April 25/May 2, 2016; Volume 30, Number 22
By Jim Augustus Armstrong
(First of three parts)
I recently conducted a series of interviews with industry leaders on what they see successful retailers doing to grow their sales, keep margins up and beat the boxes. Pat Theis, vice president of sales and marketing for Herregan Distributors, was one participant who offered valuable insight.
What do you see successful dealers doing to keep margins up, grow sales and avoid competing on cheap price?
Not focusing on entry-level pricing but on one, two or three steps up from entry-level products. Instead of showing consumers low price, show them value. With the Internet and other competition, every dealer needs to give the consumer a reason to come into his store. Also, more successful dealers are keeping their products up to date.
Since the recession, successful dealers have realized they can’t count on walk-in traffic. They see that they must go out and get the business. They have to network in a networking group or by attending chamber of commerce events, establishing relationships with property management companies and realtors, etc.
How can dealers increase their referrals?
It boils down to trust. Consumers want to find someone they can believe in. No matter what flooring product the consumer is in the market for, she wants to find someone in her sphere who can refer her to a quality dealer with whom she can establish a rapport. Quality installation is a critical part of establishing trust as well.
What are your thoughts on developing repeat and referral business?
There’s a ton of opportunity in marketing for repeat and referral business by staying in contact with your past customers. A dealer should make a phone call after the installation to make sure the customer is happy; if there is a problem he should rectify it. Doing a post-installation follow-up visit or phone call is vital not only to get more business, but for a dealer’s own confirmation that the job is being done the way it should be. It also opens up that opportunity to get that low-hanging fruit in referrals.
What do you think about the importance of creating differentiation?
It’s what we have to do as distributors, manufacturers and retailers; it’s what we all have to do. If retailers don’t create that differentiation they just kind of blend into the background. Two of the most vital areas to create differentiation are with the salesperson and the installer. You have to create differentiation or you’re not giving consumers a reason to buy from you. You’re getting them to buy from you because you’re the lowest bidder and that’s not sustainable.
How good is the average dealer at creating differentiation?
Fair. We all like to think we can differentiate but it doesn’t matter what we think—it’s what the consumer thinks. And that’s why the post-installation follow-up visit or call is so important. Without that feedback you’re just kind of guessing.
How important is it to get away from selling on price?
It’s vital. Selling on cheap price is not sustainable. With most of the suppliers we deal with, their strength is not price but style and design. The reason Home Depot is successful with the cheap-price model is because it is built that way; the vast majority of flooring retailers are not. And you won’t be in business long if you do that. In my opinion that’s the difference between having a strong business and not being in business five to 10 years from now.