The importance of selling upgrades
Geoffrey Gran of Midwest Countertops and Ignite Consulting Group discusses the benefits of selling upgrades to your existing customers
Geoffrey Gran was born and raised in Chicago. After living away for college, he returned and started his career in healthcare. In 2004, he and one of his best friends growing up, Bill Hoyer, decided to go into business together. After conducting extensive research, they ended up in the countertop business. They started their company, Midwest Countertops, on July 1, 2005, and with no experience in the industry, they came at it from a little bit of a different perspective. Classically trained as sales and marketing guys, they approached their new venture as a sales and marketing company that happens to make and install countertops. They sought amazingly talented people who also possessed technical skills. Fast forward to today, Gran and Hoyer operate a fully automated, fully digital sales and marketing company with160 employees that fabricates countertops.
Here is a bit of what Stone World discussed with Geoffrey Gran about how to increase your revenue without increasing your customer base. To listen to the full interview go to: https://www.stoneworld.com/media/podcasts/2594-stone-world-magazine-podcasts/play/65-increasing-sales-with-geoffrey-gran-of-ignite-consulting-group
SW: How do you generate more leads for your business and how do you sell more to your existing customer base?
GG: So you touched on something incredibly important and not just for our industry, but I think this is a challenge for many small businesses. You get someone who is an expert in their field, let’s call them a technician. They may be really good at making a countertop, but don’t always have the business training to understand that side of it. So for us coming from a sales and marketing side, we wanted to control their own fate. It was about customer out reach. Actually having a sales staff. Having a list of arrows in your quiver, so to speak, to go out to that customer. I think there is a lot of fabricators who do a real nice job manufacturing and installing. But they only offer basics to a customer. In this day and age, customers want convenience. The reason why everyone buys from Amazon and Jeff Bezos is worth $110 billion is because Amazon has made things very easy for the consumer. In fact, it’s so easy that when you buy one thing it tells you, you should buy these three or four other things. It’s called predictive selling. So about seven or eight years ago, we realized that especially in the Chicago market there is 350 to 450 fabricators of different sizes and experiences and quality. We realized we needed to differentiate ourselves. So instead of just selling a basic countertop and a basic edge, we are going to sell more. How you do that? First and foremost, you have to listen to the customer.
We were born with two ears and one month so we should listen twice as much as we are talking, and sometimes, especially guys like me, who are the sales and marketing guy, we tend to talk a little much. But we really should be listening more, and we should be asking the customer what their needs are and figuring out how to provide them as long as it fits in your scope. We don’t want you to get over your skies, and we don’t want you to get in trouble. So for us, being able to provide the entire project scope for our customer has been an absolute huge win. In this really hard, and truthfully expensive to acquire customers, think about it, showroom, samples, sales people, website, search engine optimization. All these things cost money, and a lot of them are esoteric, and a lot of them cost a lot of money. So when you get that customer, our theory is hug them, squeeze them, kiss them and never let them go. In order to do that, you really have to understand and sell them everything they need -- and creating that more revenue. So when you do that, and you can be that single source for that customer, they are going to come back feeling very satisfied. And they are going to tell other people. A lot of fabricators rely on that referral; that word of mouth business. What better way to get your customers excited by truly making it a great experience for them, and it is not just the countertop, it’s everything surrounding it as well.
SW: You hear some fabricators say I am trying to sell them on a different edge or a backsplash and that’s all I have, that’s all I can do. What else should fabricators be looking at to sell to customers?
GG: The number one edge that is sold across the country, about 80 percent of the time, is an eased edge. I talk to fabricators all the time. When I ask them, the reality is that is the edge we offer for free and that’s exactly right. You’re working with the customer. You’re trying to figure out a color and a material in their budget. You finally get them convinced on something, and they feel good about it, you feel good about it. We didn’t have to give up margin. Then all of a sudden the customer has a lot of nerves and says let’s talk about the edge. So immediately we take off our sales hat and put on our, “Oh boy, I don’t want to screw this up hat” and we immediately point to an eased edge because that one is free. So the customer goes, “Okay, I will take it.” It turns out it is easy for the fabricator to manufacture, and it actually looks nice. So the combination of those three things makes it easy. But we don’t make any more money when we do an eased edge. So for us, and for many other fabricators, somewhere around 50 percent of the fabricators have some type of digital equipment, at least a CNC, which means if you do a eased edge or a bullnose edge or a ogee edge, it doesn’t really cost you anymore money. Yes, there could be some different cost in the tooling or different cost in the programming, but at the end of the day, it’s somewhat insignificant. So every time you can charge for those upgrades some of them have cost of good, but some of them don’t. Some don’t have any labor components, you’re making more money.
Here’s a great example. Most fabricators like to have their cost of materials to be about a third of the overall project costs. So let’s say a customer has a 40-square-foot kitchen, basic eased edge. You can get it on one slab and that slab costs $600, tax, delivery all included. A lot of fabricators would say, “Okay, I am going to sell that job for $1800. That would put my cost of materials at a third. Now the average fabricator, according to the Natural Stone Institute, and this was a study done years ago, was around five percent earnings. Let’s just say we are going to institute that it is 10 percent. So on that $1,800 job, that fabricator made $180. After labor, material, overhead, now they haven’t paid for taxes yet, but it’s $180. Now let’s say that customer, now instead of getting an eased edge, you sell them on an upgraded edge, you sell them for $250. And in order to do that, whoever was the person who sold that upgrade, you are going to give them 10 percent. So maybe it was sales, or maybe someone in project management, maybe it was a field measurer. Now you charge $250, you gave them $25 and the company made $225. You made more earnings on the upgrade then you did on the countertop. That’s powerful. Seven or eight years ago, we realized this, and as a sales and marketing company, we are going to start selling upgrades. Yes there are the typical ones. Let’s think outside the box on how to provide more to the customer. We have evolved that program. We call these upgrades now Hot Sauce. The reason why Hot Sauce everyone asks me? Hot Sauce is that a little bit extra you pour on something to make it better. That’s the same thing. Countertops is the meal and the upgrades are the Hot Sauce. We have 130 to 140 Hot Sauce items that we offer. So of course you’re not offering them to every single customer and you’re offering it at opportune times. But what we have found is that the customer’s wallet opens and closes many times during the sales process. An example, someone walks into your showroom and in their mind they have a budget of $5,000. Now we should be asking them as well, a lot of fabricators don’t do that they make assumptions. If you assume someone has a $5,000 budget and they actually have a $10,000 budget, then you kind of shorted yourself. Let’s say in this example a $5,000 budget, they come in and love the stone you have. It is going to be a cost of $7,000. They open it and shut it, and they say we overspent by $2,000 I don’t want to talk about anything else. Now fast forward a couple of days later. Maybe someone from your office is now setting up the field measure and the shock of overspending $2,000 of their budget maybe has dissipated. Now they are open again. You start talking to them and now the wallet starts to open. I know you have existing countertops, and I know you’re handy, but let me tell you about the process because we would like to do the tear out for you and you’re able to upgrade them. Close that call, wallet closes. Now you go out and do the field measure. The field measurer truthfully is the real expert in this whole thing. They are doing two or three or five measures a day. They are coming in with all their measuring equipment, they are the ones where the customer is saying what about this or what about that. They are seen as the expert. That’s where we have 55% of our upgrades, our Hot Sauce, sold by our field measurers. When I tell fabricators about that, they always say, not my guys, they are really technical. So are my guys. They are incredibly technical, but they are also really smart and they love to make more money so we just pay them for that. Now that field measurer is talking about the different options and the customer is like, “That’s an expert. This is good stuff. What would you do?” “Well, I would put this in my house.” Great. So people buy from what they see, and they buy from the people they trust -- and we trust experts.