Why
Do People Buy EIFS in the First Place?
After 30 years of dealing with EIFS, I am convinced that most EIFS specifiers,
such as owners and designers, do not use EIFS for many of its technical
virtues, but do so mostly for various other reasons. The exceptional energy
efficiency of EIFS, for instance, is not nearly so much of a factor in
specifying EIFS as is cost, good looks and design flexibility. Selecting EIFS
as the cladding for a specific building is thus based on a number of factors,
and mainly is a result of EIFS being a “good overall value.” In other words,
EIFS provides a lot of bang for the buck.
The bottom line in selecting EIFS is often simply price. As people in the EIFS
industry know well, sometimes it gets down to pennies-per-square-foot. This
includes when the economic times are good, and when the times are sluggish.
This needs to change.
So what happens when the economy slows down? Owners and specifiers want their
projects to be completed and look for ways to make that happen. They look to
lower cost alternatives and for similar looking products. For example, it’s
hard to tell the difference, from a visual standpoint, between a precast
concrete panel wall with a textured coating on it, and an EIFS panel. So when
the specifier is looking to “value engineer” some money out of a project, EIFS
gets a hard look as a less expensive alternative to more expensive materials.
But the question begs: “If the building is already specified with EIFS, then
how do you switch to something even less expensive?” It’s hard, as there isn’t
anything, with all EIFS’s advantages, near the price. This is good, as the job
remains an “EIFS job,” and the show goes on in terms of completing the
project.
Selling Versus “Order Taking”
A bit of history: when EIFS first came into the North American market, the
reception was lackluster—oil was cheap and energy efficiency was not a big
deal. In other words, EIFS was a tough sell. Also, people thought EIFS was
“cheap” in the sense of not being a durable product—it was inexpensive and
wasn’t substantial. To sell an EIFS project you had to go out and persuade (aka
“sell”) the use of EIFS. Things have changed. EIFS is accepted now and is
mainstream—a commodity if you will. Being a commodity, however, changes the
dynamics of the EIFS business.
That ‘tough sell’ situation of the early 1970s changed dramatically when the
oil embargo occurred in 1974. All of a sudden EIFS became a ferocious tiger in
the marketplace, garnering market share from all sorts of traditional
claddings. Energy savings was “in,” at least for the short term. This surge in
use of EIFS did not make the brick (and other) industries happy—and the
still-ongoing struggle for market share continues.
Below is a graph, care of the EIFS Industry Members Association, of sales in
the U.S. over the last decade or so. Note the steady rise in square footage
sold per year.
But EIFS still had an Achilles’ heal—EIFS was still the new kid on the block in
some specifiers’ minds. Less adventuresome specifiers liked the idea of
sticking with traditional, proven materials, and to them EIFS was not a proven
product, yet. That changed quickly as large numbers of impressive, big EIFS
projects were completed. The EIFS industry blossomed. Why?
The reason is simple: EIFS was sold, not just ordered. It was not a matter,
back then, of simply getting a good price per pail. The advantages of EIFS had
to be explained—or “sold”—if you will. Fortunately, EIFS has a huge number of
positive features, and smart specifiers soon realized that it actually was a
proven product (with decades of successful use experience in Europe)
and that it did a great many things well.
The Present
Things have changed since then. EIFS is virtually a commodity now, and price
often rules in selecting EIFS brands. This is sad, as the many advantages of
EIFS are quite sellable, even though, honestly, it’s hard to tell many EIFS
products apart.
So when times get tough, the ability to sell EIFS becomes more important. Now
is such a time.
I’ll be the first to admit that I am a bad “closer.” I like to sell products on
their merits, not price, and no one can out-talk me on the technical merits of
EIFS. But I do not have the gift of sales gab, and don’t have the gift of a
sales personality in my psyche. So sometimes I get brought in to help close a
big deal involving EIFS—as the “nerd with the answers.” It’s satisfying and a
lot of fun to be part of the selling process.
In these sluggish economic times it is important to realize that EIFS does have
a lot of advantages, and to get back to the basics of a more technical sale.
Things like good local sales, technical, and field support, are critical. Most
of the people in the EIFS industry that I know have been very close to their
customers and suppliers and earned their business. Such relationships can last
for decades. In particular, finding and nurturing relationships with quality
installers is critical for a handmade product like EIFS. And some unique EIFS
products themselves do have individual sellable features that differentiate
them from other EIFS products—so product knowledge can help make the sale.
The Price Issue
I think one of the problems that the EIFS industry has now is that prices are
too low for what you get. This means low margins for all those in the
construction food chain: producers, distributors and contractors. Along with
low prices come minimal services, such as design and field support. I really do
think that the price of EIFS can withstand at least an across the board
increase of 20 percent for the installed cost. This extra built-in money would
allow the necessary support to be available to assure quality projects. This
increased price must be sold, though.
This “higher margins” was one of the big reasons why EIFS took off in the ’70s
and ’80s. There was enough money in the sale to make sure this new product
would result in good projects. And it did. A star was born.
If you think this is nuts, consider: what other wall cladding are they going to
use instead of EIFS that is anywhere near the price? EIFS is so inexpensive
compared to many similar good-looking claddings that there is a huge spread
between EIFS and the next level of pricing. In areas where other claddings are
prevalent and very competitively-priced, such as brick in the east, brick prices
are low enough to compete with EIFS. But try to convert an EIFS job to brick in
Seattle. Brick
is rare in my old Pacific Northwest stomping
ground and for good reason: there’s no clay to make them from.
What Market?
It’s no surprise to those active in the EIFS business that the residential
market is more volatile than the commercial market. This is especially true now
with the foreclosures and overstock of available homes. The troubles in the
mid-’90s with wall problems in the residential market, which was blamed on
EIFS, have had a lingering effect.
The bottom line is that in slow times the commercial market is more stable, and
that marketing of products and services to that market are more likely to
garner business than trying to sell EIFS to homeowners. The cost-of-sale into
the commercial market is also lower, as there is more square footage of wall
material for the amount of time you spend working with the designers and
contractors to secure the order. Also, the light commercial market (shopping
centers and low rise offices) is not much different than the home/residential
markets, so the transition is easy for contractors.
Winners and Losers
In tough economic times, sometimes projects get delayed or cancelled and
nothing gets built at all. Clearly, some aspects of the building cannot be
changed, like the wiring or the foundations. But some parts are discretionary,
such as fancy interior finish materials and even the exterior
cladding.
To save some bucks, sometimes EIFS is substituted for something more expensive,
as a way to get down the total cost of the building. This happens all the time
and is the reason why EIFS market share tends to stay stable and grow despite
the economy in general.
The same applies to other exterior wall products. For example, the first things
to go are the nice-to-have materials. Green materials are a prime example, as
often they cost more than traditional materials. Despite green materials’ many
advantages, when push comes to shove, the wallet rules, and the pricier
products get cut. Such is the sign of our times and values. Bluntly, if you’ve
got to save some money to stay in business, then the more expensive product
choices get axed. EIFS’s high value and pricing is what keeps it in the
running.
Make the Call
One of the best business speeches I ever heard was in the early 1980s. A
leading distributor of EIFS products gave a rousing speech at a large meeting
of EIFS distributors. The speech was later dubbed “Make the Call.” It was about
salesmanship and persistence and working hard to make multiple sales “calls” to
grab the business. This speech was very inspiring, especially for me, who is a
bit of a nerd and not a salesman at heart. So when the economy is slow, go
ahead and be sure to “make the call.” W&C
