Greetings Floor Dealers!
“We’re kicking Home Depot’s Butt. We love having them as neighbors because we take a lot of business from them.”
I was on the phone with Mark Bouquet, a floor dealer from the suburbs of Chicago and one of my Flooring Success Systems members. He went on to tell me that they get lots of people into their store who had previously visited the “Big Orange Giant,” which is just down the road from his showroom. A large percentage of them wind up buying from him even though his prices are higher.
What was going on here? That shouldn’t be possible! The only thing that people care about is who has the lowest price, right?
Tragically, too many dealers cling to this myth, bemoaning the cheapness of the buying public with the pathos of a Shakespearean actor.
But the idea that people only care about price is simply not true. If it were, everyone would eat only at McDonald’s and the only cars you’d see on the road would be Kia compacts. So the first secret in commanding premium prices is to realize price is not the only consideration in your prospect’s mind.
It’s painful, but important, to realize that selling on price is the lazy way out. Any yahoo can run through their showroom like a rabid monkey, marking stuff down in order to move product. It takes no imagination; no effort; no skill. But selling at premium prices? With a box store down the street? Ah, now that requires real marketing and selling skill. So the second secret is realizing that charging premium prices is not about luck; it’s about skill. And that’s extremely good news because, while you don’t have control over luck, or if a big, mean ol’ box-store saunters into your neighborhood and kicks sand in your face and makes you cry, you do have control over increasing your skills in sales and marketing. Then you can kick sand right back, faster and harder, like my friend Mark does.
The third secret is to realize that when you compete on price, you have nowhere to go but down. If your big marketing advantage is being the lowest priced, all it takes is for some knucklehead to sell at a cheaper price (sometimes at a loss just to get the sale) and you’ve just lost your advantage. Live by price, die by price. Conversely, if you learn to successfully market yourself as the “premium service and price” dealer, like many floor dealers I’ve taught, then you have nowhere to go but up. While your competitors are fighting for the scraps, you’ll be enjoying nice, high margins, and the accompanying wealth that this allows, never worrying about becoming a casualty of the “price wars” going on all around you. Case in point: last year Mark generated over $2.5 million in revenue, a record for his business, and this year he is on track to do even better. During the past several years, three of his direct competitors, including a national chain, went out of business. Steve, another dealer I coach, used savvy sales and marketing to survive the recession, and as a result has scooped up the market share left behind by his failed competitors. He’s busier than ever; a result of the vacuum left behind by (former) dealers in his market who bit the dust. Last man standing.
The fourth secret is to realize that you will not make up for low price in volume. Most businesses go bankrupt in the midst of higher gross sales, but lower margins. I’ll bet you the biggest lobster in Maine that the dealers from Steve’s and Mark’s neighborhoods who went under did so in the midst of slashing their prices; more casualties of “price wars.”
In the next installment, you’ll learn about a dealer who tells price-shoppers that he’s the highest priced in the county, and still gets the sale.
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!