Use Strategic Alliances to Enhance Your Business

As I think back over my years in the kitchen and bath industry, I realize that the business relationships we all form have a major impact on the success of our businesses.

Particularly in these tough times, it’s critical to examine your business alliances to make sure they are beneficial to you.

Consider the manufacturers you represent. Why are you doing business with them? Are you really getting the best service and price on the products you’re carrying? What about your cabinet suppliers? Have they been with you for many years or are they new to your company? Why did you select them?

Partnering with Vendors

In starting our new business, I first looked to the cabinet company with which I had a long-term relationship. I discussed with the firm my vision for our company, and we talked about goals and set time lines that we believed were achievable.

At our company, we discussed the pros and cons of dealing with only one cabinet supplier. The biggest benefit was increased accuracy, because we would be using only one nomenclature for products. With everyone using the same cabinet manufacturer, we would all be familiar with the products and how to order them. We would be an important dealer to the company, since we would likely have a major impact on its production.
Of course, the downside is that, if the company had a shut down or some major catastrophe, how would we be able to fulfill project orders? In our case, we were willing to take that chance. We deliberately chose a product that would allow us much flexibility in design choices (door styles, colors, wood species) and price range.

When considering countertops, while we had many choices, again the goal was to develop a business relationship with manufacturers that would facilitate long-term commitments.

We chose two vendors that we believe share our vision. They understand what’s involved in having an updated showroom, and partner with us on that. They supplied product displays as well as other offerings to be part of our new showroom.

As we sought out vendors with which to do business, we discovered a few interesting things. First, many premier vendors are opening up their own showrooms in major cities across the U.S. They want to have full displays of their products, and they realize that there are very few kitchen and bath showrooms that will devote an entire area to their products.

One of these companies is Dal-Tile. This company had a very large showroom, with complete display boards of different concepts of how a tile wall can look for either a kitchen or bathroom. Dal-Tile also offers granite slabs.
We have developed a business alliance with Dal-Tile where we can bring our customers to its showroom to select tile for their projects. We do have display boards of the company’s products in our showroom, but if customers don’t find what they’re looking for, I can maintain control of the sale and take them to the Dal-Tile showroom. We have yet to have a customer not find something he or she liked.

With appliances, we discovered the same thing. In almost every major market, there are manufacturers that have their products on display in their own showrooms. This allows you to show more product while still controlling the sale. We have an option to sell our customer an appliance with a mark up, or the customer can purchase it from the vendor, who then gives us a commission. The vendor also provides us with all of the specifications for the cabinet sizes, cut outs and all info to make it work in our cabinet design.

This same concept can work with wet water fixtures, sinks, faucets, strainers, hot water dispensers, water purifiers and other items.

The Complete Sale

As I travel to other showrooms, I’m still at a loss as to why so few think in terms of the complete sale. If customers want to purchase a new kitchen, why not think about everything that would go into that kitchen?
Lighting is an often overlooked area. Yet when I ask dealers why they don’t sell lighting, they usually reply: “I don’t know that much about it,” or “The electrician takes care of that.” If you’re not making something on that sale from the electrician, you are missing out.

Buying groups are one way to increase your buying power and achieve a greater commitment from your suppliers. By belonging to a buying group, you will have greater opportunities to achieve this sort of commitment from your suppliers.

Another area to examine is installation. Installation services can be a profit center if done correctly. Find a crew that can perform the work you desire. If you can put together the right crew, it will make you a lot of money and bring you more referral work than you can handle.

Remember, though, this must be a business alliance that works for you. To maximize customer satisfaction, we have rules for installers, as well as a check list they must go through at the completion of each project. They sign it and it gets turned into the office before they receive the final check. This assures us that all of the important issues have been addressed.

Of course, in business alliances, it has to be a two-way street. Getting a commitment from vendors requires a commitment from you as well. As an example, many vendors are providing displays on a “memo billing” – in other words, you do not pay for the display as long as you sell the products. With every sale, a percentage of the display is discounted until it is paid off.

In some cases, there is a time commitment to meet this agreement. In other cases, you must sign a contract agreeing to do business with the vendor for three to five years. In still other cases, vendors will supply the displays at no cost to you, simply because they recognize the value of getting their products into your showroom.

But, it’s important to recognize that vendors need to get a fair return for their investment, so you’d better give serious consideration to the products that are going to make money for you, and make your showroom a destination for your customers. Showroom space is very expensive, and you can’t afford to have “dead space.”

Pick your vendors carefully and you will see a good return on your showroom.