By Jim Augustus Armstrong
Norberto, a coaching client of mine, owns a new flooring dealership in the Northwestern part of the U.S. His business started out as an installation company, and about two years ago he opened a retail showroom.
When I met him, his showroom had only been open for a few months. He needed more customers, and his margins were in the high 20s to low 30s. He’s now at the end of his second year as a retail store. He has increased his margins to 60%, his revenue is growing quickly, and he’s getting a significant portion of it from repeat and referral business. Norberto’s total revenue for 2019 was over $1 million, and his installations are booked out for nearly two months. In other words, his clients are willing to wait eight weeks and pay a higher price in order to work with him instead of his competitors.
Not bad for only two years in retail.
Some dealers—out of jealousy, intimidation or whatever—will dismiss this as either fake news or an anomaly specific to Norberto’s market. I don’t think it’s a fluke at all. I think the real issue is Norberto, and other dealers having his kind of success, hold a mirror up to our industry and show people what is possible, and that makes some uncomfortable.
Over the years of writing columns and presenting seminars, webinars and trainings, I have said margins of 45%, 50% or higher are realistic for any dealer willing to make the necessary changes in their businesses and in themselves. That you can have an installation schedule booked out for months with clients who want to work with you and only you—even though you’re more expensive—if you take the right steps to position yourself correctly.
In the 12 years I’ve been working with dealers I’ve seen case after case of dealers transforming their margins (not to mention their businesses and their lives) by doing things correctly. In up markets and in down markets; in large metro areas and small farm towns with tiny populations; over and over again—in every conceivable situation—this relatively small group of dealers are quietly getting results that shatter industry norms, proving the naysayers wrong.
So, what did Norberto do to achieve 60% margins and stay booked out for months while growing his business to more than $1 million? A lot of things, as it turns out—many of which I’ve written about in this column for years.
First, he refuses to accept industry norms. If everyone else in their market is charging 35% margins (and likely cringing in fear at the idea of asking for 40%), they say, “Screw it, I’m figuring out how to charge 50%.” Then they do it. If everyone is scared to death to tell prospects they’ll have to wait two weeks for their installation, they say, “Screw it, I’m figuring out how to have an installation schedule that’s perpetually booked out for eight weeks with jobs paying 60% margins.” Then they do it.
Second, to ensure they get the results they want, they take correct steps. Not the steps the ad rep, or social media rep, or online lead sales reps say they should take. And certainly not the steps they see the majority of mediocre retailers doing. Rather, these steps entail doing all the things that drive traffic, build rapport, generate repeat business and create unique and memorable experiences for customers. If you need a refresher, visit fcnews.net for a catalogue of my columns going back for years.
Jim Armstrong is the founder and president of Flooring Success Systems, a company that provides floor dealers with marketing services and coaching to help them attract quality customers, close more sales, get higher margins and work the hours they choose. For information visit FlooringSuccessSystems.com.