Hank Darlington 2013-06-07 07:44:25
Marketing and training help PACE Supply’s Premier Bath and Kitchen thrive. In 1998 PACE Supply President Ted Green and his team made the important decision to get into the showroom business. After exploring the option of purchasing an existing showroom business, PACE opted to start its own from scratch. The first thing it did was hire an experienced showroom manager/salesperson and spent nine months teaching him how the wholesale side of the business operates. Then PACE got busy building a 5,000-sq.-ft. showroom at an offsite location in Santa Rosa, Calif. PACE opened the doors of Premier Bath and Kitchen (note the name of the business tells exactly what it does) in September 2001. The business immediately was embraced by both the construction trades and homeowners. Sales steadily grew until the 2008 downturn and business remained pretty flat for three years, but now is on the upswing. PACE Supply originally was started in the 1940s as Bessone Supply by two Italian immigrant brothers. In the 1970s, the business was acquired by Bell Industries, a multiproduct wholesaler doing business in Northern California. In 1994, Green and fellow Bell employees Kelly Hubley (current vice president of operations) and Frank Bacci (now retired) took money out of their retirement accounts and acquired Bell Industries’ plumbing division. The business was started as an employee-owned and -operated company and continues that way today. Every team member has a vested interest in the success of the business. The new PACE Supply started in 1994 with three branches. In the past 18 years, Green and his team have added eight branches and a new headquarters building. Three of those new branches were started during the slow years between 2008 and 2011. Today, PACE, a member of Affiliated Distributors, operates 11 wholesale branches and one showroom in Northern California. It currently is developing showroom best practices and planning for expansion. The products PACE markets have also grown dramatically. On the wholesale side that includes commercial and residential; fabrication; fire protection; commercial and residential hydronics; plumbing; solar thermal; waste water; water treatment; water well waterworks; and winery. PACE is strategically located in the heart of the Sonoma/Napa Valley wine industry. I believe very strongly that every business should have a short, concise mission statement that tells everyone what their business philosophy is. Pace has a good one. Go to www.pacesupply.com to see its mission statement and to learn more about this fast-growing and successful business. Showroom specifics Let’s get back to PBK and the showroom side of the business. I agree with management’s decision to do the showroom offsite in a more retail-friendly location. The showroom has 5,000 sq. ft. Of display space and offices, plus 2,000 sq. ft. Of warehouse for out-the-door and tag-and-hold sold inventory. The showroom staff of 11 consists of six fulltime sales consultants, one sales assistant, one purchasing agent, two warehouse employees and Showroom Manager Matt Kuller, who works closely with Corporate Showroom Development Manager Barry Nitzberg. Showroom hours are 8 a.m. to 6 p.m., Monday-Friday and 10 a.m. to 4 p. m. on Saturdays. PBK went to Saturday hours in 2008 to help offset the slowdown in business. Nitzberg noted this helped keep the showroom from losing ground in sales volume. I’ve had the pleasure of working with this company since the day it opened its showroom. Being open on Saturdays is one of the things I encouraged them to do, so I’m happy it’s worked well for them. Showroom purchasing is done by one of the showroom staff employees and is coordinated with PACE purchasing. A large percentage of the products sold are picked up by the customers, but PBK also offers jobsite delivery and charges a nominal fee for delivery to homeowners. I believe PBK could set a delivery fee based on mileage and should add it to every homeowner delivery (and you should, too.). Sales consultants are paid an hourly wage (this is dictated by California wage and hour laws). Employees participate in a yearly review process that provides opportunities for professional growth and increased compensation. As employee owners, PBK associates are entitled to both profit sharing and a 401(k) program along with a best-in-industry benefits package. Sales consultants average a respectable $68,000 per month in sales. That’s better than the average, but there’s still room to grow. Gross profit margins also are a tad higher than average at 33.5%, but again with the homeowner portion of sales growing I expect PBK will achieve the goal I set for all of you (being in that 35%-40% range). When you hit this, you really will be achieving the return on investment all owners/managers want to see. Showroom sales amount to about 2% of total PACE sales. Sales break out into plumber (33%), remodeler (25%), builder (20%), homeowner (20%) and interior designer (2%). Today, remodel is stronger than new construction, which tells me the homeowner portion of sales should be the fastest-growing segment for the next several years. The biggest part of this will come from the baby boomer segment. The showroom is very nicely built out with faucets displayed by brand, but on PBK boxes and boards with very little manufacturer branding. There are some areas (Kohler, Dornbracht and Grohe) that are brand-exclusive. The showroom has a nice mix of “live” displays, including 19 kitchen faucets, 23 showerheads, a steam system, a digital shower valve, a sensory lav faucet, a combination air-whirlpool tub and a Kohler VibrAcoustic tub. Customers like to feel, touch, sit in and sit on the products on display. The more of this you can offer, the better! Maximizing brand value PBK does not put model numbers or prices on display products and will not give out real model numbers until the sale is finalized. It handles this by being up front with the customer in the beginning of the conversation. I know from experience this can be a difficult “sell.” If I still owned my business, I would have model numbers and prices on display product, but only my own internal model numbers and net prices. You work too darned hard to be giving out too much information. For example, PBK simply shows “one piece, comfort height, white water closet” when quoting a toilet. Please don’t make it easy for your client to shop you. With the Internet and smartphones, it’s too easy as it is! This year, PACE is investing in its biggest marketing campaign to date. One of the key pieces to its new marketing program is an all-new website that was due to launch in May. I was very pleased to hear/see this because, as you know, I believe this is the most important thing you can do to attract new potential clients to your place of business. Other items that make up the 2013 marketing plan include: advertising in two large local cultural arts venue programs; a video on the local movie theater’s big screens prior to the movie; bimonthly ads in the home improvement section of the local newspaper; small ads in the Yellow Pages along with www.yellowpages.com mobile and payper-click; a Facebook page; blogging; manufacturer websites; Google Places; Pintrest; events in the showroom; a customer referral program; local home shows; and newspaper inserts. Wow! Here’s a wholesaler that’s figured out how to be a retailer. Yes, you have to spend money to make money! PACE also has a system to track the results of its marketing efforts. Every salesperson is responsible for asking its client “How did you hear about us?” This is recorded on a spreadsheet and reviewed by management on a quarterly basis. I asked what type of person PACE is looking for when hiring a new sales consultant. The response: “Knowledgeable in the kitchen-and-bath or home décor industry is the key, along with proven skills in solutionbased selling and closing techniques, an excellent track record in high-ticket product sales, comfort in ‘cold calling’ and networking. A bachelor’s degree and professional industry affiliation is preferred. Strong interpersonal and written skills are a must! They need to be team-driven performers with strong accountability and an ethical approach to selling.” I’ll bet these folks wouldn’t mind if you borrowed this for your next hiring exercise, unless you’re a local competitor! The company has written job descriptions for every showroom position and it does an annual performance evaluation. Training and style The next question is if PACE has a formal training program. The answer is an emphatic yes. It conducts once-a-month staff meetings that include product knowledge, programs from vendor partners, ASA and NKBA and it has used me for showroom selling skills training. There is no fulltime outside salesperson for the showroom, but the company is seriously considering adding one. This is another move I heartily endorse. PACE treats the showroom as a profit center and generates a detailed monthly profit-and-loss statement. As my friends down under say, “Good on them!” Too many of you don’t do this, and only hope you’re making money as opposed to knowing for sure. PACE also develops an annual budget for the showroom. They do not have a three-to-five-year business plan, but Nitzberg and Kuller thanked me for the reminder. The main products displayed and sold in the showroom are plumbing, accessories, bath furniture, countertops and shower doors. I continue to encourage them to expand on this. The showroom and wholesale sides of the business are in complete sync. Since PBK opened in 2001, management has worked closely with the entire PACE team to teach best practices and provide the ultimate customer experience. Of course, situations arise that require new approaches to business. The team communicates well, and as an employee-owned business, knows that working together benefits everyone. Showroom dress is professional business attire. Coffee, tea and bottled water are served to clients. PBK just installed two flat-screen TV monitors in the showroom. For educational purposes, I encourage all of you to do the same. Finally, I asked Nitzberg and Kullen to “brag” about their showroom. I wanted them to tell me what makes them stand out in their marketplace. This is their joint answer: “We are the best at offering up-to-date, handson displays for the public to see, feel and try before purchasing. We are the best at working with designers, general contractors, plumbing contractors and end users to help in the selection and project-management process from start to finish so mistakes and costly delays are avoided. This makes a successful experience for all parties involved.”
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