Greetings Floor Dealers!
Welcome to Part One of my Summer Series all about commanding higher retail margins!
During several of FCNews’ Marketing Mastery webinars I host with Dustin Aaronson, I have asked attendees if customers are more price-sensitive than ten years ago. The overwhelming response is always a resounding “Yes!”
Dealers across the fruited plain have felt a big increase in downward price-pressure since 2008, maybe even you. Here are some typical “price-pressure” dramas dealers face every day. How many sound familiar?
- You lose another sale because you can’t match Home Depot’s “$39 Installation.” You know it’s a big lie, that Home Depot marks up their products to make up the difference. But try telling that to your customers when they’ve got “$39” on the brain.
- You spend $8,000 on a full color newspaper circular and the only response you get is from a lady who wants vinyl for a tiny bathroom in her rental. After she blows an hour of your time having you haul out samples and giving her prices, she says she’s going to “check around” and get back to you.
- You lose another sale to a flooring installer who sells products out of his truck at “cost” just to get the installation work.
- Yet another customer walks into your showroom wanting you to slash your prices until you bleed. So you do, but they buy from your competitor anyway because he’s willing to slash until he’s losing money just to “keep his installers busy”?
- You’ve been working with a distributor for years. You thought they were on your side. One day you find out they are selling directly to the public and undercutting your prices.
If you found yourself nodding your head to any of these, you are not alone. With competition from box stores, cheap-price chains, and online discounters, many dealers feel like they’ve got a gun to their head, forcing them to slash their prices just to survive.
But not every dealer succumbs to downward price pressure. Savvy retailers across the U.S. and Canada are commanding premium prices regardless of market conditions or the presence of Home Depot. Here are just a few examples:
“I’m now getting margins of at least 50% on everything I sell,” Garry, a floor dealer from Illinois told me. “And I’m even busier than before I raised my prices.” Garry had recently raised his prices by 30% or more across the board, and he did it virtually overnight.
Dan, a dealer from Montana, recently secured a commercial job for over $100,000, with a margin of 40%, virtually unheard of in commercial work, especially a job of this size. His residential margins begin at 43% and go up from there.
Mark, a dealer from Illinois took his flooring business from near bankruptcy to, last year, doing over $3 million in revenue. This year he is on track to do between $4 million – $5 million. His residential remodel margins are at 40% and above.
These dealers—and others I’ve worked with—have proven there is a better way, and they’ve proven it during what’s been described as the worst economy since the Great Depression; a period in which consumers have become more price-sensitive than ever.
There are three specific strategies that these dealers have implemented which allow them to charge essentially whatever they want for their products. Over the next several installments I’m going to cover these strategies in detail. But the most important thing to realize is that you do not have to resort to price-slashing in order to compete. If your prices are currently lower than you’d like them to be, and you like the idea of escaping the “cheap-price” rat-race of doom forever, then stay tuned. This series of articles is for you.
To Tons Of Customers!
Jim Augustus Armstrong is The “Coach”
Jim Augustus Armstrong is the President of Flooring Success Systems, a program that equips dealers to double their profits, cut their work hours in half and beat the boxes! Many dealers have totally transformed their businesses and their lives for the better after joining Flooring Success Systems.
See what real, live dealers are saying!