Managing the Business Aspect of Design Work

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Most of us in the kitchen and bath remodeling business tend to look at our businesses in terms of selling remodeling and construction to our clients. The reality is that a big part of the difference between our competition and us is, most often, the reputation we have established for our design work.

In this month’s column I will examine how we, as dealers and designers, market this and how we get paid for this part of our work.

DETERMINING VALUE

It was not that long ago that virtually every kitchen and bath dealer offered free design service in order to sell cabinets. As our designers gained knowledge and skill – both through experience and professional training – the public began to perceive that this design work had value in and of itself.

Many of our designers now have earned professional accreditations such as CKD, CBD, CMKBD, ASID and others. Even so, many designers are still reluctant to expect to be paid accordingly. This probably stems from the fact that there is no long tradition of paying for kitchen and bath design services. This is an area where leadership – either from one of the senior designers or the business owner – can play a key role.

As management, it is important to recognize that most people make judgments about the worth of a product or service by the price that the seller places on it. It is up to the company’s management to set the policy as to what will be charged for design services. This is an ongoing process that involves educating your staff on the costs associated with these services.

In addition to the designer’s own time, there is also the cost of the time that other staff members spend on projects. You will find it necessary to reassure some of your designers that their time is really valuable, reminding them that they are professionals and the knowledge they have gained warrants being paid as a professional.

It’s just as important to make sure that your designers maintain the level of professionalism that you are marketing. This can be accomplished by establishing a program of training and knowledge-sharing within your firm and encouraging attendance at trade shows and industry-specific seminars.

Many companies do not have a defined procedure for the sharing of experience and knowledge among the staff. It is important to set up a time to regularly share the things that have been learned from your firm’s experiences.

In most cases, the business structure we operate with assumes that we will actually execute most of the projects that our firms design and rely on the profit from the actual construction phase to cover the costs expended on design. It is understandable, then, that there is not a lot of emphasis placed on the dollars that are charged for the actual design.

The downside of this approach is that it leaves us open to wasting time on potential projects that never go forward to become actual projects. The simple answer to this is to more realistically charge for the design phase. Most design/build firms collect a retainer prior to performing substantial design work for a client.

To begin, as mentioned previously, your staff needs to buy into the concept of the retainer and the idea that it should be a substantial one. If your designers do not believe that their work is worth the amount of retainer that your firm establishes, they will have a very difficult time convincing a client of this.

A reasonable charge for designing and specifying a remodeling project is three to five percent of the estimated cost of the project. It’s important to explain to a potential client, at the outset, that your firm expects to collect a retainer for this amount prior to commencing design work.

The next step in collecting a substantial design retainer is to make sure your marketing gets the message across to potential clients that your staff consists of more than simple order takers. Entering your projects in design competitions, having your designers speak to local groups and having them act as a resource or instructor at local colleges are some of the activities that will lend credibility to the professional status of your staff.

One of the most important things your staff members can do to enhance their credibility is to pursue professional accreditations, such as the Certified Kitchen Designer and Certified Bath Designer designations. In addition, there are several other professional and trade organizations that offer certifications associated with the work that we perform as design/build firms (ASID, AIA, etc.).

MARKETING DESIGN SERVICES

Your firm should approach the selling of design services and receiving a design retainer from a client as the most important sale your business makes. Even though you may feel that selling the actual project is where your firm makes its money, you will never sell that project unless you first sell a retainer agreement. Furthermore, once you have that retainer, it is likely that you will ultimately turn over 90% of those into project sales.

Make sure the public is aware of your firm’s design excellence. You can do this in any number of ways, including through your print and media advertising, by spreading the word through your referral base (perhaps through a newsletter or other mailer) and through speaking engagements that allow your designers to demonstrate their knowledge and expertise.

Another part of your marketing effort involves your showroom and other sales tools. Your image (logo, signage, building maintenance and showroom) should all project the professional look your clients will associate with a professional design firm. A well-thought-out Web site is becoming ever more important in getting your message out to potential clients. Even though some other form of marketing might provide the original contact, more and more people go next to a Web site instead of directly to your showroom.

Finally, make sure that you provide your clients with the type of experience that will cause them to send their friends to you for their design/build projects.

To read past columns on Business Management by Bruce Kelleran, and send us your comments, visit the KBDN Web site at
www.kitchenbathdesign.com.

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