Conflicts of Interest Costs The Industry as a Whole!

 

In the beginning, the first portable building company made a decision based on money. In an effort to control expenses and because of employee control, they decided that “contract haulers” were the way to go! They also decided that “employees” on locations far from the plant did not make good sales people and they could not control expenses.

 

Because of their experiences they created a quasi-dealer program and hauler program, making them both subcontractors. They did that for two simple reasons;

#1-An effort to increase dependability in the areas of building installs and sales

#2 They wanted to shift the sales and transportation expenses from the plant to someone else!

 The delivery system puts the hauler and dealer at odds and “drives a wedge” between everything that makes common sense and in every aspect of the building installation. Examples;

In regard to the dealer:   

Benefit #1 to the plant; the dealer spends his money to rent a lot along with all the other risks and expenses thereby only leaving the plant to deliver a few display buildings to the lot for the dealer to sell from.Benefit #2 to the plant; the dealer has his own money and effort in the deal. The present dealer program allows the plant to be not be concerned with the many and varied issues surrounding the selling and the sale of their product.

In regard to the hauler;

  • Benefit #1 to the plant; the plant shifted all the risks to the hauler and also gain a “set” expense that could just be plugged-in as a “contracted” transportation cost of each structure making pricing much easier and dependable.

  • Benefit #2 to the plant; the plant can just sit back and construct the building, roll it out, immediately making the “hauler” take on all the risks. This left the plant to concentrate on building another structure. Variable expenses would not affect their bottom line.

 

Getting back to the story.  The portable building industry, as we know it, emerged out of that “first” portable building company. Because the contract hauler system and dealer program seemed to work “for the other guy” each subsequent company copied the original means of transporting buildings to the dealer’s customers without regard to the negative circumstances created by the “original plan.”

At first glance the “contract hauler” plan appears to have good attributes. What is not so obvious is that plan produces TOO many “conflicts of interest” that far outweighs the benefits! These “very costly” conflicts extend throughout the entire process from manufacturer to warranty In the future, the company that see’s the light and makes changes toward reducing or eliminating these negative conflicts will emerge as a winner. The industry could come out of its fragmented state into a “total business” providing buyers of their products a more satisfying experience and as a result and many more sales for the building manufacturer. Tunnel vision has caused the industry to NOT SEE serious issues in favor of “doing it like we have always done it!” That can be a fatal mistake in any business. Successful business owners, in any other industry, know they should always be open to doing things different when the need arises.

 

With that said, good businesses don’t just make changes for the sake of making a change. There has to be a good solid business reason to make changes. It is common knowledge that humans “just don’t like change” because we like to keep doing what we are comfortable with, even if it hurts.But it is clear that this seasoned portable building industry has not recognized that it is multi-faceted and can no longer keep its head in the sand. The industry is NOT just constructing the buildings! It is FIRST sales! If something is not sold NOTHING happens! If the product is not sold, the plant has nothing to build!Due to the way the “contract hauler” system works, the dealer has absolutely no control of his business! The dealer’s customers “naturally assume” that the dealer knows what is going on! Because of the contract hauler system, the dealer has NO CLUE of what is happening after he sells a building! Technically the dealer is NOT actually IN BUSINESS but has all the expenses and responsibilities and risks of a business.What does that mean as it relates to the dealer/customer relationship? To answer that question let’s look at it from the customer prospective.

Most building manufacturers don’t know this, but, portable building buyers are buying the DEALER first and the product second! The customer has many “dealer choices” and chooses the dealer for lots of reasons, but, the all-encompassing reason is as follows;Most customers don’t really see much difference in products. What he is primarily looking for is a feeling that his dealer is knowledgeable in all areas of the business. The customer wants to feel that he can rely on the dealer to truthfully answer questions about the product. He also wants to know that he can get future answers regarding the structure, delivery, warranty and the TOTAL transaction in general. Most customers are looking for a dealer that has “ownership” of the entire process and “the product” and furthermore will take care of the customer’s needs regardless of what those needs might be.

Core Issue: The present “dealer program” only works at about 10% of its possibilities. It is a 90% failure because of the contract hauler system which virtually PREVENTS those customer expectations from being realized!The dealer assumes he is in business for himself, but soon discovers that after each sale he is without any way of affecting the total outcome of the total sale! You might be asking, total sale? The answer is, there is a lot more that surrounds the sale than the customer agreeing to buy. This especially includes the dealer’s ongoing business which includes referrals from satisfied customers. There is a lot more than just turning an order to the plant. It is called building the business (repeat sales). It is primarily creating an environment of “good customer attitude” and the customer believing that he has made a friend of the dealer. The industry has made the portable building dealer a “glorified salesman” at best and the “hauler program” totally prevents the dealer from affectively “building his business.” When future sales are affected 100% of all of those in the organization are permanently AFFECTED!

.Core Issue: The present “dealer program” only works at about 10% of its possibilities. It is a 90% failure because of the contract hauler system which virtually PREVENTS those customer expectations from being realized!The dealer assumes he is in business for himself, but soon discovers that after each sale he is without any way of affecting the total outcome of the total sale! You might be asking, total sale? The answer is, there is a lot more that surrounds the sale than the customer agreeing to buy. This especially includes the dealer’s ongoing business which includes referrals from satisfied customers. There is a lot more than just turning an order to the plant. It is called building the business (repeat sales). It is primarily creating an environment of “good customer attitude” and the customer believing that he has made a friend of the dealer. The industry has made the portable building dealer a “glorified salesman” at best and the “hauler program” totally prevents the dealer from affectively “building his business.” When future sales are affected 100% of all of those in the organization are permanently AFFECTED!

.Dealer wants better quality setting of blocks – hauler wants to get it done and go home!Dealer wants to be on the install site to talk to neighbors while the building is being set – Hauler does not want to bother telling the dealer when and where he is delivering because of line item #1!Dealer treasures his customer’s referrals – hauler seems to not understand the value of customer relations!Dealer may need to adjust building placement on the lot when hauler is in the area – After hauler has delivered a couple of buildings that day, all he wants is to go home!Dealer may need something from the plant that the hauler could bring to the lot on the next delivery – hauler does not want to communicate so coordinating is impossible!Dealer never has a heads up on delivery therefore cannot plan – hauler does not want the dealer to know the itinerary because he does not want him on the delivery because of #’s 1-4-5!Dealer is totally stripped of opportunities for “added” customer service and opportunities for referrals – when hauler isolates the customer from the dealer!Dealer’s customer complains the Hauler has not done something that the customer needs. Dealer has zero recourse, cannot console the customer, cannot contribute to the answer at which time the customer becomes at odds with the dealer because the dealer is first in line for complaints! The customer see’s the dealer as someone that does not care enough to get action on behalf of the customer.