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HBSDealer Stock Watch: Midweek Deadlock

BY HBSDEALER Staff

Industry stocks split down the middle between winners and losers on Wednesday. The big gainer was UFPI, up 8.28%, followed by SHLD with a 4.49% increase.  After leading the winners on Tuesday, HBP dropped 4.30%.

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Throwback Thursday: NLBMDA edition

BY HBSDealer Staff

Phoenix — The National Lumber and Building Material Dealers Association honored Paul Hylbert for his contributions to the association and the lumber and building materials industry during the NLBMDA Installation Dinner event on Oct. 17. The dinner was part of the ProDealer Industry Summit.

Hylbert started his career with Wickes, where he spent 21 years. He served sequentially as chief executive of the Wickes Europe, Wickes Lumber, and Sequoia Supply subsidiaries before leading a leveraged buy-out of the latter to form PrimeSource in 1987. He served as the CEO of PrimeSource from 1987 until 1999.

After the sale of PrimeSource, he joined Lanoga Corporation in 2001, serving as CEO until the formation of ProBuild in 2006. Starting as COO, he later became CEO in January of 2007 where he remained until his retirement in October 2010. He remained on the ProBuild board until May 2011, when he resigned to form Kodiak Building Partners.

He is a past NLBMDA chairman and has served on several committees and task groups over the years. He currently serves on the NLBMDA Building Task Group and on the LuDPAC Board of Trustees.

In his remarks, the current chairman of Kodiak Building Partners expressed pride in his industry.

“It’s a business where you can still do business with a handshake,” he said. “We are in a noble profession.”

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And now a word on profitability

BY HBSDealer Staff

Phoenix — Not all customers are created equal. The trick of advanced analytics, as revealed during a presentation here at the ProDealer Industry Summit, is to identify which customers are profitable, and which are a drain on the business.

It’s easier said than done. But knowledge is power when attempting to boost profitability.

Jason Niemi and Jason Bolstad, co-founders of Building Results CRM, a DMSI product, pointed to statistics that showed 60% of your customers make up 160% of your profits. Simply put, the key to customer relationship management involves identifying those profitable customers.

The first step to successful analytics is understanding the cost of services provided, including allocations that could be contentious within a company. “It doesn’t have to perfect, but just get it close,” Bolstad said.

A customer net profitability report can show which customers are adding to the bottom line, and which are detracting from it. According to Niemi and Bolstad, a systematic approach to improving profitability involves organizing customers into four categories:

  • Core — high gross-margin, loyal customers
  • Opportunistic — similar to core, but less sales volume
  • Marginal — not high volume, not costly to serve, but candidates to slip into the unprofitable category
  • Drain — high-cost of service and unprofitable

Identifying the type of customer is only the beginning. The key is to move the customers into the profitable categories, and out of the drain category — even if it means cutting them loose. And the big question remains how do you handle customers in the drain category.

He offered a couple of suggestions involving customer communications. One is to be more clear with return policies. Another is to be honest with the customer about the details of its status as a drain. “I would recommend: don’t be afraid to be very honest,” Niemi said.

With customers identified in segments, a company can concentrate on converting the opportunistic category to a core category.

And there’s also advice for how to treat those customers who are already in the profitable core category.

“Study them,” Niemi said. “What are the behaviors between you and these customers that allow you to make money. And also study them as a company, what makes them a great partner?”

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