 I think channel conflict as we've traditionally defined it being that I'm your distributor. I don't like it when you sell to another distributor, and I really don't like it if you're selling direct and cutting me out. Welcome to the Smarter Building Materials Marketing Podcast, helping you find better ways to grow leads, sales, and outperform your competition. All right, everybody. Welcome to Smarter Building Tools Marketing, where we believe your online presence should be your best salesperson. I am Zach Williams, alongside my co-host Beth Poppy Glove, and we've got an awesome, incredible show lined up for you today. We are so excited to welcome the one, the only, Mark Mitchell. He is one of the leading sales consultants in the building materials industry. He puts out incredible content, small plug for his newsletter in case you're not subscribed. And we're just excited to have him on. He always brings a fresh perspective. You're definitely about to learn a lot and be entertained. Welcome, Mark. Thank you. Thanks so much. Great seeing you two again. Great to have you here. Yes, wonderful. Mark, you know, we, you and I chat a good amount. And the reason why we, you know, for listeners, why we asked you to come on the show is that, you know, you've announced that you're hosting your Wizard Summit here in October, which we'll plug here in a minute. But one of the things that you mentioned on your landing page for the event that really caught my attention was that the building products industry has gone through a lot of changes, and then more is coming. And I mean, it was like, ooh, like, I want to talk about that. Like, I want to talk about, like, what are the more things that are coming? Yeah. And I also selfishly want to hear your perspective and your outlook in reference to the building products industry, because you've been through a number of different types of market cycles in your career. Yeah. So getting your perspective has always been very valuable for me. Like I remember when you were telling me about the 08 recession one time and how it was very, very different than other market cycles and reference to building products. And so I don't want to answer for you, but I want to dive in and just hear from you about what changes you see that are happening. And then let's talk about how that relates to the current market climate. The first thing to me that happened was, of course, COVID, which really just stopped everybody in their tracks and and caused us to, you know, rethink, like, how do we do business? Or in many different ways. And so from there, what I think is many things that were going to happen, that we're going to take, we'll say five years to happen, we're crammed down our throats in a year. I think that, you know, that that people shifted even more to buying things online, you know, like you used to see something and you go to the local store, local dealer or something to buy it. Whether you just enjoyed that process or you wanted to support the local merchant, but if they're not open, or they don't have it, you start to get in the habit of just go online, find the information I need, get the answer to my question. And oh, I could order it right now, click, it's done. I can now move on to something else, as opposed to, you know, getting in my car, driving to the store, and going in hoping that they have what I want, getting it and coming back home. And so that really just compressed that. And so the, you know, that the amount of times we go online to get information was already, you know, pretty high back in January of 2020. But boy, COVID just forced it up. And so the companies that have will just, I'll say the best websites that make it easy to find them and to find the information that the customer wants are the ones who are winning. And that was something was going to happen anyway, but this really speed it up. Then the then the second one is how we buy. And so you have companies who may sell, have chosen to sell direct online, other ones that say, Well, Mike, I'll leave that up to my customers. And, and that's fine. But, but we're seeing that that shift, where more people, even professionals are buying things online, after they they found what they want. And so to make sure that it's easy to not only find your product, your information, but also if somebody wants to buy it online, you make it really easy. It's interesting, like in looking at so many companies, websites, and you look to say where to buy. And I was looking at deck companies and railing companies. And I think only one company had listed on their where to buy decks direct, who is this leading online distributor seller of deck materials. And, and so it's as if the other companies they don't exist. So anyway, so we've so we've seen this just continuing shift. And the other one is the we could not much as salespeople love to get in their car and go drive and see people. They couldn't do that. So they had to get used to calling using different tools, such as such as zoom or virtue, you know, different ways of having virtual calls or texting or phone or email, whatever, whatever tools it was, had to rely on those more. And some salespeople adapted really well, and actually said, gee, this isn't too bad, I can see more people in the same amount of time than if I'm in my car driving from meeting to meeting. And the customers also discovered, gee, I like the fact that I don't have to meet with somebody. If I meet with somebody, I kind of feel like I got to give them it's a bigger deal. I got to give them a little bit more of my time. I've you know, we're gonna have coffee or do something even if I really want to talk to them, but I need like 10 minutes of their time. And, and if I want to meet in person, I can ask them if if if I can do it on a on a phone call or a virtual call, that's even better. And so that was a you know, that's been a big shift that to me that happened was probably to me the biggest shift. The the other big shift is I don't think we've ever been in a time when you literally couldn't find many times the product. There nobody has any doors. I need to buy 300 interior doors from my new homes. I can't find anybody they'll sell them to me. Okay, what? You know, that I mean, that was that was a whole new world, you know, for the customer and for the manufacturer. And, and so that was another big change that we're, you know, we're, we're kind of working through that now. People I talk to customers, it's getting better. It's not perfect. They still will have some products that have long lead times and some products out of the blue that they thought were fine all of a sudden are not available. So that's another big challenge that that I see that has happened. So those are things that to me happened because of March of 2020. Since then, those are changes that have happened. And then we're we're set for, you know, even more coming out. Mark, you started out by talking about the web presence and, you know, companies who like manufacturers who have gone to either selling direct to consumer, or have an e-com platform, or at least are making it easier to buy directly from the manufacturer, whether or not they're making it directly available online. So obviously, this is a conversation that we have with manufacturers all the time. Everything that happened from COVID and on has really fast forwarded the conversation exactly like he said. And of course, the thing that pops into everybody's mind when you say sell direct or e-com from a manufacturer is channel conflict, right? So I'd love to know what your predictions are on the future of channel conflict. Do you think that will continue to be a prevalent topic in concern for manufacturers who are wanting to push their products from an online standpoint or sell direct? And if not, how do you anticipate that changing? I think channel conflict as we've traditionally defined it, being that I'm your distributor. I don't like it when you sell to another distributor. And I really don't like it if you're selling direct and cutting me out. Or you've always sold to me and now you're selling to Home Depot. Okay, you know, those types of channel conflict. Those are over we've stepped past that it's that's just an accepted customers may not like it, distributors and dealers may not like it, but they know it's a fact of life. So that one is gone. I think that we'll see a new kind of channel conflict and and I don't know if it's channel conflict or channel disruption channel competition as as the everybody today has to continue to earn their value. It's like if I'm a distributor, I need to keep upping my game every day, or I'm going to become unnecessary. Like, like, why are we having this? Why? How much is it we pay in this distributor? How much more are they marking things up? What are they doing for me? Do I need them? And the same with the dealer, the same with a contractor. And so we're going to start to see I think that where you see Lowe's and Home Depot really into installed sales. I think that that's going to get bigger. And I think all of a sudden, if I'm a flooring dealer, or I'm a roofing contractor, I may, you know, be now seeing, Whoa, I got a new competitor here. Okay. And am I unhappy with the manufacturer for some reason? You know, do I feel like they're supporting the other competitor more than me? But I think, you know, we're going to see, we're not where we used to just sell the product that then got installed in this drive for making things more efficient and easier. I think we're going to see things like installed sales, I think grow, I think we're going to see off site. Yeah, we've seen, we've even seen, we've even seen manufacturers mark talk about this. Or they're like, oh, we want to, we want to do, you know, could be completely vertically integrated. We want to offer the product, we want to do an installation. We don't want to be at the mercy of an installation crew getting our product and actually selling it and making sure we actually get the deal. We want to do this and the number of manufacturers are looking into this more because they see it as a huge opportunity. Well, it's interesting when you think also about the consolidation that's happened in our industry and the consolidation that's happening in all industries, it's important to look at the different touch points that your product has. So it's not just competitor merging or acquiring a competitor. It's it's a product acquiring the beginning, middle and end. So now I control the manufacturing, the distributing, the installing, the warranty, all of that, all of that's under my control. And you're just able to create a better experience start to finish. Yes, I always still have this. It's just my years in the industry of how slow the industry is to change to move along to try new things. And, and, and, you know, to me, I look at like nest thermostats, I look at how they totally turned upside down the thermostat business. I look at Elon Musk with that how you buy a Tesla car. So it's certainly there. You know, the opportunity is there. I'm just sitting there going, is there a company that's in the industry today that recognizes this and has the courage, I can strengthen their conviction, whatever to say, no, we're going to upend the whole the way the window business does. Now, you know, Pella, what, two years ago, you know, did a big thing where I think they list prices, which is like, what, you know, you don't do that. So that was a big step. You know, I think that there's a ton of room for innovation of how we get the products to the the person that needs it. And, and that can involve installation, it can involve warranty. Maybe you don't buy the product, maybe you're just leasing the product. You know, maybe you're leasing a roof from me, right? And so you pay me this much a year, you don't worry about your roof. When your roof needs repaired, I repair it 20 years from now when it needs replaced, I replace it. I mean, I just think there's all different kinds of models. And I, I'm not sure that I see anybody within the industry that would be that innovative. I think you're seeing small steps, Mark. Oh, yeah, we do we do market research every year on this. And one thing we saw, because of the pandemic was that builders, contractors, even architects were starting to source products directly on Amazon. And we're like, Oh, that's really interesting. I wonder if many manufacturers are going to lean into that. And sure enough, I was checking out Huber's website, zip systems, I think like a week or two ago. And if you go to their flashing section, they haven't like your traditional like where to buy. And then they also right underneath of that, they have shop now directly on Amazon. And they blink you directly to an Amazon page. Go Huber. Yeah, that's awesome. I'm like, because you know, because you're like, Oh, is this going to create channel conflict? Like I guarantee you, they just they probably talk to a number of customers. And they're like, Hey, we buy on Amazon, because it's really quick. And I need it like tomorrow, because it's it also takes their traditional distributors, dealers, and saying you better up your game. Okay, I mean, you know, you can compete in this too, right? But you know, it's a different business. So I think that, you know, that can happen. I, I look at, I keep thinking that someone is going to come in from the outside with big money. And it's maybe a company, maybe it's a company that like Berkshire Hathaway owns or something, but who would who would give them the money to do this. But I think Katerra had the right idea, they just they just didn't know how they didn't know how to execute. They were too fragmented. They didn't know they just had too much free money. To me, they had too much money. And they started to believe their own crap. And they weren't focused. And so they just blew through the money as opposed to like, yeah, we actually need to make a profit one of these days. And, and so I think that we'll call it Wall Street, sitting there looking for where do I put my money? And now they're putting it into housing. So they're buying up or building single family housing to rent to become a landlord. Well, what, you know, they also are very aware of how offsite construction eliminates a lot of the waste and inefficiency that's just baked into the system. And so sitting there if they go, hmm, I could get in that business and, and I could compete with home builders, I could compete with commercial builders, general contractors and so forth. I think we're gonna, I think we're going to see in I bet there's some people that are already really looking at this and maybe even testing a few things out on a small scale. But I think you're right, we're going to see some different ways of doing things. The other thing that I think about is we are, we do not have enough people to hire. And so it could be we don't we've we've had a problem where we don't have enough roofers, plumbers, electricians, painters, glazers get on down the line. And then you look at your dealers and distributors and they have trouble hiring people to work for them. And then the manufacturer also has trouble. You know, Mark, I would argue that like, I think that's actually going to change. And this is not, well, let me say this, I think the lack of labor. Mark is shaking his head. I know. Yeah, so hear me out. Okay, so there's this thing called the great resignation that happened during COVID, right? The economy is flushed with money. And we saw people, you know, they invest that and did really well. And now people are being squeezed financially because of inflation. You're seeing this that you're seeing the national average savings rate of Americans drop. Yeah. And so there's a number of people that were, you know, maybe they stopped working, whatever we're going to shoot, my savings are driving up, you know, drying up, I need to go back to work. And so I don't have this single handedly going to change the building product space. But I do think the availability of labor across every market is going to start to become a little bit easier because a lot of those people that quit or left, whatever it might be, because they were flushed with cash, are going to now have to start working again. I think there's going to be a few fields where that happens. So we had a lot of like in our field, we had a lot of creative people. It was very easy to quit your job and and become a content producer or you know, whatever you could it was pretty easy to become a freelancer or whatever you want to call it and and find business online pretty quickly. And yes, that now is that was easy. It was easy to get the business easy to do it now time. So we'll start to get tough for them. And so some of them are going to go, This is not for me. Now, I do not think that person is going to become a roofer. I don't think that person's going to go work for L&W supply as a selling dry wall. I don't think they're going to go work for a building materials company, maybe in the marketing department, maybe for their agency. So the person that was a building. So I'm primarily thinking about sales people. And I know I've talked to you before about I'm really into this guy, Peter Zehan, and his studying of how declining birth rates. And so right now, we are 400,000 people short of the number of people that we could employ. And it's only going to get worse until about I think he says 2034, when we'll be 900,000, short, right? So there's going to be fewer people, let's say, under the age of 40, in the looking for a job, right? You so I mean, you saw Elon Musk talking about this to like the national birth rates, like it's how it's declining too. Yeah, and then he like famously tweeted comically. So I'm just the point I'm trying to get to is if you had 20 salespeople, and if you look at the traditional building material sales person tends to be a baby boomer, right tends to be an older person that's been around, they know the business, they know the product, the customer, the competition, right? Those people are retiring. There's nobody to take their place. Okay, you know, the you look at the younger generations. Being a building material sales person is not on their radar screen, right? Maybe working for Google is or Chase Manhattan Bank or something. But but the building materials industry has, has, you know, done a poor job of saying, hey, this is a great industry to have a job in, which it is. But they've done a horrible job. And so, so first of all, we've got this thing where people will just say they don't think look up to the industry. I just think that we're going to see building material companies are going to have a difficult time finding as many salespeople as they might like to hire. So that says to me, once again, their digital presence, their website, their things like in homes, customer service and selling, all of those things are now going to become more important because even if you had the money to hire more salespeople, I don't think you can find the caliber of people that would be worth the investment. Okay, I understand. So I think that's going to be so so the industry is going to face this, even if they have the money to hire them there, I think they're going to have a really hard time finding quality people. And then the other one that's not going to hit us right, it's not going to hit us in the next two years, but it's going to start to hit us quickly is that we're going to have fewer people. If you're 40 years old or below, you are a consumer, you buy stuff, you buy stuff, you know, you have a baby, you got to buy diapers, you know, then you got to buy school clothes, then you got to buy and you're buying a car and a house and, you know, you're consuming things, right? You get to 40 and then you start to save. You have I already have a house I already have this I have this I don't need I've gotten you know, most of the things I've got my one kitchen aid mixer that I'm going to buy my whole life. I bought it when I was 25, 300 bucks, it killed me but it's been the greatest investment ever, right? So I don't need any more. And so we're going to see fewer and fewer people under the age of 40. So we're going to have fewer people needing a new house with a new door with a new roof. Not you know, it's not going to be a huge number but we've we've been kind of spoiled where every year, there were more people were going to buy a deck more people were going to put a fence in their backyard. And and so you didn't have to be the the sharpest sales or marketer is like you had a nice chunk of the business if you just did your job, you'd be okay, marks can get a little bigger, whatever, right. But but now, you know, the market is going to start to get smaller. And so now, you know, you're going to be fighting for that piece of your market share. And that's going to that's different. You know, people have been able to kind of just coast on the rising tide thing lifts everybody lifts all boats. Mark, I want to shift to talk about the economy for a second. Yeah. The economy, the numbers, if we look at mortgage rates right now, mortgage rates and 30 year mortgage last year at this time was 2.65%. 30 year mortgage today is I think it's at 5.78%. Yes. And so it's really impacting homeowners, specifically look at residential. I want to get your take on what you think is going to happen with the economy. If you had a crystal ball, I think we have to because you are the wizard, right? But I just you know, so I just like you know, I've you know, we've talked about how every recession is different. Everybody assumes that the recession is affects. Well, they won. First of all, go What was the last recession like? So that will be what this one will be like. And then also they kind of generalize about how it's going to affect them. And then if they do something stupid, like listen to the news, then they get even more depressed. Okay, because how bad the world's going to be. And so, you know, we've also had this huge shift in the last since 2010, we'll say or somewhere in there, this huge shift between who has money and who doesn't. And so the people that have money, they don't care about 5% interest rate, they want that house, they want to move to wherever they're going to, they're going to move. They want a second house, they're going to buy a second house, right? They aren't that same person. It's almost like I don't think that middle person exists anymore. Right? I think there are people that I just graduated from college, I'm looking for my first decent job, I'm working at Starbucks or whatever I'm doing, right? But I'm struggling. Maybe I act, maybe I found, we'll say my first job, but it isn't, it doesn't pay six figures, you know? And so I'm learning, you know, I have a different vision than if I were in the same position 20 years ago. 20 years ago, I've been looking at maybe my getting married, having my first starter house. Well, there aren't any more starter houses. If you're someone in marketing or sales today, Mark, and you're looking at, you know, the amount of mortgages, like I saw a stat recently, let me just pull it away carefully. Yeah, then mortgage home purchase, home purchase applications have bounced back last two weeks. This is from a guy named Len. I don't want to put his last name is Len Kiefer, I think. Yeah. They're only down 10% from a year ago. Okay. He says it's pretty good considering mortgage rates have essentially doubled over once again, the people that could just barely afford, you know, a 400, 300, $400,000 house, right? That's who that's who is to me. Now, I don't have the stats. I'm just saying what I see is, is the people that could just afford this, the people that the difference between 2.5% and 5% means yes, we cannot afford that mortgage, right? Honey, we're going to have to wait another year till we buy a house, right? Those people have been affected. Now, those people bought a new house, they have no money to fix that house up. They have no money to add on, you know, a nicer kitchen and so forth, right? They're they're spending everything they can to just get a roof over their head that they can say this is mine. And but the people just above that and to weigh up, you know, they they'll want a new deck. Oh, okay. Yeah, I want a new deck. How much the decks cost? Well, I don't care. How much did they cost two years ago? I don't know. You know, I'm not, they're not, they're not as affected. And so I think that you can you can have a mental thing about oh my gosh, mortgage rates and how does he starts and oh my gosh, and all this, we better buckle down, we better tighten our belt, we better this, we better that, right? Okay, that's the stupid way of thinking, a smart way of thinking is saying, okay, where's the market going? Where's the money going? Yeah, how can I best take advantage of this situation? And so to me, where, you know, a lot of people made the mistake in the we could say they made a mistake or they they made a choice to to, in order to sell volume, they pared down, if they had a good, better best product line, well, they they got, they got rid of the best, right? Because few people buy the best, right? And they focused on, we'll get to the good and we try to do as many as we can make 1000 good doors a month that and if we would get rid of the good and better, we can now do 1200 good doors a month. That's what we're going to do, right? Well, okay, so now, you know, they've kind of gone down, they've given up margin, they've given up the the idea about getting people to buy better doors. And they walked away from that. And to me, I would be focused on, you know, the the better and best, I'd be like pushing people up toward better and best. And literally, like, I know if a builder called me and said, Gee, I'm sorry, I don't have any of my good doors. But I do have you need I have 200 of my of my better doors. But that wasn't a thigh thinking for most of them, most companies. And so I think that as the market, you know, so the so the bottom end of the market to me is going to get tougher. And it's going to, you know, going to shrink a bit, right? But I think the the top end of the market is still there. And now your job is to say, why should you buy a deck instead of going vacation? You got $30,000 burning a hole in your pocket? Okay, is it going to be, you know, you're going to trade in the car and get a newer car? Is it going to be going on a vacation? Is it going to be $30,000 worth of closets or $30,000 deck? They're going to spend the $30,000. Okay. And and and so too often, the building materials industry just sits back and doesn't fight for their share. They kind of go, Well, if they if if somebody wants a deck, we'll try and sell it to them. So, Marcus, we go into this next season of whatever the economy has to hold, I think we're all kind of waiting for the next issue to drop. What advice would you give to a manufacturer that they need to start doing today? Being closer to their customers and listening to their customers and and and looking for what are their customers biggest challenge and challenges? And is there anything they can do to help their customers be more successful? I think that, you know, being we one of the downsides of COVID is we got most building material companies got further away from their customers not closer to their customers. True. And and so the channel to me still controls the sale. So it's like whether it's an architectural specification, whether it's the product of builders going to put in their new home or the what a contractor just likes to work with or the company like dealing with or a distributor or dealer. Okay, that's where this will be one or lost. And when you when you forget about the importance of them, and and you stop being open to meeting their needs, you know, you see so many companies think about, like if we you know, they I always think a lot of them have like a MBAs whose whole job is to sit behind a computer screen and look for ways to save money. Okay, and they've never been on a job site. They've never met a customer. They have no clue, you know, what a customer does. But yet they'll go, you know, if we stopped acknowledging orders, that would save us $20,000 a year. Well, then let's just do it. What maybe we asked the customer, would it be how big a deal would it be if we no longer acknowledged orders? No, we don't want to know the answer. We just want to save the 20,000, right? And piss off the customers. Mark, this has been great, man. This has been really great. I want to make sure we quickly plug your Wizard Summit. If someone is interested in joining, which we've been a part of before, you you're holding you tend to hold this almost every year, if not twice a year, but you didn't hold one this spring or hold one this fall, which is really exciting. Give us some quick details on that. So the Wizard Summit will be held on October 3rd and 4th in Boulder, Colorado. It's something that I've been doing since Zach, we think November of 2014. 14. Yeah. Yeah. And so Zach was there, helped me with the first one. In fact, Zach even named it the Wizard Summit. So but you know, I realized years ago that there's a huge vacuum in this industry in terms of helping people, educating people and and showing them new ways to do things. You can join the NHB and it's a great organization, but it won't teach you anything about how to sell home builders. The same with the AIA or the same with the roofing contractors, whatever. So I took it upon myself, you know, back when I first started consulting saying, okay, there's this big vacuum. So I'm going to try to be that source of information, educational information to keep people sharp on top of things. And so one of the, in addition to writing my newsletter, my blog and my podcast and so forth, the other I decided to do was to hold an event and bring people in so that we could spend a couple of days and really go through what's going on and what's changing and how what should you do to take advantage of that. And not only me, but I, you know, have always had experts in other fields and experts in in parts of like selling or marketing and so forth that focus. They only work for building material companies. And so so there's a great group of people there to help keep you on top of your game. And and so it's and it's about like getting you to think it isn't and it's helping expose you to things, challenge your thinking and then have you have you have more options about how to move forward. And people will tell me like, you know, at the end of the second day, Mark, I have 20 pages of notes here, what am I supposed to do now? And so one of the biggest problems is paring that down to like, you know, what are that? What are the three biggest things that you should do? Not you can't do 20. Right. What are the three biggest things you should do? Okay, and they could be, you know, they can involve sales, they can involve social media or your website or or heaven forbid trade shows, you know, whatever. And so it's a great experience that people that come back on a regular basis tell me, you know, it just gets me out of things and you force me to look at my business from 30,000 feet. You challenge what I always believed to be true. And so it so I say, well, I'm a little biased, but I think it's a great event. We also limit the number of attendees so that so that we can spend time individually with them on their issues, their questions, their challenges. It's not like you're sitting there with 300 people in a lecture taking notes. You know, you're right in the middle of it. It's true. And Mark, if I want to sign up, what do I go to find that information? Let's see. Well, you know, the easiest one is to just come to my website at see the wizard calm and wizard spelled w h i z a r d calm. And you will see it promoted on there. And while you're there, you should sign up for my newsletter. There you go. It's some great every Sunday night. I I try to see who I can piss off with my tape on what's going on the world. And and so I think that's would be some good stuff. But I'd love to see you come. You know, sale. It's great for sales people. It's great for marketing people. It's great for the boss, you know, leaders of companies that want to get a different point of view and have their thinking challenged. It's great for them. Then the other one is if you have anybody that's that you know that's been with you for less than a year. This is a great way for them to get literally, you know, two or three more years of knowledge in two days. So all of a sudden they're going to become a much more valuable employee to you. It's great. Mark, again, thanks for coming on the show. As always, you bring a wealth of insight and help. Make sure you link to that in the show notes. And if you enjoy this content, make sure you check us out at Benvio.com slash podcast to subscribe to get more. Until next time, I'm Zach Williams alongside Beth Optiglove. Thanks everybody.