Hank Darlington 2017-08-03 05:22:05
Your showroom needs a broad base When we started our DPH showroom business in the early 1980s I knew location would be a key to success. We ended up renting a much larger space (10,000 sq. ft.) than we needed or wanted, but it was on a six-lane busy freeway with great visibility. Back then there were only three main decorative faucet lines (Artistic Brass, Phylrich and the Broadway Collection). The main fixture manufacturers (Kohler, American Standard, Eljer and Crane) still were mainly white and chrome in the products they sold and produced. We had this quite spacious showroom, but hardly enough products to fill it. It didn’t take us long to figure out adding door hardware, kitchen cabinets, countertops and appliances would not only help fill it, but would attract a wider variety of customers and, most importantly, would add to the revenues generated. We discovered the cost of doing our advertising was the same whether we were promoting only the decorative plumbing products or a large variety of luxury products for the home. Plus, we learned customers appreciated the “onestop shopping” concept. Recently, this got me thinking about how important it is to have a broad base in almost all areas of your showroom business. But allow me to first share a story where a client of mine put too many eggs in one basket. One of the largest kitchen/bath cabinet manufacturers in the U.S. made a deal with one of the big-box stores. After a few years the big box recognized them as one of its “vendors of the year.” That’s a good thing! However, the manufacturer realized more than 50% of its total sales were to this one customer. It scared the heck out of the owners of the business and they backed away from being a supplier to this one huge customer. Today, this company remains one of the country’s largest manufacturers of cabinets, but now it’s done through more than 500 independent dealers across our fruited plains. In this case, a much broader customer base has been a much healthier business strategy. Let’s look at some areas of your showroom business where I believe you have an opportunity to broaden your base. Customers: I’m aware plumbing contractors are your core business, but I also know the more progressive wholesalers that have opened up their doors to the retail customer have enjoyed wonderful success growing revenues and margins. Let’s face it, to have a successful showroom it needs to look, act and feel like a retail store. This includes everything from how it’s laid out and how products are displayed to the location, hours of operation, how the sales consultants dress and everything else that makes a brick-and-mortar store successful. Yes, you need and want those homeowners coming through the front doors, but you also need to broaden your customer base by reaching out to general contractors, remodel contractors, designers, architects, commercial customers and other independently-owned showrooms (who can’t buy a lot of your products direct from the vendors). Plus, today there’s the demographic diversity of your potential client base: young first-time homeowners; older folks who are downsizing or building second homes. How broad is your customer base? Are there some areas where you can do a better job? Vendors: This is an area where I learned some valuable lessons early on. When we first started our showroom business I was so excited when a vendor came in and wanted us to display/sell its products that I immediately said “yes” without really doing the due diligence that I should have. Our industry was growing fast and after three or four years I discovered we were displaying 20-plus faucet lines. Our salespeople were confused, our customers were given too many choices and none of the vendors were very happy with us. There was no loyalty or relationship. We sat down with our team and did a vendor analysis which helped us cut the list down to five main faucet suppliers. All of the sudden we were more important to our vendors, which in many cases helped us improve our purchasing power. I learned you can make as much money in the way you buy as you can in the way you sell. On the other hand, you need to be careful not to become dependent on one or two vendors. Things change, strategies shift, reps and management change. Always remember, manufacturers are focused on their bottom lines, not yours. Trying to manage your business on whose volume rebate might be the biggest can be a dangerous game. As a result of this experience, we learned to put our vendor analysis form to work for us at least once a year. We would sit as a team and evaluate all our major vendors. If you would like a copy of this vendor analysis form, drop me an email. The lessons here are you need a broad base of vendors and working to become important to a few of them will reap more rewards than trying to be just another customer to a lot of manufacturers. Products: In this area I have a very strong opinion. The more “one-stop shopping” you can effectively offer equates to more customers you will attract and win. Plus, it will help your revenues and profitability grow. I know, your core business is plumbing and you’re darned good at it. But by adding a variety of related products you will make it easier for your clients to shop. Remember, we grew our business by adding door and cabinet hardware. It doesn’t take much display space and required very little inventory. Plus, the margins are pretty attractive. Virtually every bathroom needs vanities, lighting, bath accessories, tile or granite, so why don’t you provide them? The same thing applies to the kitchen where there’s a need for appliances, cabinets and countertops. Again, why don’t you be the “go-to” business for them? It’s OK to step out of the traditional wholesaler showroom box. Why do you think the big boxes, Amazon and their kind have been so successful? It’s not just the perception of low prices. It’s the fact they sell almost everything, which makes it easy for their customers to shop. If you can buy several different things with only one stop, that saves both time and money. Remember, that broad base of products will win more customers and grow that all important area of sales. Sales consultants: I recently interviewed a DPH sales consultant that generates almost $3 million in sales. She’s very good! She’s also about 50% of that showroom’s total sales with three other salespeople doing the other 50%. If I were her boss, I’d have some concern that I had a lot of eggs in one basket. What would happen if that star left and took a big piece of that business with her? What if her family decided to move or she decided to retire? You aren’t going to take away or discourage this star from doing what she does, but you also might try to broaden the base and possibly spread out the major accounts. Online and offline selling: Face it, the digital age is upon us and it’s not going away! If you only do business the old-fashioned way of all sales offline, you have a wonderful opportunity of broadening your base by offering online shopping as well. Lots of the “big boys” are promoting this. Come see it in the store, talk with a sales consultant and then order it online and come pick it up at the will-call area. Maybe even offer free delivery. The younger the customers are, the more they will expect to be able to do business this way. By offering both offline and online shopping experiences, you will broaden your base, increase sales and help ensure your future. Your business needs a broad base in all the above areas just as your retirement portfolio needs to be balanced and diversified. You need a full stable of supportive vendors and a good variety of products, customers and services. Take a moment to step back and analyze if your showroom business is as broad-based as it should be. If it’s not, start developing a written plan to head you in that direction. Good selling! Hank Darlington, owner of Darlington Consulting, is a 2004 NKBA Hall of Fame inductee. He can be reached at 916/852-6855 or firstname.lastname@example.org. WANT MORE HANK? To read past Hank Darlington Showroom Strategies columns, visit www.supplyht.com.
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