Jan 4/11; Volume 30/Number 14
By Jim Augustus Armstrong
(First of three parts)
In this series you will learn how one dealer transformed the effectiveness of his sales team and quickly tripled his net profit. Part one will focus on the case study of a particular dealer, while parts two and three will delve into the specifics of how you can quickly implement this kind of system into your own business.
One challenge dealers often face is finding salespeople with experience in the flooring industry. If none are to be found, dealers must hire salespeople without experience, which means having to train them for many months before they become producers for the business. And what happens after all that hard work? The salesperson might quit or go to work for a competitor. What if there is a better way? What if you could get a total “newbie” salesperson producing large revenue for your business in just a few weeks? A step-by-step sales closer system can make that happen.
Daniel Knigge works as a salesperson for Russ Bundy’s flooring business in Utah. Daniel had very little experience in the flooring business when he began using a sales closer system.
“I started working in the flooring business only six months ago,” Daniel told me. “My residential margins were 30% to 35%. It was emotionally stressful. I would end the day, be totally exhausted and realize I hadn’t closed any sales. It was discouraging.” To make matters worse, he works right down the street from two major home centers. “People would come in and say, ‘Lowe’s quoted me this price,’ or ‘Home Depot quoted me such and such,’” he said. “I constantly had to compete on price.”
Things changed when he switched to using a sales closer system. “I closed the first seven out of seven people,” he continued. “Since then my overall close ratio has averaged 85%. My residential margins are now averaging 40%.”
I asked Russ how it feels to have a system that he can turn over to a completely new, never-worked-in-the-flooring-business-before salesperson and have him immediately begin generating these kinds of margins and close ratios. “It’s pretty amazing and gives me a lot of hope about building my business,” Russ said. “In the past I felt like it was really hard to bring someone new in. It takes a couple of years to get them fully trained. What if during that time they aren’t successful, they don’t generate enough money and you have to start over from scratch? So to be able to put somebody into a system takes a lot of pressure off of me from needing to teach them everything about how to close a sale.”
He went on to say that hiring a new salesperson is always stressful. “I think other dealers can relate to this. You can bring in a good person but if you put them into a bad sales system, they might not last very long. But you can bring a mediocre person in and put them in the right system, and even they can be successful.”
Within 87 days of implementing a purposeful sales system, Russ’ year-over-year revenue was up 13% but the increase in his net profit is what is truly impressive. “We’re also getting higher margins,” he said. “So even though we cut all of our advertising efforts, our net profits have tripled.”
Raising his margins to a 40% average—up from 30% to 35%—meant that Russ was able to bank all that extra money which he had previously left on the table. It was basically pure profit, which is why a seemingly modest margin increase can exponentially boost your net profit and vice versa; cutting your margins by 5% can devastate your net profit.