By Ken Ryan
Robert Varden is best known as the vice president of the CFI division of the World Floor Covering Association (WFCA). However, for a good part of his career he ran successful, high-profit installation businesses.
To some, high-profit and installation may seem like an oxymoron. After all, how can you make money from installation when home centers and other big boxes are offering “free” installation?
During a recent FCNews-Marketing Mastery Webinar Series, Varden joined Jim Augustus Armstrong, FCNews Marketing Mastery columnist, in a discussion about profiting from a business in which he sells no products—just service, namely installation.
Varden explained how he regularly pocketed six figures from his business and that all of his employees—not subs—fared well economically. Back then Varden oversaw five to seven crews, 10 to 15 individuals in all, so it was not a large business. He said he charged above average prices for installation; the higher profits enabled him to pay his installers more. But it was more than just a better wage. He tried to create an environment so inviting that his installers would not want to leave. Whether that was holding family picnics or other employee-friendly gatherings, it was important to create a positive culture. “You take care of them and they take of you,” he said. “It was a great relationship.”
Nowadays, Varden said dealers are too worried about competing with box stores on price when it comes to installation. As he explained: “Many times the estimate is too short on material for fear of being overpriced, so what they do is cut that yardage down. We would go in there and talk to the customer and say, ‘We could do it this way with this much material. However, if you add two more feet I can eliminate this seam or that seam over there.’ Not one time did they not take us up on the extra material. We gave them options. They are spending thousands of dollars so what is another $100? To come into someone’s home with that knowledge gives the consumer confidence.”
Flooring dealers who hire their installers as employees have control of everything from what they wear to how they are trained.
Independent contractor vs. employee
Varden’s discussion segued into one of the hot topics impacting the installation business today—the Department of Labor’s new classification of what constitutes an independent contractor (IC) vs. employee. Varden said that if a federal government agency like the DOL today walked into most flooring retail stores they would likely classify the dealer’s subcontractors as employees because these subs are working for the dealer every day.
As owner of an installation business, Varden hired his own employees. They were not subs or ICs. “As an employee I can train them and train them correctly,” he said. “We started out with a lot of carpet installers. To teach them another surface was not that difficult. You could take the carpet guy and he could work with the wood guy, and the wood guy could show him the right way. Try to get a sub to do that.”
Varden said there are many other advantages to hiring installers as employees. Take the consumer, for example. The customer would much rather deal with a single entity. She will feel more at ease if an installer comes to her home wearing a uniform or at least a T-shirt bearing the name of the flooring retailer from which she just bought product.
To illustrate the point, co-moderator Armstrong painted this picture: “How would you like it if you are a homeowner and you see some guy wearing a Guns N’ Roses T-shirt smoking a cigarette in your driveway? You worry that he is going to rifle through your underwear drawer when you are not at home.”
Varden recalled being at an installation-training seminar where he encountered an unmarked van in the parking lot noteworthy for a dashboard piled high with papers, assorted trash and a roll of toilet paper. Aghast, Varden went back inside and asked aloud who the van owner was. It turned out to be a good worker with whom Varden trained. Varden told him how damaging it is his for his reputation to show up at a home with an unmarked van looking filled with crap. His point was that a retailer would never let an installer employee show up at a job like that.
The next FCNews-Marketing Mastery webinar, ‘How to Dramatically Increase Your Sales by Eliminating Price Objections,” is scheduled for July 21.