relationship with the competitor. Perhaps it’s because they only buy specific items from you for whatever reason(s). Perhaps you get their business only if they have jobs near your locations.
Perhaps it’s because they don’t feel appreciated at your establishment. Perhaps no one ever paid them much attention by trying to sell them more.
In this case, like the first approach, the customer at least has a relationship with your company, so they are familiar with you. This makes it a little easier to get the customer to have a conversation with you about doing more business than it would be if the customer never did business with you.
The customer may say, “Thanks, but no thanks.” But at least you’ll find out why and possibly get some info on your competitor as to why that customer is loyal to them. But, first you need to identify those customers who are not buying the majority of their total purchases from you!
The Third approach is more challenging than the first two approaches. Not to mention, it’s scary to some people. It’s going after new customers. This approach involves both ‘cold calling’ and ‘warm calling’.
Let’s start with ‘Warm Calling’. Warm calling is when a mutual acquaintance recommends you. While the chance of converting a prospect is never going to be 100%, the chances increase greatly if someone you both know recommends you to that prospect. You may ask, “How do I get someone to recommend me or my company?” Well, the answer is simple, ask them. As you build your relationships with your customers and they truly value you and your company, it’s okay to ask them if they know of any others who do not buy from your company. If they do know of someone, ask your existing customer to recommend you by reaching out to them. Or, at the very least, ask your customer if you can “drop their name” when you do reach out to the prospect. By the way, if your customer will reach out on your behalf, that is much more powerful, so don’t be shy in asking.
Getting prospects to respond to you is never easy. However, think about if you’re looking to hire someone to do work on your house and a friend of yours recommends someone. While you may not end up hiring that person, you’ll most likely at least give them a chance. It’s no different in business. Don’t be shy, ask for recommendations/referrals.
The so-called “scary part” for some people is ‘cold calling’ prospects. Which means you’re pursuing a prospect without any prior relationship nor recommendation from a mutual acquaintance.
The reason some people are scared of “cold calling” is because they don’t deal with rejection well. I understand that to a point. However, as I’ve told salespeople over the years, do not take it personally. If you can’t get your foot in the door with a prospect, or if you do get a meeting with them but they say no to buying from you/your company, keep in mind, it’s not personal it’s business. It’s a numbers game.
You may ask why should I prospect? The obvious answer is to grow your business. But beyond that, it’s natural for existing customers to move away, retire, pass away, down-size, or even change suppliers. Also, your customers are not all busy at the same time, therefore your capacity is more than you think.
Keep in mind – the needs of your prospects are the same as your current customers. Don’t think the prospects problems are unique. If you’ve solved them for your customers, then you’re prepared for your prospects.
Here are some ways to find potential prospects:
- Ask existing customers for referrals
- Ask sub-contractors who they work with
- Join builders’/contractors’ associations and network
- Internet search engines and websites
- Social media, including Instagram; LinkedIn; X; etc
You may never be 100% prepared to cold-call and you may never eliminate all doubt. However, make the call anyway!
Pre-planning for cold calling is important, here are some tips:
- Research the prospect ahead of time
- Draft a cold-call intro (but not an entire script)
- Practice your technique
- Have a plan if they answer and don’t answer. Start with a greeting followed by why you’re calling, focus on how you can help their business. Don’t ramble – keep message to no more than 30-seconds. Try to pique their curiosity as to why they should consider doing business with you and your company.
In summary, the three-prong prospecting approach to increasing revenue are …
- Identify product groups your customers are not buying from you and pursue that business (i.e., wallet-share)
- Identify customers who are buying a smaller percentage from your company than your competitor and discuss it with them (i.e. vertical growth)
- Identify and research potential new customers. Especially getting referrals from existing customers and sub-contractors
I hope you found this article helpful. I have done presentations with lumberyards in the USA and Canada on this topic. In mypresentation, I dig much deeper into the details on the three-prong approach to prospecting. Some of my other presentation topics include how to improve gross margins; time management skills for salespeople; organisational skills; management KPI’s and metrics; and more. If I can ever be of any help, don’t hesitate to reach out to me. I wish you the very best in 2025
Mike McDole has 40+ years’ experience in the Lumber & Building Materials Industry in the USA and is the principal of Firing-Line LBM Advisors (outside of Boston, Massachusetts). He helps LBM dealers of all sizes with management strategies, sales strategies, salespeople, gross margin improvement, profit improvement, and more. Mike can be reached on 1 774 372 1367 or mike@firinglinelmb.com.
