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CMA News & Articles - The CMA is the precast concrete industry association of South Africa. Find our members on our website to source quality precast concrete products, professional built environment service(engineers, architects, contractors and more).

South African makes good

Expat South African Larry Green has single-handed revolutionised the US home paving market.

During the past 20 years spent in California the former founder and of local precast concrete block paving company SA Paving has transformed the US market by introducing new ideas and approaches to home paving, building a multimillion dollar paving installation business in the process.

His company, System Pavers, today operates throughout California, Oregon, Washington and Colorado, executing about 5000 home remodelling projects a year. He has introduced a raft of exciting new methods for recruiting and training, initiated new marketing strategies, and put into effect new ways of retaining customers, following sales leads, and more.

In October last year the Concrete Manufacturers Association (CMA) in cooperation with CMA members Bosun and Smartstone arranged for Green to run a one-day seminar in Gauteng for CMA members to give them insight into his highly successful business methods – at the same time demonstrating how a “local boy” made good in the US’s reputedly highly competitive business environment.

In the following interview with Precast, Green identifies some of the key strategies behind System Pavers’ success. As those who attended his seminar discovered, the initiatives he describes here make for an instructive case study which local companies may use to their benefit.

Precast: Why did you choose to leave South Africa when you had a flourishing paving business here?

LG: The country was in the grip of sanctions and the political climate, especially after the Rubicon Speech, was precarious to say the least. I led an incentive trip to Israel with some of my sales people in 1988 and took the opportunity of visiting Ackerstein Industries, one of the world’s largest paving manufacturers. They had set up a paving factory in California which was losing money and I was invited to run the company with an option to buy the residential marketing and installations division. I moved over in October 1992 but soon realised that it was not going to work as the company was essentially bankrupt.

I was then introduced to a concrete paving block manufacturer, Angelus Block, run by third generation Italians. The owner of the company, Mario Antonini, suggested I start a paving company using his pavers. He helped me get System Paving going in Newport Beach by setting up a $100 000 line of credit. I was joined by Doug Lueck who had been in the industry for some time and we have been working together for 22 years.

Precast: Could you describe your business model?

LG: We adopted a model similar to the one we had first used in South Africa. Essentially we are a marketing, sales and project management organisation aiming at middle to upper income families. We don’t manufacture nor do we employ labour to install the paved surfaces we sell. We source high quality pavers from manufacturers and all laying work is done by sub-contractors who follow strict best-practice installation protocols set by us. Moreover, we supervise the installation process and maintain a hands-on approach with the client.

I transferred my family to the US early in 1993 and they underwent an initiation by fire. I mean this both literately and figuratively because shortly after their arrival we experienced widespread fires, flooding and an earthquake. However, the latter proved a blessing in disguise because many driveways and other paved areas were destroyed and the cost of installing paving was covered by insurance.

Precast: In your presentation, you said you were surprised to find that very few American homes were using concrete block paving (CBP).

LG: Yes we found many beautiful homes in California but most of them had stamped concrete driveways and they looked dreadful. Driveways were lifting everywhere and we realised we had to educate people as to why CBP was preferable. Once they re-paved with CBP, our clients loved the transformation. In those early days we used radio endorsements which made us sound like a much bigger organisation than in fact we were. We had to travel a long way to meet with customers and traffic was so bad in Los Angeles we found we could only manage one appointment a day.

In 1995 we completed a huge bus terminal project in Los Angeles and we had to import 1.3 million paving block bricks from England. This was an incredibly challenging project which involved putting up a 100% performance bond. We grew up on that job.

Notwithstanding our success in the commercial sector, we preferred the residential paving market and in 1998 we decided to focus on it exclusively. It was from that point on that we really started to grow.

Precast: You extended your footprint into other states such as Oregon, Washington and Colorado as well as some East Coast states. You also began franchising. Can you elaborate?

LG: Neither the East Coast nor franchising, which we attempted on a small scale, really worked for us. However, our limited exposure to franchising taught us some valuable lessons about structure and systems and it helped us with record keeping and installation standards, as well as selling and training methods. It was then that we realised we had to become a training organisation. There being no model we could follow, we had to develop our own programmes.

Our peak years were reached in 2007 and 2008 when we were doing ±5 000 projects a year. It was then that we were approached by a large private equity group to buy us out for an insane number. It would have meant gearing the company heavily and I didn’t want to be a CEO with so much debt on the books.

Then in October 2008, the financial markets started to crash and by 2010 sales had dropped to 35% of where they had been. Despite this we only posted a loss in 2009, a year in which our ratio of marketing spend to sales increased from 8% to 17%.

We survived this period by developing a sub-set of outdoor products and transforming ourselves into a lifestyle company. A drought in 2010 led us to promote synthetic turf and water features and we also introduced built-in barbeques, other outdoor elements and landscape lighting. A landscape architectural division followed recently as did greens capes and plants. We are now finding that the more lifestyle products we sell, the greater our CBP sales.

Part of our survival strategy involved using our database to reach people to whom we had already sold as well as to those who were on our list but who had not bought from us. We felt that once people knew and trusted us we could go back and do other business with them and this worked.

Baby boomers formed the largest segment of our market and as the stock market recovered so did the demand for home improvement. Sixty percent of housing in the US is over 30 years old and outdoor living has become the fastest growing segment in the home improvement market. We are back at our pre-recession peak levels and projected growth is at least 10% if not 15% to 20% a year. I am more excited about the work that I do now than I’ve ever been.

Precast: Winning and maintaining the trust of your customers is obviously crucial to the long-term viability of your business. Could you expand on this?

LG: In the old school paving installation model doing one job well and never having to go back defined success. Our model is based on long-term relationships which are grounded on the 25 year warrantee we offer on paving installations. It’s not just the paving blocks which are covered but the labour and installation work as well. We always use aggregate in our sub base layers 50mm to 200mm deep together with geofabric reinforcement and this ensures that our work lasts a long time. We monitor the progress on our various projects very closely and each project manager oversees 2.5 projects at any given time. I visit our sites randomly and the greatest joy I get out of this business is hearing what the customers have to say.

Setting the highest possible standards in all facets of our business helped build relationships with our clients. Relationship building really works and since 2010 it’s proven itself over and over again.

Precast: You mentioned earlier that you have become a training-based organisation? What does this entail?

LG: Ours is a low-barrier to entry business so our focus is on providing excellence to differentiate us from our competition. We aim for peak job performance and perfection. This involves ongoing training and translating our mission into systems and processes. We spend 1.7% ($2 million) of revenue on skills development and we’ve proved that it impacts positively on the bottom line. We wouldn’t be able to fulfil our mission without it.

Our training is not confined to those in the field but involves everyone in the company. It entails centralised core training of all the basic skills as well as leadership development. Sales people are flown in from our nine different offices to our training centre in Santa Ana California and we pay them a base salary during the training week. Although our paving crews are sub-contractors, we train them how to lay pavers in line with our standards and specifications which are the highest in the industry. Incidentally, we also teach them how to manage their accounts, in other words how to make money.

We use role playing and videos extensively in sales training. We cover problem solving, creativity and new product induction. Leadership management, culture inspiration, motivation, follow-up evaluation, chairing meetings and corrective action are also part of our curriculum. Additional training includes advanced sales techniques, sales manager to branch manager training, and construction manager training.

Our sales people undergo a role-play test at the end of the first week and the pass mark is 80%. However, we give those who don’t make it a second chance but they must achieve 80% in order to continue working for us. We insist on this figure because we need highly skilled sales people for our business model to work which is based on closing 25% of our leads.

One of our biggest challenges is finding people to promote and replacing those who leave us. We have two full-time recruiters and we examine personality profiles very closely before we hire.

Precast: How do you generate sales leads?

LG: We use several tools many of them linked to relationship building. In a nutshell these include: physical mail shots; emails; referrals; door-to-door canvasing; radio advertising; newspaper advertising; home improvement shows; seminars; newsletters and sweepstakes. All our leads are channelled into a large data base which we work continuously. Referrals are very important to us and we give $500 for each successful referral. We also offer $10 000 towards a lifestyle project for five successful referrals.

We source much of our information on potential leads from data companies. They give us a sense of market size and of our share of it. We rank the cities in which we’ve done the most revenues and we give them the highest priority. We also assess how people live in our high value areas, the size of their properties and their equity in the property.

The sales yield of our various market tools are analysed regularly. This costs us around 8% of revenue on average with our internal database marketing efforts as low as 2%-4%%. Relationship marketing is clearly the most effective cost of acquisition tool we have.

Precast: Tell us how you measure client satisfaction.

LG: Customer satisfaction is where it all happens. We use a third party organisation, Guild Quality, to contact our customers and we pay them $30 for every survey. These surveys are our best marketing tool by far and we post the results on our website absolutely seamlessly. Every one of our projects is surveyed based on a set of criteria we want measured. We score between 92%-95% of customers willing to recommend us and we build these scores into the incentives and bonuses for our sales people and project managers.

Precast: Finally, is there any message you’d like to leave our readers.

LG: I believe that failure is an important component of success. If you’re not failing some of the time you’re not pushing the envelope, which is something we all have to do if we want to excel. One of our main drivers is our core belief that we are creating a better living environment. It guides all of us at System Pavers every working day and it underpins all our decisions. Moreover, we believe that if we excel at what we do and do it better than anyone else the money will take care of itself. We don’t sell on price but on emotion and sharing special times with family and friends in a beautiful environment.



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