Greetings Floor Dealers!
FLOOR DEALER: We carry a large selection of well-known, high-quality products and we provide great customer service.
JIM: So what’s the problem?
FLOOR DEALER: The only thing our customers care about is cheap price.
I was in Starbuck’s with a friend not long ago. I ordered a Trenta black iced tea, unsweetened and she ordered a frappa-whappa-happa-crappaccino (or something like that). The bill came to over eight dollars.
Eight dollars for flavored water.
Apparently we weren’t the only ones anxious to plunk down oodles of boodle for coffee; there was a long line of people happily forking over the green for high-end caffeine.
(As an aside, I love the irony of an SUV driver filling up her tank while complaining about four-dollar-a-gallon gasoline—a product that must be drilled from thousands of feet beneath the ground in a hostile middle-eastern country, shipped across the ocean in multi-million dollar tankers, processed in multi-million dollar refineries, trucked out to thousands of gas stations, then pumped back into the ground so it will be available to consumers on demand. Then hopping in her SUV and driving over to Starbucks to cheerfully pay $25 a gallon for flavored water that comes out of the tap. Awesome!)
So how does Starbucks successfully command premium prices for a commodity we can get anywhere? One answer is that they are drug dealers and we’re all hooked. But there are plenty of other places we can get our caffeine fix for a lot less money, so that doesn’t explain it. The fact is, there isn’t a single answer to this question. Starbucks employs a constellation of strategies which, working together, enable them to charge five times more than you would pay for coffee elsewhere. Some of the strategies they’ve implemented include making their dining rooms feel like living rooms; changing the vernacular (tall, grande and venti, instead of small, medium and large); positioning their waiters as “baristas”; creating total differentiation from other coffee sellers; selling a better-than-average product; a constant rotation of new, fun offerings; complimentary wi-fi; free time-shares in Honolulu when you buy your tenth Caramel Macchiato with extra whip; and a plethora of other things that I don’t have space to mention. In other words, Starbucks has created a zero-resistance selling environment.
en•vi•ron•ment: the aggregate of surrounding things, conditions, or influences
Too many floor dealers are looking for that one solution, that one trick, that one ad, that one magic sales phrase that will enable them to escape the cheap-price rat race. I call this the “Myth Of the Silver Bullet,” and it’s totally false. If Starbucks merely had a high-quality product, but none of the other environmental elements I mentioned, they would be unable command five dollars for a coffee-flavored slushie. In fact, they would either have to lower their prices or go out of business. This is exactly what has happened to many floor dealers over the past six years. Faced with an ever-more price-resistant buying public, Home Depot and Lowes offering $39 whole house installations, and online retailers screaming “we’re the cheapest!” a lot of dealers simply caved in on price.
This is a crying shame because it doesn’t have to be this way. Many of my Flooring Success Systems members are commanding a minimum of 50% margins on everything they sell, and they’ve done it while other dealers in their market area curled into a fetal position and slashed their prices. But they will be the first to tell you that there isn’t one strategy that made this possible; it was an entire system of strategies working together to create an environment conducive to selling at premium prices. In part two of this series, I’ll reveal three of the most powerful of these strategies.
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!