Greetings Floor Dealers!

Welcome to Part Two of my Summer Series all about commanding higher retail margins!

“Our margins start at 45%,” Craig, a floor dealer from Florida recently told me.  “And our sales volume is up 60% over last year.”

Craig’s story is not uncommon.  As I said in the last installment, dealers all over the U.S. and Canada are commanding margins of 45%-50% (and above) on everything they sell.  This in spite of the presence of box stores, cheap-price local dealers, and online discounters.     They are doing it by using primarily three strategies.  Let’s take a look at the first one.

45-50% Margin Strategy #1: Have A Marketing System In Place To Protect, Nurture, Grow, And Profit From Your “Herd” Of Past Customers

Here’s a question I ask dealers during FCNews’ Marketing Master Webinars: Are new customers more skeptical, suspicious and stand-offish than ten years ago?  The overwhelming response is always “Yes!”

New customers who come to you through “traditional” advertising have a ton of baggage.  They are skeptical, mistrustful, price sensitive, harder to close, they complain more, and on and on.  Not so with your past customers.  They already know you, like you and trust you.  They are far easier to sell to.  (This doesn’t mean you should never advertise to cold prospects, but you shouldn’t do it at the expense of marketing to your herd.)

Here are just a few of the benefits of working with past customers.  How many sound familiar?

  • You avoid the massive advertising costs that it takes to get a new customer to walk in your door.   This savings goes right back in your pocket.  It’s basically “found money.”
  • Past customers are pre-sold.  On a “ready to buy” scale of 1-10, past customers are 9’s and 10’s.  (New customers from “traditional” advertising are mostly 1’s and 2’s, and you have to do all the hard work of moving them up to 10 before they will buy.  Often times you’ll lose them to a competitor long before that.)
  • They are much more willing to pay 45-50% margins (or more) than strangers.
  • They are much more pleasant to work with because there’s already a relationship.  They don’t treat you like a criminal out to rip them off.
  • They are much easier to sell to.
  • Past customers refer their friends, relatives, neighbors and co-workers.

Here’s another question I ask during webinars: Do you market on a regular basis to your past customers?  The overwhelming response is always “No.”

So here we have the tragic situation where, in spite of all the benefits listed above, the vast majority of dealers totally ignore their past customers.  Instead, they spend all their time, energy and money using “traditional” advertising to try to get distrustful strangers to buy from them.  Does this make sense?  Not if you want to command 45-50% margins.

That’s why it’s critical to have a “herd building” marketing system in place.  In fact, savvy 45-50% margin dealers think of themselves as “ranchers.”  They realize that the biggest profits come from past customers.  So they have a marketing system in place to fence in their herd, nurture their herd, and protect their herd from poachers.

By making this one critical shift in your thinking—from being a “floor dealer” to being a “Rancher”—you will totally transform your business and your life.  You’ll leave your competitors in the dust, including Home Depot.  Why?  Because the vast majority of dealers will never make that shift.

However, if you are unwilling to make that shift, and another dealer in your area is willing, then you’ll probably wind up eating their dust.  More and more dealers are shifting to the rancher concept, so be careful you’re not the last one to the party.

In the next installment we’ll cover an effective, affordable and proven strategy for marketing to your “herd.”

 

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.
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