Much of the sales process for building materials requires communicating the value of the product to the end user. This means building materials manufacturers and distributors have to give architects the information they need to help their clients see the return on their investment (ROI).
In this article, we’ll explain what ROI means for building materials and why architects need to understand it. We’ll also review how manufacturers and distributors can help convey their ROI potential to architects and, ultimately, project owners.
What does ROI mean for building materials?
Usually when people speak about ROI, what they’re really talking about it which material is the cheapest. The cost of materials might be the ultimate driver of return on investment; less money spent means the return can be minimal. However, each project has unique elements that impact its value to owners or developers, including revenue streams, tax credits, and publicity.
For example, if a project can secure green building certifications, this may mean the owner can lease out space more quickly and at a higher market rate than if it wasn’t a green building. Even if the products needed to meet green building requirements are expensive, they will result in a higher overall ROI.
This is why building materials ROI is not as simple as what’s cheapest, and why ROI can be a useful sales tool – especially if your products aren’t low-cost.
Why do architects need to understand a building product’s ROI?
At every stage of a project, an architect is making decisions about how to allocate the project budget, and to justify the budget decisions to the client. Owners need to know that the costs they are being asked to pay are worth it, so architects need support to be able to convince an owner to make an investment in your products – especially if that investment is substantial.
If your product is seen as similar enough to something less-expensive, you could lose out on the project or have your material value-engineered out. Similarly, if there are any perceived obstacles with your products – long delivery times, tricky installations, non-standard payment terms – an architect may recommend what they feel is a “like” replacement. That is, unless they understand the ROI that your products can deliver.
How can building materials manufacturers calculate ROI on specific projects?
This is an easy answer: you can’t. In order to provide concrete ROI figures, you would need to know the ins and outs of the project’s finances and projected cash flows. Not surprisingly, this is not something most project owners will want to share with you.
Instead of hard numbers, though, you can provide a framework that lets the client (or the architect or the contractor) fill in numbers if they would like. What you want to show is how they should be thinking about the benefits of your product relative to the cost – and relative to what their competitors are doing.
What should be factored into the ROI framework?
Product Qualities
The first thing to consider is a project’s intrinsic qualities. These can include things like longevity, resistance to erosion and water, or ability to withstand extreme heat and cold. These are the things that will be most obvious to the architect and possibly the property owners, but translating them into ROI may fall to you.
- Example: Because of the product’s longevity and any warranties you provide, the owner will save money over time by not needing to replace the product as often or at all.
- Example: Your product weighs less than a competitor’s, so the transportation and installation costs will be lower.
Installation, Maintenance, and Operation Costs
The costs of installation, operation, and ongoing maintenance are often the most overlooked and most significant ways of demonstrating ROI. If incorporating your product means fewer people hours needed to maintain a function, clean a product, or operate part of the building, this is something to emphasize. Likewise, if the space can still be in use while cleaning or any necessary repairs are performed, this is also worth noting.
- Example: Your product can be installed with less rigging than what your competitors’ materials require.
- Example: Your product can be repaired quickly, versus another product that requires customers to wait weeks for a part to be custom-made and shipped.
Elimination of Other Products or Systems
By using your product, an architect may be able to eliminate other products or systems. These cost savings contribute to the ROI. For example, wall tiles that provide acoustic benefits may mitigate the need for other acoustical systems or sound dampeners.
Additional Revenue Opportunities
Does your product create additional revenue opportunities for the owner? If your materials create flexibility in use, the answer is likely “yes.” This includes things like being able to use a space in a new way during downtime for the primary use or being able to charge the end user for the use of the product.
- Example: An acoustic wall divider that allows a restaurant to offer an event space during non-peak hours.
- Example: A multi-family building with a bio-composting machine, where residents pay an additional monthly fee for access.
End-User Appeal
Almost every commercial building owner will be looking to attract an end user: multi-family buildings need residents, schools need students and teachers, office buildings need tenants, hospitals need patients and providers, hotels need guests, and so on.
If your building material makes it more likely that people will want to inhabit the space, this can be very persuasive to architects and owners. Consider things like:
- Whether the product is viewed as a “must have” by the intended end-users
- How the product creates a perception of luxury
- The product’s contributions to green building or sustainability certifications, as spaces with these kinds of designations are often considered more desirable
- Whether the product helps differentiate your building from other buildings vying for your same occupants
Communicating Value to Architects So That Clients May Also Understand
Making sure an architect understands your product’s ROI potential is a vital part of your sales process. Here are the most effective ways to do it:
Ask for testimonials
If possible, secure testimonials from architects, owners, and building managers about how your product has made their property more valuable, easier to operate or maintain, or any other positive feature. Hearing from people who experienced the ROI your product offers can be very powerful.
Create case studies
Case studies are valuable for demonstrating how a project owner or end user previously, or would have had X condition but using your product removed the problem or improved the condition. Well-written case studies show that the product delivers on what it promised. To avoid talking in specific numbers, you can use percentages or multipliers (“50% improvement,” “twice as many,” etc.). Every project is different, so while the percentages will likely be consistent, dollar amounts will vary and you don’t want to create the wrong expectations for prospects.
Communicate your product’s value in more than one way
People take on information in different ways. Written information is good, but architects tend to be visual learners and may miss key points – or simply lose interest. On the other hand, clients may balk at drawings or renderings because they don’t understand what they’re looking at. Offering the information in multiple formats helps ensure everyone is on the same page.
Provide materials that can easily be shared by the architect with the client
The built environment industry often works within software systems that can be easily accessed by architects, contractors, and engineers, but not so much by project owners. When you provide materials, do so in a format that allows them to be sent to the client directly without the need for special software or platforms.
ROI isn’t just something for the project finance team. It can help shift the sales conversation from the price point to the value you deliver and the advantage you provide over your competitors.
