WARNING: this article contains a strong dose of “tough love,” with no punches pulled, and may be difficult for some to hear.  If your feelings are easily hurt I recommend skipping this installment.


Greetings Floor Dealers!

As detailed in Part 1 of this series, selling on cheap-price is a fragile and temporary marketing advantage at best because all it takes is for someone to figure out how to sell at an even cheaper price and you’ve just lost your advantage, and quite possibly your business.  Not to mention all the other problems associated with cheap-price selling, including customer service going down the drain.  Kmart learned this lesson twenty years ago, and Walmart is learning it now.

A cheap-price business model is difficult to maintain even for large companies who have a carefully laid out plan in place for selling at thin margins.  They can buy in bulk, and have usually secured deep discounts with manufacturers and vendors.   Often they are publicly-traded or have significant investor capital, and are able to sustain losses longer than small businesses in order to grab market share.

Here’s a critical question for those of you selling on cheap price: do you have this infrastructure for mass scale in place?  If not, then you need to think very carefully about your business plan.  The vast majority of dealers  who resort to cheap-price selling aren’t in the position described above.  They do it because they feel like they “have to in order to compete.”    Their pricing strategy isn’t a strategy at all; it’s totally reactionary.  Under these conditions, the dealer who sells on cheap price has embarked on a suicide mission which virtually guarantees that they will either 1) slowly go broke, or 2) struggle forever.

Put another way, selling on low price may be the final refuge of the desperate, mediocre marketer.  Or it might be a solid business plan if you have the infrastructure of mass scale in place.  Here’s how to know which category you fall into: if all you’re doing is lowering the numbers on your price-tags it’s probably the first one.

It is not the crook in modern business that we fear, but the honest man who doesn’t know what he is doing.
-Owen D. Young

Honest dealers who don’t know what they are doing copy the pricing of the big companies.  Other dealers copy the copy-cats.  Eventually it becomes a giant game of the blind-and-dumb leading the blind-and-dumb, until you get what we have now: the vast majority of flooring advertising—websites, display ads, mailers, everything—resorting to cheap-price.

Many dealers are looking for that magic, silver bullet: a single campaign or sales trick or ad that will enable them to escape the cheap-price rat-race.  Sorry to break the bad news, but there are no silver bullets.  To sell at premium prices in a discounted world you must employ multiple sales and marketing strategies, all working together and reinforcing one another.  Some might be thinking, “But Jim, that sounds hard!”  Yup.  But what’s harder: learning to sell at premium prices, or struggling for years and possibly going broke trying to sell on the cheap?

Life’s hard when you live it the easy way; easy when you live it the hard way.  –David Kekich

Well, I didn’t pull any punches, and if you’ve made it this far without throwing this article across the room, congratulations.  If I’ve been harsh it’s because far too many smart, honest, hard-working dealers are struggling because they think they have no choice to compete on cheap price.  That bothers me.  A lot.  It’s why I’ve dedicated my career to equipping floor dealers to sell at high prices and margins.  Sometimes we all need a dose of “tough love.”  I think that if you’re tough enough to run a flooring dealership, you’re tough enough to handle it.  In the next installment I’ll cover specific strategies on selling your products for the most money.

If you missed it, go read Part 1.

 

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!