Monday, January 9, 2012


A while back I asked several modular home factory owners and top management people  some important questions that effect their relationships with their new home builders.  Here is the answer to the first question I asked.  I've kept their identities hidden.

Why would a modular home manufacturer agree to a non-exclusive builder relationship and then penalize that builder for shopping other companies?

Southern Factory Sales Manager:
Builders have the right & should compare factories.  We wouldn’t penalize a builder for doing that providing the builder doesn’t share proprietary information while doing so.  We don’t ask our builders to sell our products exclusively as long as the other products they sell don’t substantially overlap us (some want a value-priced offering to reach a broader market).  If a builder wants to carry two products that are similar in spec & price point, it simply becomes a race to the bottom on every deal…and that’s just a huge waste of time, money & energy.  But if a builder shops around, and brings to our attention advantages that he or she liked about a competitor, it should be a way to make us sharper.  So it’s ultimately a good thing.

New England Factory Owner:
I have no problem selling a builder who buys from another company however we will not supply the sales and lead support.  Consequently, most of our builders purchase only from our company.  They understand the value that we provide and are willing to make the commitment for that reason.  Bottom line, our builders know we help them sell many of their customers. 

Mid Atlantic Factory CEO:
In the current soft market, a manufacturer might agree to sell on a non-exclusive basis to retain the sales that do result. They would not think of it as penalizing the builder by being cautious with (wanting to control) leads that result from their efforts. The particulars of your example could also depend on who was the original source of the lead that you were writing about, the factory or the builder? It is more likely that the factory is thinking they do not want to reward a builder who is not loyal. Another factor would be how the manufacturer deals with builder territory exclusivity.

Mid Atlantic Factory Owner:
We all would like to believe that we can and do create a near franchise relationship with our customers. But the fact of the matter is that we are only as good as our last house, when we do not require exclusivity. More importantly I don’t believe that every factory can supply every single one of the needs of their customers in all cases. There are manufacturers that do a great job building the entry level products, but don’t like to venture into the light commercial or multi-family markets. There are companies that do an awesome job in the middle to high end, but cannot get down to the entry level products.


Anonymous said...

As a builder single sourcing houses to a plant became a scary scenario as the manufacturers were closing up one at a time. Loyalty is a good thing and relationships are a valuable asset for an ongoing concern. As in the case of new world homes one must have an ongoing conern. Sometimes manufactures will show flexability. Other times there is the right plant for the homeowner. If manufacuters would commit to territories with a minimun volume then i believe one would see more joint and stronger marketing campains. When factories try and grab that extra house from an unknow builder they always risk killing valuable relationships. Honest communication alwys works best. Trying to get away with taking that one extra house is a fools move.

Anonymous said...

Thanks for the insight into the factory's mindset. I was with a PA factory for several years before the recession but when my sales dropped in 2008, they quickly found another builder in my town and sold him a house.
He's out of business now but I'm still here selling my 5 homes a year but now I'm with another factory. Don't screw me over as I have choices.

Anonymous said...

Most manufacturers of this building system are short sighted with respects to builder loyalty and I suspect that's the way it's always been.

With the "what have you done for me lately."