How to Become a Pie-Eater in a Down Market
Well, I think Part I gave us a clear picture of what the future backdrop for Kitchen and Bath Dealers might look like next year. It certainly doesn’t appear growth is on the menu but who knows?
So where do we go from here? The September jobs report, which was pretty good, is a signal that the Fed will keep raising interest rates to stave off inflation. I don’t think we want to spend a lot of time on how to reduce your expenses to match lower sales, but I also don’t want to skip around it either. Here is the plain and simple math of what you would need to do if your current sales dropped in sync with the market which I’m pegging at about a -25%.
Ouchy! That model took it on the chin. So, let’s say we don’t do that but instead drop our expenses to match our new sales level. Here is how that would pan out:
Now let’s see what It would take to lower your expenses by $190,000. ($840K-$630K) Yikes! Why don’t we start with the biggest part of your expenses which are Payroll, payroll taxes, benefits etc. which make up more than 50% of your variable expenses. (The places you can reduce cost) Cut to the chase…if you currently have 6-8 people, something will need to be done on that front. This is an option, but maybe not the one you’re leaning towards. Let’s consider the “Pie-Eater” route. What is a “Pie-Eater” you ask? It’s the type of company that sees this as an opportunity and makes plans to take advantage of it. (Grab market share) This means that they are hungry and I love it!
Okay, enough of that nonsense. If your plan is to skip the pie-eating contest and stay where you are, then I would suggest that it’s probably a good time to exit this blog stage left. If you are hanging around to learn how to grow market share, then stay tuned!
The good news is that we can look at is the fact that most Kitchen and Bath Dealers will not change much over the coming year. That means that you are already a step ahead of the competition if you start planning and changing now. (In the middle of it is too late)
- Don’t overlook your current customer base. Be sure to find ways of adding value and building a strong relationship so when others come-a-knocking, the door isn’t left open for them. (competitors)
- Up your marketing game. Your website is the most important marketing tool you have. It’s your digital store front that almost every customer or potential customer will look at. Too many dealers have lame websites that only provide run-of-the-mill content. That thing needs to bring a strong personal touch and a number of different options the customer can get engaged in. Design, choosing selections, and budgeting tools are just a few ways to keep them on your site longer. Thus, the goal is to create a stronger connection with these consumers.
- Customer After Care Programs. I am amazed that most dealers don’t have a plan to stay in touch with past customers. That is the base of your referrals and it’s never too late to reintroduce yourself. Sit down and think about how you are going to reach them, how often, and most importantly, do something to ensure this initiative doesn’t fade away in the wind.
- Go after trade business. Custom builders are awesome, but you really need to spend more time and resources trying to capture Remodelers and Interior Designers for a solid base of business. If you walk in with the same story, then you will be walking out the same door.
- Start building your on-line customer journey. It’s by far the fastest growing channel and is not expected to slow down. Also, don’t be surprised if more manufacturers get in that game or at least partner with Dealers that are planning on taking advantage of it. Time to jump in the pool!
There is entirely too much to cover this subject in a blog or two. Let’s move this to a couple of webinars so that folks can actually get some actionable initiatives and be able to ask questions. The first “Pie-Eater” Banquet will be held on Wednesday, October 26th at 11:00am EDT. Come hungry!
Part 2 of the “Pie-Eater” Banquet will be held Tuesday, November 8th at 11:00am EST.
A big bonus to attend is that each online seminar provides 1 NKBA CEU credit.
Be sure to check out our new Kitchen Planner which can be a leads magnet for your website. The process is easy, and we are also providing a nice discount through the month of October.