September 2/9, 2019: Volume 35, Issue 6
By Jim Augustus Armstrong
(Second of two parts.)
In my books, articles, webinars and seminars, I often feature case studies of dealers who have close ratios of 60%-80% (the national average is only 30%-35%), command margins of 50% or more and stay booked out for weeks or months at a time. Occasionally, someone will say these results are impossible. I don’t blame dealers who feel this way because these results are way outside industry averages. Let’s look at how flooring dealers are achieving results that many think are impossible.
To varying degrees, the dealers I feature have all implemented what I call “Tier 1” marketing. This means marketing strategies directed toward their past customers in order to generate repeat and referred business. It also includes having a strong sales system in place that creates differentiation, enables the dealer to command higher-than-normal margins and close more sales. In other words, Tier 1 is all about going after their warm market, i.e., the low-hanging fruit.
In part one of this series, I pointed out that dealers will often spend thousands of dollars in advertising to attract cold prospects, yet not invest any effort to get repeats and referrals. Does it make sense to invest a fortune chasing strangers yet totally ignore the only people on the planet who have proven they will buy flooring from you? Of course not. But that’s what the vast majority of dealers are doing.
When you put Tier 1 marketing in place, over time you will get a higher percentage of your business through repeat and referred customers, which will, in turn, automatically increase your close ratios. Think about it this way: On Monday you have 10 walk-ins who are all repeat/referred customers. On Tuesday you have 10 walk-ins who are strangers who simply found you online. Which day are you going to close more sales, get full margin and not get jerked around as much on price? Monday, of course.
Tier 1 also produces the “marketing multiplier effect,” meaning it will multiply the ROI of any other advertising you’re doing. For example, let’s say you’re investing $3,000 per month on your website, SEO and Google ads. And let’s say this generates 10 walk-ins per month, and you close three of them on average. This will produce $9,000 in revenue. By having a strong sales system in place (Tier 1), you can do better than industry averages and close four or even five out of 10. By having a referral system in place (Tier 1) you should be able to generate at least one referral from your closed sales. If you market to all 10 walk-ins with a monthly newsletter (Tier 1), you can easily generate another one or two sales over the next year. In this example, Tier 1 has more than doubled the ROI from the original $3,000 advertising investment without spending much more money. Tier 1 will create this marketing multiplier effect for any other advertising you’re doing.
To recap, Tier 1 will increase your percentage of referred/repeat business. That, combined with a strong sales system, will automatically increase your closed-sale batting average and help you command higher margins as well as help even out the seasonal ups and downs. It will also increase the ROI from all the other advertising you’re doing. Tier 1 is also simple and inexpensive compared to many other types of advertising.
Jim is the founder and president of Flooring Success Systems, a company that provides floor dealers with digital and offline marketing services, and coaching to equip dealers to make more money, work fewer hours and get their lives back. For information visit FlooringSuccessSystems.com.