Could Your Firm Improve With a Reality Check?

Most principals of decorative plumbing and hardware showrooms bury their head in the sand when it comes to evaluating their businesses. They don't take a hard look at reality or, as Jim Collins suggests in Good to Great - "the brutal facts" of where their business is and the direction it is headed.

If you own a showroom and do not constantly perform self-evaluations, there is little chance that change will occur. Walking through the business world with blinders on may result in the steady erosion of market share and profitability, and perhaps the loss of the business altogether.

The first question you should ask yourself is: "How do your rate your performance?" The second question you should ask is: "What are the criteria used for the evaluation?"

As Americans, we tend to use a numerical basis for everything we do. In school, we knew that if we scored a 95% on a test, we would receive an A. If we scored 1600 on our SATs, there was a good chance that we would be accepted to Harvard. We measure how soon we learn to walk and talk. We want to quantify performance and compare it to others.

Testing Your Company

At the Decorative Plumbing & Hardware Association (DPHA) Breakfast held in May at the Kitchen/Bath Industry Show, I challenged my peers to take a test. I asked them, if they had to rate their companies on a scale of 1 to 100, where would they fall?

I found that most people gravitate toward the higher end, giving themselves a score between 85 and 95. The low 90s was the median.

This generous self-evaluation becomes more realistic if you change the scale from 1 to 100 to 1 to 10. Ask yourself where you would fall. Again, most successful entrepreneurial owners are liberal in their self-evaluation and grade themselves between 8 and 9. Compress the scale a second time. Change the criteria from 1 to 10 to 1 to 5. A new rating of 4 is not as good as an 8.5. The smaller the denominational scale becomes, the more reality sets it.

The ultimate test, however, is to rate yourself on a scale of 1 to 2. Two means that you perform better than direct and indirect competitors and 1 means that the competition offers more to your customer base than you do at the present time. In all areas where you are a 1, there is room for growth and improvement.

Are you ready to take the test? Consider the different components that comprise your business: physical plant, marketing, merchandising, displays and staff. On scale of 1 to 2, rate each component considering the following.

PHYSICAL PLANT

As yourself the following:

  • What is the customer's first impression of your showroom? What do customers see? Is it warm and inviting, or aloof and cold? (1 or 2)
  • Does everything in your showroom work? Are displays lit properly? Are fixtures mounted correctly? Do you have running water (we are in the water business)? Does your showroom connote the experiences that the products can deliver? (1 or 2)
  • How clean is your showroom? Are there fingerprints on the glass vessels? Are spiders building condominiums in the corners? (1 or 2)
  • Sit in the middle of your showroom when no one else is around - either early in the morning or late at night. Turn on everything that is supposed to work. Look around and ask yourself if the showroom is a 1 or a 2. What needs to change? Is this what you had in mind when you started your business or became the chief executive? Are you satisfied with the results? (1 or 2)
  • MARKETING

    Rate yourself on the following:

  • Is your advertising effective or do you simply place ads because it is the right thing to do? Is the traffic generated a 1 or a 2?
  • Do your advertisements reflect the experience that the featured items or showroom are designed to deliver? Do they emotionally engage the customer? Do the ads differentiate the product/showroom from competitors? (1 or 2)
  • Do you provide reasons for customers and prospects to come to your showroom? (1 or 2)
  • Are your efforts expand your customer base a 1 or 2?
  • Merchandising

    As yourself the following:

  • Does your showroom compare favorably to the local upscale department or specialty store?
  • We are in the retail business. We need to compete and benchmark our performance not only against other showrooms that offer similar products, but other retailers that are competing for disposable income. Should your market spend its discretionary dollars at your showroom or at the Williams Sonoma down the street? Is your showroom a 1 or 2?

    SALES STAFF

    Ask yourself the following:

  • Are all of the birds flying in the same direction? Do your sales associates give the same sales pitch? Do they look to maximize margins? Do they know which products and product categories deliver the highest margins? Do they know the attributes of the products, the experiences that the products can deliver? Do they know the right questions to ask to understand customer preferences, desires and budgets? Do their actions, attitudes and appearance reflect and project corporate values? Is their score a 1 or 2?
  • If I had to start my business over tomorrow, I would focus first on developing a corporate culture and then the physical plant. On a recent flight, I sat next to several executives from United Airlines who were returning from a course on how to build employee morale. Talk about being 10 years late and a million dollars short!

    While the rank and file is requested to take multiple pay cuts and have their pensions turned over to the federal government, the top dogs at United continue to receive healthy salaries, stock options and bonuses.

    As a result, United can talk until it's blue in the face. That business will never get there.

    Every showroom owner should have a clearly defined and understood expectation of employees. They are the heart and soul of the business.

    Does your rhetoric reflect reality? Do your staff members come to work simply to collect a paycheck, or is there another reason they are there? Is your staff a 1 or 2?

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