“It’s very easy to be different but very difficult to be better.”
Managing the rotation of your kitchen and bath displays should run as smoothly as the rest of your business. The right displays can generate hundreds of thousands of dollars in sales for your firm by determining what works right for you.
In this advisory, you’ll find tips on creating a tracking system and identifying what your clients like best about your showroom displays, so you can collect data that will be useful in maximizing your return on investment in future displays.
How to invest in the life of your showroom displays
To get the most value out of your displays, define the two essential factors in developing them.
- What you think your customers want
- The designs that exemplify your firm’s capability and range
While the first factor depends upon your clientele base, the second depends upon the look and feel of your firm. For instance, does your showroom exemplify classic or postmodernist aesthetics? Perhaps both? The displays you develop should be the result of planning with your team to identify your firm’s signature look and expected design trends.
If your firm portrays a classic look, you might keep most of your displays for five or seven years. Though, if you want to be on top of the trend curve, your firm would do better to switch out one or two smaller displays every two to three years. Put them up for sale and assemble a new one. Whatever you do, look into the annual return rate to decide which products to buy for your showroom displays.
There are three types of ways to measure investments.
With displays, your focus should be exclusively on the yield. Whether you invest in a display that carries a five to six-year or a two to three-year life, the criteria for selecting a display for your showroom should start with:
(a) What styles and products generate the most outstanding sales
(b) What will give you the highest return when you sell it
Step 1: Assess your investment
Let’s say you’re investing $20,000 in a display, and your firm averages a 20% annual return on its net worth. Over five years, that would amount to a $4,000 net profit generated annually.
Key Point: Take the profit from selling your display and put it into a fund to backstop your business if it is ever needed.
Next, calculate the required sales volume from the display to achieve a 20% return or a $4,000 net profit.
Your financial records show a historical 4% pre-tax net profit after a market-rate owner’s salary.
With that in mind, calculate:
$ of Annual Return = Required Sales from Display
Historical Net Profit %
$2,000 = $50,000
Over its five-year life, this $20,000 display investment should produce $250,000 in sales.
Note: If your historical net profit is 2%, your annual objective would be $100,000 in sales ($2,000 ÷ .02).
Step 2: Pay attention to every aspect of your displays to reap the most profit from them
Profit is in the details.
You will want to discover what part of your displays generated the most sales and influenced your clients’ design preferences.
Key Point: Have your sales team determine which attributes of your displays were responsible for generating the final sale, then tabulate the sales volume for each display at the end of the year.
This can be accomplished by requiring sales designers to complete a sales recording form when their files are turned over to the administration team for processing. The form should include at least these two questions:
- Which display influenced your client’s decision to retain our company?
- What attributes did they like most about the display?
Step 3: Create and maintain a year-end display return analysis
Have one of your team members develop a “display sales analysis chart.” Use this chart to catalog your displays by date, purchase amount, net cost, total sales generated, and so forth. This chart shows which showroom displays generated the most money and which ones should be targeted for modification or cut loose to make room for new designs.
Key Point: Report the sale of the display below the line under “Other Income” on your P&L Statement and remove it from “Current Assets” on the Balance Sheet. Do this because only consumer agreements should be recorded in your top line as revenue. A display sold for a very low markup would distort your company’s true gross profit margin if it were recorded in your top-line revenue.
Keep the cycle going. Changing your showroom displays doesn’t mean changing your signature style but updating it and retaining classic looks and colors that define your showroom while giving your product a new face or adding an innovation more rapidly than your competition.
An excellent way to sell displays you no longer need is by marketing them to previous clients or builder accounts. Post them for sale on your website with a few high-quality photos to show them off. You could turn the deal into a blog post by drawing from suggestions you find in this article and peg it as a perfect fit for a second home, be it a summer cottage, ski lodge, or investment property.
Both clients and builders know the value of your services. Let’s say the original sales price of the cabinetry display is $15,000. Mark it up 5% for inflation each year it’s been in use, then cut that total in half and hand it over to a new owner for $9,600. Make sure to show the drastic reduction in price as a great deal rather than a closeout sale:
“Are you the new owner of this beautiful kitchen? Save thousands on a $19,200 kitchen – yours for only $9,600.”
Plan with the end in mind
Whether for classic looks or new trends, keep your showroom looking fresh by featuring top-of-the-curve products in your displays. Make your presentations vibrant and versatile. Be bold and lavish in your designs.
Historically showroom displays are the best way to generate sales.
After all, your showroom is your physical website. This is another reason your personnel is the engine of your firm’s success. When people come into your showroom, your sales designers have the opportunity to educate, excite, and sell prospects their dream projects. It all starts with making the right investment the right way.
—SEN Leadership Team
Master strategic planning, selling more into each job, leveraging technology, Good-Better-Best selling, and other smart implementations at one of SEN University’s valued online business courses – or contact Shannon Blair to attend our in-person schools.