Does your kitchen and bath dealership have the optimum structure, allowing you to grow at the fastest rate and get the best efficiency from all of your people?
When visiting and analyzing kitchen and bath dealers, I’m often asked, “How does our dealership compare to others?” They then follow this question with other questions about employee structure, sales volume, number of employees and turnover issues, among others.
What they’re really looking for is to find out if they have the most efficient mix of employees for the volume they’re doing, or if there’s a better mix that would help them sell more and be more profitable.
The ideal mix of employees and roles depends on the volume of business you’re doing, the volume of business you’re trying to reach and the level of supporting technology you utilize. It’s what I call the “Three Phases of Dealership Progression.”
Phase one, or the Dealer Progression Phase, is what I call the Mom & Pop Shop: Pop sells and Mom does the books, right?
As the Mom and Pop shop gets bigger, salespeople are hired. At this phase, everyone wears a lot of hats. Typically the salespeople (and Pop) pretty much do everything around the sale. They design it, they sell it, they purchase it, they service it and they might even collect the money.
Since salespeople do so much in this phase, the target volume per salesperson is around $1 million to $1.5 million per year (if they are doing business with builders moreso than retail).
Phase One dealers should set a structure in place as soon as possible to give their salespeople the support they need to keep them selling. Most salespeople in this phase spend too much time doing paperwork because there is no efficient supporting structure to handle it for them.
The Phase One chart below shows what your company should typically grow into in this phase, with a focus on the front-end side of the business.
Phase Two is the Growth Phase. At this point, the dealership has taken steps to get salespeople selling instead of handling all of the paperwork for each sale. They hire a sales coordinator (an early-stage purchasing agent) and allow salespeople to offload some of the paperwork process.
They also begin to take the “service” work away from the salespeople by having a true “service coordinator” to handle
all details such as paperwork. This begins the progression toward providing a support structure for salespeople to allow them to get out of the office and increase sales.
The first goal for Phase Two is to find a system that will enable growth by minimizing all of the manual paperwork. The second goal is to structure salespeople to sell more and support sales less.
The jump from the Growth Phase to Phase Three, the Hyper-Growth Phase, is the most difficult for dealers. High growth requires shrugging off many mainstream manual processes and investing in automation that will support sales of up to $100 million.
This phase is large, since it covers sales from $8 million to $100 million. Approaching the $8 million mark, the dealer would have already learned that the paperwork process is not able to keep up with the sales volume. Thus, a system needs to be put in place to enable them to expand and accommodate this type of sales volume.
This phase introduces new roles and new people into the equation, as well. In addition, salespeople are now focused exclusively on either inside or outside sales.
Here, the salespeople do what their title indicates; they sell. To that end, they must also have a full sales support structure in place to handle the supporting processes for all sales, including a design/estimation department that does the design and pricing work for them. This structure also enables them to increase volume extremely quickly.
In Phase Three, dealers must work to keep everyone working at full capacity – at all times.They need to watch the ratio of sales to support staff and make sure one is not overwhelming (or underwhelming) the other at all times. Depending on the quality of people, this will be a moving target. With these things in check the owners are free to focus on expanding the model into new locations while possibly even exploring new markets.
Brent Jackson is co-founder and president of the Charlotte, NC-based CompanionCabinet Software, LLC (www.companioncabinet.com), a software company that automates all of the paperwork between kitchen design and invoicing for dealers generating more than $5 million in annual sales revenue. Jackson grew up in the kitchen cabinet business, and each year he visits dozens of dealer operations throughout the industry.