Marketing Minute: Marketing where the money is - July 2022
By Paul Friederichsen
When the infamous 1930s criminal Willie Sutton was asked why he robbed banks, he replied simply, “Because that’s where the money is.” Today, the money for flooring contractors is in multifamily, but it is not, as Willie would say, “easy pickings.” Like many flooring markets, it’s hard work and has its own unique set of challenges to understand and master to become successful.
WHAT IS MULTIFAMILY?
The multifamily market covers a range of installations serving every demographic imaginable: market-rate apartments for middle- to upper-income families, affordable apartments for middle- to lower-income families, senior living communities for ages 55+, student housing for on-campus dormitories and off-campus housing, and on-base military housing. Floor contractor work across these markets falls into three categories: new construction, rehabs/value add, and capital expenditure work to expand or improve properties.
GROWTH AND OPPORTUNITY
In 2021, multifamily was predicted to boom, and boom it has. From 2020 to 2021, the Covid-19 pandemic and lockdown presented an especially unique challenge for the multifamily flooring business: a moratorium on evictions. Without the normal turnover of occupants, the volume of flooring remodel work in most areas declined. Many operators also deferred spending on remodeling or expansion as a wait-and-see strategy. Now that the health-related restraints have been lifted, multifamily work is back to pre-pandemic levels, thanks to pent-up demand.
Add to that another helpful tailwind for multifamily growth: the growing lack of inventory and affordability of single-family housing due to rising inflation and interest rates.
“Apartment demand will likely remain robust, and rent growth remains elevated in 2022, given the current rates of absorption, rising mortgage rates in 2022, and the lower level of construction activity relative to current demand,” according to the National Association of Realtors. That’s excellent news if you are a multifamily flooring contractor in Dallas, San Antonio or Houston, Texas; Las Vegas, Nevada; or Riverside, California, according to Multifamily Executive, because these markets will have undersupplied pipelines through 2023.
Senior living housing is experiencing a “silver tsunami” as one in five Americans will be over 65 years old by 2030 due to longer life expectancies. Even certain subsets of senior living are experiencing their own booms. In a 2021 interview on Taylor Time Live, Nick Peters, vice president of healthcare and senior living at Shaw Contract, said, “Currently, there are only 3.1 million licensed long-term-care beds. That’s 14% of what’s needed.” Given this shortage, there is a lot of new construction activity to take advantage of. Still, there is a lot of rehab work as well due to competition among senior living operators. “Flooring plays a critical role in creating a favorable impression of the community, as well as the quality of living experience to keep residents,” Peters noted.
The multifamily housing market itself is even morphing into single-family homes built by larger builders, specifically for the rental market, according to Kimberly Byrum, managing principal of multifamily for Zonda, a data research platform for builders.
But just as with any market segment, the multifamily flooring business is unique. Graham Howerton, president of FEI Group and a leader in the multifamily flooring market, once observed that the best approach to winning and keeping business is to act as a problem solver, not just a resource for flooring products. “Right now, you have to consider the product, the installation method, safety, floor prep, sound transmission, speed of install and lifecycle cost,” Howerton notes. “I think you must be a better educated, more comprehensive consultant to the client today to have any chance at all in meeting their needs and the demand of the market segment.”
Tom Cartmell, branch sales manager at Diverzify, stated that the successful commercial flooring contractor must concentrate on three things: relationship, reputation, and price, in that order. “We try to build relationships with architects and designers,” he says. “If we can get in on that job early and have input on what’s being specified, that helps us tremendously. You can have input on what they will use or how they will use it.”
MARKETING FOR MULTIFAMILY
Note the last position of “price” in Cartmell’s priority hierarchy. Price is always a preemptable advantage. Your competitor can always beat your price advantage. What your competitor can’t beat is your brand. As a commercial flooring contractor currently in the multifamily space or considering going there, your best play is a strong, well-defined brand built on five principles of brand insistence.
Awareness: This is built primarily on how well you communicate your value proposition to architects, designers, owners and operators beyond what can be done by your sales reps. Marketing communication increases the reception and effectiveness of sales; are you laying the groundwork for success? Should your prospect assume you’re hustling the latest waterproof vinyl product, or are you a valuable resource for ideas and solutions to the latest multifamily housing issues? Are you consistent in maintaining a level of awareness with your prospect? If not, you may not get the call for the next bid.
Differentiation: So much of brand differentiation comes from a deep understanding of multifamily projects’ different needs and nuances and how your company overcomes them. Take, for example, urgency. The tenant moves out Tuesday. Your crew comes in Wednesday. The new tenant moves in Thursday. How do you guarantee success? How do you deal with gypcrete floors when you remove a gluedown vinyl? And if you’re a manufacturer, how do you make a product that gets around the acclimation issue, or retards sound transmission, or handles a pet-friendly property with easy care and maintenance?
Value: Value is more than a simple quality/price equation. How can you help me (the customer) make more money in today’s market? For example, one of the fastest-growing trends in multifamily is the use of in-house construction teams. Proponents prefer the holistic approach, cost effectiveness, control and customer service-basically, things they were missing from contracting out construction and rehabs. As a flooring contractor, how can you make them aware of your different approaches to enhance, augment or improve the in-house direction they’ve chosen? Remember, real business-to-business marketing value boils down to three points. 1. It’s more than price. It’s problem-solving. 2. It’s more than service. It’s sharing. 3. It’s more than promise. It’s performance.
Access: Business is all about relationships, and relationships are based on access. As a leader in your company, you must be available and transparent to various groups to grow your business, multifamily or otherwise. Are you networking with the right groups? Do you promote your availability as an opinion leader in the multifamily market? Do you share the success stories of your installations or your team? In most cases, the mere use of public relations and social media will help you stand out, above and apart, to win business.
Emotional connection: Even B2B purchase decisions are rooted in an emotional connection or chemistry. Often, it’s about understanding the language as well as the needs. For example, you would never pitch a senior living client by using the word “facility” and not “community.” You would never refer to “residents” as “patients.” Using the wrong terms will fail to connect with the prospect and cast doubt on your understanding of their business. Striking the right emotional connection with a client or prospect has empathy at its core and demonstrates your knowledge of their needs and the needs of their clients, too.
By thoroughly understanding the multifamily market and adjusting your operational and marketing approach to maximize the potential for your business, you can go where the money is. And you can take that to the bank.
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