For 22 years, I considered myself a runner. The 10K (6.2 miles) runs were really popular, and for my age group, I was pretty good at keeping my time for the 10K just under 40 minutes. As time went on, I was drawn to another challenge: to run a full marathon (26 miles, 385 yards).
After running my first marathon, I wanted to do even better. My physical conditioning was fine, and my leg speed was about as fast as I could go. Then, a long-time marathon runner told me to stretch my stride. He told me if I could stretch my stride by one inch, I would reduce my marathon time by six minutes – and he was right.
I believe the same principal holds true in our kitchen and bath sales practices. Now, in our sales/design efforts, there are several ways we can stretch our stride. But if you choose to try to stretch your stride, don’t be surprised if it feels very uncomfortable until it becomes your norm. I know my hamstrings hurt a little more as I learned to make that stride just one inch longer in my running, and the same will hold true for you in selling. But the financial payoff will be well worth the effort.
Making More Money
So how do you go about stretching you sales stride? To begin making more money from your efforts, start by making three adjustments of one percent each. First, sell one percent more than your current goal. Second, raise your selling price by one percent. Third, reduce your selling cost by one percent. You should work on all three of these adjustments at the same time.
Let’s tackle the selling one percent more than your current goal first. As a reference, let’s use $750,000 as your current goal.
To raise the goal one percent, your new goal should be $757,500.
Now let’s look at the one percent increase of $7,500 and see how we can make it happen with just a little extra effort and skill. Let’s reduce the $7,500 down to what you have to do today. If you take a two-week vacation and the typical six holidays and are working a five-day week, you have 245 days to achieve your increased goal. In other words, you need to make a little less than $31 more per day than you currently do. Or, you could decide on the goal of selling just one more kitchen during the year.
Rather than having to find more customers, you can make that extra one percent by making the most of the customers you already have. Simple ways to do this might include upgrading the door style or the finish of their cabinets, adding moldings or undercabinet lights, upgrading the hardware, adding roll outs, selling appliances and making the bath grab bars part of every bath sale.
Our industry is filled with an infinite number of products, which, when combined with your design skills, will enrich the final project – something the customer will enjoy for years to come. It all comes down to whether you can get them to understand the value of the investment you are asking them to make.
Can you do it? Yes – by stretching your sales stride and making sure you fulfill your prospects’ dreams and expectations. To do that, you must stress benefits to be gained and losses to be avoided by doing business with you and making the proper investment.
Next on the list – you have to raise your selling price by one percent. That means the $20,000 project will now sell for $20,200. We as sales/designers are often more price sensitive than our prospects. The fact is, if the salesperson meets the client’s needs, one percent should never be a stumbling block. You can also explain it in other terms: for instance, it’s only $3.97 per month on a seven percent, five-year home improvement loan – plus the interest is deductible. I believe it is important for us to help the prospect see our products as monthly investments, just like a car or a home purchase.
The third one percent we are addressing is the reduction of your selling costs. This may be more in the hands of the company you work for than in yours, but if you are the owner or in a position to control costs, there are all kinds of savings opportunities you can consider. First and foremost, you should look to the elimination of mistakes. Mistakes often have a very expensive price tag. Doing things right the first time is always the most cost-effective way.
Recently I was speaking with one of my cabinet suppliers about some door problems we were having where replacement was necessary. I was told, “No problem, we will send you a replacement at no charge.” To that statement, my reply was, “The most expensive door I can get from you is a replacement door at no charge because of your lack of quality control.”
You also need to control the sale and your input of time. Your time is an expensive, non-recoverable expense. Keep your communication accurate and document everything in writing. You will come to appreciate not having the emotional drain caused by mistakes and misunderstandings.
Other ways to keep your selling costs down include reducing your cost of goods by negotiation, being part of a buying group and using all display allowances and co-op advertising funds.
Once the sale is made, make sure the progress and outcome meets the expectations of both you and your customer. If this doesn’t happen, it’s likely that the job will require more time and money to ensure a solution.
Now let’s look at the cumulative effect of each of these one percents. First, add $7,500 in sales over existing projection. At 40 percent on sell margin, this will yield $3,000 of additional gross margin. Next let’s look at the impact of raising the gross margin. One percent additional gross margin on $757,500 is $7,575. The cost reduction of 1 percent on $757,500 of sales at a 40 percent margin would be one percent of $454,500, a yield of $4,545. Added all together, that gives you a total of $19,620. Not bad…but are you willing to stretch your stride to gain this benefit?
You might be reading this thinking, okay, it sounds great on paper, but how do I know if it can be done? Well, why not give it a try? Even if I’m wrong about 90 percent of this, you would still be gaining $2,000 by using this method.
Please accept the challenge from me and stretch your stride. I am confident that you will enjoy the results and get to the finish line ahead of the others – with up to $20,000 in your pocket to show for it.
Read past columns on Closing the Sale by Ralph Palmer, and send us your comments about this story
and others by logging onto the Kitchen & Bath Design News’ Web site, located at www.kitchenbathdesign.com.