Subscribe to our newsletters & stay updated
Spring is coming, and I am thrilled to see so many businesses adapting and thriving through these pandemic times. I am continually impressed with the tenacity of independent business owners as they manage to find ways to succeed.
I recently read an article in Inc. magazine by Jeff Haden, and the moral of the story is that the customer you didn’t listen to might end up as your competition (https://bit.ly/3J8xOFf). In the article, Haden outlines the story of a tractor manufacturer owner named Ferruccio, who became quite successful and began buying sports cars.
One day, he purchased a Ferrari 250 GT. He loved the statement the car made, but it was noisy, stiff and uncomfortable, with a clutch that frequently needed repair. He voiced his displeasure to Enzo Ferrari and, as legend has it, Ferrari told him, “You stick to making tractors. I’ll make the cars.”
At the end of the story, we find out Ferruccio’s last name — Lamborghini. Needless to say, by 2020, Lamborghini booked nearly 2 billion in revenue and recorded record profits.
The article points out how Richard Branson started Virgin Airlines when American Airlines canceled his flight to the British Virgin Islands, and Reed Hastings started Netflix after paying a $40 Blockbuster fee. Once again, great revenge stories of customers becoming competitors.
When I read this article, it hit me. In 2021 alone, I was contacted by no less than five builders/contractors seeking advice on opening a showroom. Many had already done their homework, contacted showroom design firms, and asked vendors to be open direct with them. Some are well on their way to running their showrooms already.
Driving Customers Away
In conversations with these builders/contractors, many expressed displeasure with the local showrooms they were working with: they weren’t being listened to or taken seriously and were taken advantage of with pricing. Many expressed they would open a showroom that catered to the customer in a more comprehensive way since they understood the true cost of the build or remodel.
Many of these builders/contractors I spoke with were focused, bright and prepared to take on the showroom in the local market.
The underlying theme in all the conversations was that these showroom customers were not being paid attention to; they felt friction in the showroom. I would imagine the showrooms these builders/contractors use likely believe they are treating them fairly and listening to their needs. I would also imagine that in many ways, both parties are at fault for not being clear to each other regarding expectations, offerings and service.
Communication failures and poor pricing policies can drive your customers to seek other buying channels. You may think that your pricing is perfectly fair, and you offer a solid value proposition to your builder and contractor community, but are you meeting with them on a regular basis to make sure?
While I think this is not a trend, it is certainly a wake-up call. I don’t think any showroom should be sitting back thinking they have great relationships with their customers and business is secure. You need to visit them, listen to them and, if they are important to you, make some changes in your business to fit their needs.
I remember early in my career thinking I had a customer “locked up,” then visiting them and seeing all the boxes of product from my competitor in the back room.
It all comes back to a word I have used over and over in columns and articles — friction. When your showroom has friction for the builder/contractor, he will either find other showrooms or change channels to reduce friction.
Think about it like Uber. Uber cut the friction out of taxi service — it’s easier but not cheaper than a taxi. Until your showroom becomes like Uber, you run the risk of being the taxi service — which is the last option. Or Blockbuster — out of business.
One of my favorite ways of describing friction is when you go to gas up your car and the credit card reader says, “Please see cashier.” How many times have you just pulled away — and found a pump without friction?
I find myself in the same situation feeling like the builders/contractors I spoke with. Occasionally, I run an event at a conference center or hotel. If you haven’t done this before, the level of price gouging by hotels can make you rethink doing conferences. For example, coffee at my last event was $170 a gallon. Wi-Fi for the event space was over $50,000 for the week.
At those rates, how can you not feel ripped off and search for alternate methods of meeting with people? I understand hotels try to make up revenue from lost time because of the COVID-19 pandemic, but there will come the point where we as event hosts will say, “Enough!” and go 100 percent virtual, or find a different venue that won’t gouge.
I don’t suspect I would enter the conference business, but I am sure the future events will be scaled back in scope. Maybe if the hotel explained why they need to charge at this level, I might feel better about paying it, but in the meantime, it feels like friction.
Some of you are probably thinking that vendors/suppliers wouldn’t consider partnering with the builder/contractor proposed showrooms — especially when the supply chain is still a challenge and many existing showrooms aren’t getting the products they need on time. However, there is the hope of better volume and opportunities, and the builders/contractors have a good business plan in place. They are laser-focused on the business plan and that is appealing to the suppliers — simple as that.
The solution goes back to making sure you are invested and focused on the showroom channel, your people are well-trained, your processes work well, and your displays and technology align with the needs of the builders/contractors so they feel you are an extension of their business. Then they won’t see a need to venture out on their own.
Take the time this spring to find ways to reduce friction in all facets of your business. Maybe it’s time to start installing products, offering financing or hiring staff designers. Either way, you can’t beat what you copy, so make changes unique and tailored to what your customers want.