Sixty years since the advent of the modern kitchen/bath industry, design firm owners are still not making nearly enough money for the beautiful, functional, and complex projects they design and produce. A bold statement, yes. Here's my proof that dealers are not charging enough for their work. The vast majority:
1. price jobs based upon what their local market can bear instead of what their annual company budget for a market-rate owner's salary, overhead, and desired net profit would demand
2. do not regularly take cash discounts from their suppliers even when they can earn 36% returns
3. do not have at least 12 months of fixed expenses (including a market-rate owner's salary) parked in a liquid investment portfolio, ready to capitalize on an opportunity or survive a nasty recession
4. have not developed a string of successful showrooms spilling over into adjoining states
5. are too busy, grinding away in their daily operations, to get away and learn what they don't know
Having reviewed literally hundreds of dealer financial statements over my 48 years in this industry, I can say with a high degree of certainty that most practitioners are undervaluing their jobs by at least 15%. On a $2,000,000 operation, that's $300,000 being left on the table. Imagine what that kind of extra cash can do to solidify a firm's financial underpinnings or achieve its growth objectives!
Of course, when told that his/her firm needs at least a 15% price increase, the natural owner's reaction is: "Can't be done. We are already the highest price kitchen/bath company in town."
But it can be done. I have seen scores of dealers do it once they (a) understand how to properly budget their operations to determine what their firm's price formula must be and (b) discipline their team to follow a specific sales process. A process based upon one simple strategy: the use of boldness in sales.
How Consumers React To Boldness
What is it that causes even veteran salespeople to delay giving the price to a prospect? Perhaps, it's the fear of hearing: "Wow, that's a much higher price than we expected!" Or "we need some time to think your price over." Or maybe these salespeople just harbor some timidity because they couldn't afford the project at that selling price themselves.
In The 48 Laws of Power, Robert Greene states: "Everyone admires the bold, no one honors the timid." Research shows that boldness and hesitation evoke very different psychological responses in consumers. For example, hesitation puts hurdles in your path. Indeed, when sales designers need to take time - like a couple of weeks - to come up with a design and a price, they create a gap that allows consumers to think as well. Telegraphing any timidity in the area of price creates the risk of "infecting consumers with awkward energy and doubt."
Conversely, Greene believes "boldness destroys such gaps." The swiftness by which a price is delivered, and the positive energy of that action, leave your prospects "no space to doubt and worry." So kitchen/bath firms that adopt a speedier, disciplined sales process can fill that gap, gain trust, and secure retainers before their competitors have even developed a plan and proposal. Greene continues: "Audacity separates you from the herd. Boldness gives you presence and makes you seem larger than life."
Writing in 1998, it's almost as if Greene knew what would be happening in the 2016 presidential election. Because he concludes: "We cannot keep our eyes off the audacious - we cannot wait to see their next bold move." How prescient!
Bold Act #1: Interactive Design
So how to inject boldness into your sales process? Don't be conventional! Don't waste your client's time - and yours - by taking weeks to come up with a plan. That's how all your competitors work. Be different, do it right there in their home. And do it with them!
Yes, ask your normal interview questions to get a strong sense of project scope, their priority of needs, and why they want what they want. Yes, inspect the basement under the kitchen, study the construction to determine whether a partition can be easily removed, and locate the distant electrical panel.
But no, don't take the time to measure the space now. Not until you are retained on the project. After all, you are a professional. You can "eyeball" the general amount of space needed to develop one possible, workable "plan."
After the first hour of interviewing and observing, it's time to perform ... time to demonstrate your expertise and professionalism. Boldly state: "Wow, you have some great possibilities here!" And then, using your hands and walking around the space, talk through one plausible layout with your prospects ... letting them know the general placement of the refrigerator, sink, and range .... roughly the amount counter space that would available for a good preparation area, etc. Yes, you may sketch the "plan." But, during their initial one hour visit to your showroom, you made it clear that all sketches remain your property until you are retained. Ask them how they feel about this initial "plan." This kind of performance and conversation will have them quickly bonding with you. And gaining you a distinct advantage over the competition!
Then let your prospects know you are excited about their project! That this layout is just but one possible idea. That once you have accurate measurements, and have committed your team's time to their project, you will develop 2-3 preliminary plans to scale. That their job, with so many great design possibilities, deserves a lot of attention! If they are going live in this house for next 10-15 years, surely they would want the opportunity to weigh the pros and cons of each plausible plan before making a final selection. Indeed, if this were your house, having been in the kitchen/bath industry for so many years, that would be exactly what you would want. It's the only way you would be comfortable with your final design selection.
Be sure to read the next issue of KBDN for the final Bold Act!