For Tilling Timber and Independent Hardware Group, a long-standing partnership has developed into new ways to drive sales growth and support independent timber merchants.
When the winner for Trade Supplier of the Year was announced at February’s IHG Awards of Excellence, the audience erupted with applause, but not surprise. The success of the relationship between Tilling Timber and the IHG membership has helped to encourage timber building in Australia, and works as a model for how complementary businesses can drive growth for each other, and for the broader sector.
The family-run timber company founded by Norm and Judy Tilling has always been innovative in its business methods and in recent years it has shown great willingness to lead the way with new value-add parts to its product range and service.
“The relationship goes back nearly 60 years,” says Richard Walker, IHG timber category manager. Tilling came on board as a supplier to the newly formed Mitre 10 Group in the early 1960s and their early hardwood product was popular throughout Victoria. But in the past decade, the company has grown across Australia and expanded heavily into engineered timbers, particularly LVL and timber I-joists.
“That’s where their march towards becoming a significant supplier partner for us changed,” says Walker. As builders began to understand the advantages of the new style of product, they bought less hardwood and more engineered product. The transition took time and marketplace education, but several factors worked together to tilt the balance towards engineered beams.
First was the quality and reliability. “You can get longer lengths, it’s dimensionally stable, it’s a stronger product,” says Walker. “Plus, because it’s engineered, you don’t have to rely on the trees to grow a certain height before you can get timber of that length, and it uses more of the tree, so it’s more sustainable.”
The long spans of LVL were also perfect for popular open-plan living spaces. Because manufacturers built beams to the old hardwood specifications, they were easy to integrate into builders’ systems. It was – and remains – a good product that solved a lot of hardwood timbers’ issues. But it was the next step that was the game changer for both Tilling and IHG.
When Tilling introduced SmartJoists, an I-joist with LVL flanges top and bottom, joined by an engineered web, IHG members could see the enormous potential. “It’s a product that would replace the traditional solid joist or PosiStrut beam for second-storey floor builds, says Ben Shaw, general manager at Richmond Mitre 10 and Danahers Mitre 10 in metro Melbourne. “Because it’s an engineered product, you could determine what loads it could carry, how big the holes you could cut in it.”
IHG members also recognised it would require a different way of selling, as did Tilling. Where LVL beams had been straightforward substitutes for an older product, SmartJoist was a new method altogether and involved a more complex approach.
Bringing it to market was a process. Second storeys were traditionally built over steel or timber PosiStruts. SmartJoist could replace both, though its first incarnation required a bit of tweaking. The traditional PosiStrut is an open-web design type of floor joist, which means that plumbers, electricians and air conditioning installers can run all their services through without any effort. When SmartJoist and competitor joists first came out, they were a solid beam through the middle and tradies had to cut holes for the services, which led to some suggestions for improvement in the feedback from builders.
In response, Tilling increased the role of their design service, looking at house plans and cutting holes for follow-up services in factory. Labelling and precision docking were also offered, among other value-adds.
As Shaw says, it was a winning strategy: “The trades love it because it’s just as easy for them to do their work, the builder loves it because there’s significant cost savings, and we love it, because we’re selling more timber.”
Teaching builders how they could use SmartJoist required putting the stores, the builders and the supplier together to come up with a solution that worked for everyone.
“We’ve always had Tilling in our racks,” says Shaw. “The opportunity for us with the specified product was to substitute a timber solution for steel or PosiStrut products – things that would be lost to our business as a sale.”
The design process is straightforward, says Leon Quinn, national sales and marketing manager, Tilling Timber. “Trade Centres receive plans and engineering from the builder and are asked to quote the frame structure. Our floor and roof designs are a part of the frame, so IHG members can take our design and combine it with other products as a full structural package for the builder.”
The benefits flow both ways between store and supplier. “It’s a design-led solution,” says Quinn. “We have 45 designers and three engineers to support the product and we produce over 14,000 individual home designs a year. A designer might spend two to three hours per design, but none of the designs are guaranteed orders, they still have to go through a process of winning as a quotation.”
Just as SmartJoist helps IHG members to sell more timber, selling the product through stores increases the conversion rate from design to build, as the design benefits are coupled with the one-stop ease of buying through an already-familiar trade centre.
Which isn’t to say the design benefits aren’t substantial. “It removes the waiting for a manufactured product,” says Shaw. “A Posi system could take anywhere from two to three weeks, Tilling can turn it around in two or three days. So it speeds up the build process and enables our builders to be moving forward rather than waiting on manufactured product.”
Derek Vanderkolk, co-owner of Bayswater Mitre 10, says his builders appreciate the seamlessness: “They send the plans off, Tilling will engineer the subfloor and the second floor, and they get a layout of where everything needs to be, where all the stumps need to go, where all the bearers and joists need to go. It’s basically a Meccano set, you just put it together.
“It’s faster for them on site and they get a certificate to say it’s all engineered. They’ve only got to pass that on to their building surveyor and they’re home and hosed.”
Through this focused partnership, Tilling and IHG members have both increased their market share. Each company has brought significant strengths to the partnership. “IHG’s scale and geographical coverage mean that when we bring new products or new solutions to market, there’s a channel to market,” Quinn says. “They can get very strong results very quickly and they cover such a large proportion of trade markets in Australia.”
Walker appreciates the other side of the relationship. “Tilling is great at re-engineering and improving the design of a house or a building to take out steel,” he says. “And because that re-engineering is focused on improving the design, it can come in multiple forms. It could be ‘here’s a cheaper way to construct the house’ or ‘here’s a better method so there’s less bounce in the floor’. Their expertise in that space is outstanding.”
IHG members are quick to list the benefits: no waiting on fabricators; no need for welders or for steel to be galvanised; no need for a crane as timber beams are significantly lighter; most builders are far more familiar with working in timber and the material is easier to adapt, both for last-minute changes and for future extensions.
In terms of practicality, reps from Tilling and IHG’s members go out together and speak directly with builders to show how they can improve results. Shaw says, “We do specifically targeted joint calls. We work in tandem and we use the Tilling external sales team as an extension of our own reps. The customers appreciate they’ve got a subject matter expert on site with them.
“There’s been a fantastic response from our customer base and we’ve had great uptake. It ties into our whole-of-house strategy – we want to be selling our builders as much of the house as is possible.”
Vanderkolk has had a similar experience: “They do calls with and for us and our building clients reckon it’s fantastic because it’s one less thing they have to worry about.
“Their design service is very efficient,” he says. “I haven’t had anyone complain about any of the floor systems that we’ve supplied. Tilling also have very good customer service, where they’ll talk to the customer directly, rather than have us in the middle trying to pass on information about how the floor system needs to work and what they need done.”
Both Shaw and Vanderkolk cite the breadth of Tilling’s approach as key to the success of the relationship, including best-practice customer service, speed of deliveries to site and their technical ability.
Tilling has also recently developed a CRM system that tracks every job. It was born out of the need for engineering documentation to be produced from Tilling’s designs when they are converted into orders. “This becomes the source documentation for the builder’s construction,” says Quinn.
Because all the data was already being collected and tracked, it was an easy job for Tilling to provide feedback, and then to improve on that: “We created a portal so our IHG trade members can log in and see all the jobs that they’re quoting on and use it effectively as a CRM just to make sure nothing gets missed,” says Quinn. “We originally built the portal just as a workflow management system, but it quickly evolved into a CRM that enables us to provide realtime feedback and for them to run their own reports on their conversion rates for Smartframe designs.”
Similarly, distribution is a team effort, making use of Tilling’s distribution centres in major mainland capitals and IHG’s extensive Trade Centre network. In some cases, deliveries will go straight to site from Tilling where there is a logistics saving to be made. “It’s all well and good for us to say ‘Oh, I innovate, and I’ve got great design,’ but the backbone of our business is distribution and if we can’t get it there, the rest doesn’t really matter,” Quinn says.
Like almost all IHG members, Tilling is a family business at heart, and that similarity in culture shows. Customers are at the core of their business strategy and there is a readiness to go the extra mile to help their customers make a sale or build a new relationship. When the Awards of Excellence ceremony concluded, Norm and Judy Tilling were surrounded by literally dozens of friends from the industry, all ready to congratulate them and each with a story about the difference Tilling has made in their own business.
New build sectors
One of the most valuable aspects of the partnership is its ability to help stores and their builders at a time when housing is slower overall by growing timber’s share of the market.
“Tilling’s engineered product has expanded the offer we bring to our builders,” says Vanderkolk. “It’s increased the business we do with them – they can get everything from one place.”
Shaw agrees. “We’ve seen significant growth, coming in captured sales we wouldn’t normally see. If I was to look at a band of my top 20 customers that we’ve offered this service to over the last 12-18 months, we’ve doubled our sales with these customers as a result.”
Tilling and IHG are also looking to expand sales in previously under-explored areas such as mid-rise and multi-res.
“We want to create more opportunity for all independent members to bring more possibilities to their builders,” says Quinn. “Going for a timber structure in mid-rise is definitely more economical for the builder than concrete. It’s just about being able to cohesively put it together.”
While smaller builders have been cautious about expanding out of domestic builds, the combination of Tilling’s design service and IHG’s whole of house service makes it more achievable with less risk.
Environmental concerns are also emerging as market drivers, and Tilling’s range not only represents a low-carbon alternative to concrete and steel, its plantation-grown products are PEFC certified and come with chain of custody certification.
“It’s a matter of seeing opportunities,” says Quinn. “The merchants need to tailor their offer a little more and then we need to make sure that we’ve got products and solutions that support entry into that area as well. If we just keep going after exactly the same diminishing market, then the figures are only going to be what they will be. But if we look outside the box a bit and come up with a solution that might help builders into another market, to get growth there and establish a footprint somewhere they weren’t before, then that can soften a general downturn.”
It’s a growth that the IHG team is firmly behind, with the group looking for areas where its trade members can expand and take advantage of the possibilities offered by Tilling.
“The premise of ‘whole of house’ is how do we sell more of the house to the builder, not just the parts that we’ve always been really good at,” says Shaw. “It’s an exciting relationship. Tilling is always trying to be innovative and pushing the envelope, which is great to see in the timber space.”
For Quinn, it’s simply part of being a large family business. “You’ve got to add value or perish, it’s as simple as that. If you don’t deliver a lot of value, the rest of the market will run past you.”
But that growth is carefully directed. Unlike some suppliers who have begun to move into the timber merchanting space themselves, Tilling is very happy to leave the selling to the professionals. “We specialise in loading as much innovation into our part of the house as possible, then the merchant is the generalist and they bring the best solutions together to deliver as much value as possible to the builder,” says Quinn. “We’re happy to play to position, as they say in the sporting world.”
And whether that playing to position involves driving into new sectors or delivering a lower-cost faster build, each design comes with additional sales of consumables to the IHG merchant: tools, cladding, flooring and all the other products that are needed to turn a frame into a residence. So even in a market without overall growth, the partnership is able to deliver more value to group stores.
“Our Trade members come to us and say ‘we want you to help us come up with a deal’,” says Walker, “and Tilling is willing to play in that.” He describes the commercial relationship as very competitive and rewarding, “but more importantly than that, they’re proactive and work with our members to grow their sales.”
Walker concludes: “As a buying group, we’re able to work with Tilling to put a compelling offer together that outweighs the existing product it’s replacing.”
For more, visit www.tilling.com.au or www.mitre10.com.au
Image: Tilling Timber SmartJoist being used to create second storeys.