Greetings Floor Dealers!

Years ago I owned a carpet cleaning company.  During that time there was a local charity selling coupon books with deep discounts to local businesses such as restaurants, lube shops, and—you guessed it—carpet cleaning companies.  One carpet cleaner participated by including a coupon for “one room free, up to 200 SF.”  He nearly went broke from all the bargain-hunters who hired him to clean only a single room but no other areas of their house or apartment.  He showed up at one “couponer’s” home and found she had used masking tape to mark off the 200 SF so there would be no chance of having to pay him anything.

And that’s the problem with daily deal-type advertising in a nutshell.  It magnetically attracts price-shoppers like a ten-ton magnet attracts paper clips.  Many businesses—especially restaurants—who used Groupon reported hordes of customers showing up to take advantage of the deep discounts, never to return and purchase at regular prices.  Forbes reported that a restaurant in Portland, Ore. lost so much money on a Groupon deal it would have gone out of business had it not secured a loan to cover its losses.

Hordes of dealers pump out “deep discount” advertising messages like a fire truck blasting water onto a 4-alarm blaze.  I Googled “flooring Los Angeles” and sites at the top of the page had “cheap price” offers such as:

  • Buy 1, get 2 free
  • 80% off
  • Laminate flooring $0.99/ft.

And let’s not forget about Home Depot’s infamous “$39 Installation” offer.  (Actually it’s not an offer, it’s a lie: no installer will work for this amount.  It also devalues the critical importance of quality installation by a skilled technician.  Do not, under any circumstances, give in to the temptation to sink to Home Depot’s level with a similar offer.  When someone tells a dealer, “Home Depot will install it for $39,” I teach dealers to say, “Great! You’ve come to the right place.  We fix $39 installations.”)

During a recent Marketing Mastery webinar that Dustin Aaronson and I were conducting, I polled the attendees and asked how many of them were using “cheap price” language on their websites, such as, “our prices won’t be beat,” or “highest quality at the lowest prices.”  A number of them said they did, including a dealer who said he “had to” in order to compete.  Unfortunately, many dealers feel this way, which is tragic because it’s simply not true.  But lacking good marketing and sales training, these dealers don’t know what else to do, so out of desperation they copy the “low-ball” strategies they see their competitors using.

If you promote on cheap price, you create enormous problems for yourself:

  • You magnetically attract price-shoppers.  (Who’da thought?)  You’re scraping the bottom of the barrel.
  • Not only are you making less (going broke?), but price-shoppers are genetically programmed to complain and cause problems.
  • When your margins are too thin, you simply cannot afford to provide the kind of world-class service that generates referrals.  (Except referrals to other cheapskates who complain a lot.  Terrific.)
  • If your market advantage is selling at the lowest price, if someone offers an even lower price you’ve instantly lost your advantage.  Live by price, die by price.
  • Very few dealers prosper using a “discount” business model.  By doing so, you stack the odds that you’ll 1) go out of business, or 2) toil away for decades dealing with the worst-of-the-worst customers, always struggling financially.

And that’s just the tip of the “problems-caused-by-cheap-price” iceberg.  Over and over again I’ve seen flooring retailers desperately trying to figure out how to sell their products for the least money.  This is  Walmart thinking; 180-degrees out of whack.  You should devote your time, energy and money into figuring out how to sell your products for the most money.  And that’s the topic of my next column.

 

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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