Thinking outside the box

BY PETER SCHOR
Showroom specialist

Some years ago, I was speaking on showrooms at the AQUA Convention, the convention of outdoor spa dealers. I was speaking on the exhibit floor to the senior national sales manager with Sundance Spas, a quality manufacturer of outdoor spas that has 700 dealers and sells in 51 countries.

I asked, “Why doesn’t an outdoor spa manufacturer have an educational program for spa dealers to go after the builder market? Every consumer would love to put an outdoor spa onto their mortgage and every builder and spa showroom is motivated by making more money.”

Next, I found myself conducting a seminar for 350 dealers that were brought together for two days. What I gave these dealers was the framework of how they could initiate a Builders Upgrade Program for Sundance Spas -- a simple “good, better and best” product scenario. I told them approximately what most tract and custom builders would expect to make in profit to the consumer, how to approach the builder and how to establish their showroom as the place of choice. My information was proven and taken from the most successful “models” in North America. Not all 350 dealers were qualified to serve this market, yet 116 (one-third) took advantage of this golden opportunity!

There is gold out there for the plumbing/bath showroom
Yes, it is a bit more complicated for the spa dealer as we want to include the plumbing contractor and there are more architectural/mechanical details involved. The builder and plumbing contractor are highly motivated to making more money. The consumer would love to add luxury bath/plumbing products onto their 30-year mortgage and make dreams of their ideal home come true. What I am advocating is for middle- to high-end multiple housing -- it’s not ideal for the lower-price housing for first-time home buyers.
Here is the proven process that comes from first-hand experience and from “models” of select successful bath/ plumbing showrooms that use this type of program.

The outside plumbing salesperson must call on the plumbing contractors to communicate this new proposition in making more money for everyone involved.

There must be a complete trust between the outside salesperson and the plumbing wholesaler for this to work.

The outside salesperson must ask the plumbing contractor, “What type of profit margin would you need to make if your builders would like to offer plumbing/bath upgrades?

After the plumber answers the question, the outside salesperson must sell/ empower the plumbing contractor to make sales calls on their builders in their behalf of them to offer upgrades to their consumers.

It is imperative that the outside salesperson has a detailed list of products and sizes of all bath/plumbing finished products that are being used in each bathroom, kitchen sink, wet bar and laundry sink in each of the three to five“Plans” that the builder has available to the consumer within a given tract.

A quick tip: If the outside salesperson sees non-plumbing products that are sold in the showrooms that could be sold to the builder direct, then let it be. Take shower doors, for example. The plumber must be assured that nothing will alter the existing sizes and installation unless approved by him and the builder.

The outside plumbing salesperson makes a scheduled sales call to the builder (project manager) in behalf of the plumbing contractor regarding a plan to make more money through a planned plumbing/bath upgrade program -- as in a good, better and best scenario where all products in each bathroom or kitchen sink are not broken down.

The outside plumbing salesperson then asks the builder, “What type of profit margins do you need to make on the upgrade plumbing product program?” The builder must be empowed and assured that the upgrades will not alter construction, such as moving walls, changing shower and tub drains (unless totally agreed), or anything that would slow down the production of the home in any way.

The outside salesperson empowers the builder of the “good, better and best” program. Good is what the builder is providing for an entry level and “better and best” are two upgrade packages that are pre-selected as the most popular by experienced showroom and design experts. The builder needs to be assured that it won’t be a red bathtub and the consumer’s loan has fallen out of escrow a builder’s nightmare.

A good case in point: Del Webb has an age 55+ active living development of 6,000+ homes in Lincoln Hills, Calif. You know, golf courses, tennis courts and golf cart paths throughout for retired Baby Boomers. They had many spec homes built (1,200+) that were professionally designed and coordinated with upgraded packages that were extremely tasteful and sold fast. They doubled their profitability with these upgraded homes.

It is extremely important that the outside salesperson and the showroom manager are sure the upgraded packages will fit the architectural spaces and are the most popular options in today’s baths and kitchen. Any changes to the agreed upgrade program by the plumber and the builder will create upsets and could jeopardize the program.

The consumer calls up to set up an appointment to come to your showroom through their builder and plumber. They tell the showroom person the builder’s name, the tract name and the plan number they purchased.

When the consumer arrives, the showroom personnel are prepared in advance to show the consumer the standard package (“The Good”) of what the builder/plumber is putting in and then can show them the two upgrade packages, “Better” and “Best.” The showroom can quote a packaged price (no breakdown) with the builders and plumbing contractors profit margins included along with the showroom profit. There is to be no other options to be made to the consumer.

Think about it: If the builder and plumbing contractor makes their normal and reasonable profit margins, then “what’s my price” on every line item is not important. The consumer is extremely happy to put the plumbing and kitchen upgrade on to their mortgage rather then moving in the house, ripping out the existing product, having a new one installed, and spending hard earned cash!

Quick example of the upgrade -- The kitchen sink
The “Good” is what the builder is providing. A basic 33- x 22-inch self-rimming stainless steel equal bowl sink; single lever faucet with spray; basic garbage disposal and basket strainers. The “Better” might be a 33- x 22-inch cast iron high-low bowl in white; deluxe single lever control faucet with pull out spray; better garbage disposer and strainers. The “Best” might be a 33- x 22-inch cast iron high-low bowl in white; higher-quality single lever faucet and pull-out spray in white powder coated; all-white, powder-coated deluxe garbage disposer; cast brass powder-coated shower strainers; soap dispenser; instant hot and cold water purification system; and perhaps the cutting board and vegetable basket. The idea is to make sure the consumer hears the options in “Better” and “Best” along with the existing “Good” that they are purchasing with the house.

Change orders and the paperwork
It is imperative that you find out exactly how the paperwork is to be created to make it easy for the builder, plumber and yourself to make the upgrade changes. The customer name, tract name and number; the name of the model; and a signature for approving the upgrades to be put on the mortgage. Remember that besides you billing the plumber, the plumber must bill the builder and the builder needs to put it on the mortgage. You must learn exactly how they want to do it.

The other possibilities
Could there be the possibilities to sell the builder directly on showroom non-plumbing, contractor-type products that the plumber does not want to sell or install? The answer is yes! Some of these highly profitable products are: Shower doors throughout the bathrooms; matching bath accessories to the faucets -- towel bars, paper holders, towel rings, robe hooks, shelves and more; towel warmers; medicine cabinets; bathroom lighting; magnification make-up mirrors with light; electric floor warming; LCD mirrored TV; and shower/tub shampoo and soap dispensers.

What about door hardware? How about finally “picking the pockets” of the door hardware showroom that has picked your pockets of bath/plumbing products for many years! You can either buy many door hardware lines direct or through a master distributor. Remember Boyle and Chase (www.boyleadnchase.com), the master distributor of Baldwin Door Hardware that exhibited at k/bis 2006? I wrote about them in my pre-k/bis showroom column. Ask them how many plumbing wholesalers are buying from them today.

Another possibility: How about setting up the upgrade program inside the larger-tract Builder’s Upgrade Center? It has been done by plumbing wholesalers with or without showrooms very successfully before.

Quick live story from a plumbing wholesaler with a showroom that I’ve worked with. This showroom is working with a plumbing contractor and a nationally known Top 20 builder building a semi-custom tract home sub-division fo 700 homes. The base price of the homes is extremely competitive. The builder also has an extensive upgrade program where you can add on as much as one-third of the home’s value with additional upgrades. Think about it, wouldn’t you like to choose what upgrade “goodies” you want to pick for your home? Like myself, I would take the built-in outdoor barbecue pit, outdoor deluxe spa, combination air massage and whirlpool tub, and so forth. I am sure you feel the way that I do in getting what you really want. The wholesaler, the plumber and the showrooms are making big money and the consumer is getting to put their dream wishes on a 30-year mortgage.

There are numerous other tips and secrets to enhance a builder’s upgrade program. If you want to make more money from your showroom, please give me a telephone call.

 

Peter Schor, president of Dynamic Results, Inc., is an educator, motivational speaker, consultant, coach and writer in our industry and many diverse others. For the past 17 years, he has conducted 100 educational programs yearly, including 34 industry conventions. Schor has great expertise in the field of showrooms and has won many industry awards. He also works with manufacturers in the field of sales, marketing and public relations. Schor has a new book called Pillars of Success, published by Insight Publishing Company, Sevierville, Tenn. He can be reached at 1491 Ivy Arbor, Lincoln, CA 95648, phone 916/408-5346, fax 916/408-5899, e-mail pschor@dynamicresultsinc.com or at www.dynamicresultsonline.com.