April 23rd, 2012
Cutting Costs to Survive
The only way to survive as a manufacturer in today’s stalled economy is to reduce expenses, right? Manufacturers are looking for a better bottom line and reducing expenses to make up for lost revenue. They are slashing customer service expenses, laying-off marketing department staff, delaying the introduction of new products and reducing sales staff.
Durasol Awnings manufactures sun control products that many would consider a luxury. They have every reason to experience declining sales in a depressed economy. Virtually every awning manufacturer in America has seen sales slump each of the last four years. Yet, Durasol Awnings’ sales have grown by double digit numbers while their competitors may be taking their last gasp. What are they doing to grow their business? Can window and door manufacturers duplicate an awning manufacturer’s success with similar methods?
First and foremost, Durasol Awnings has excelled in their everyday function of manufacturing and distributing their products. They consistently ship complete orders on time and in top quality condition. Although that should be standard operating procedure for a manufacturer, if we are cutting costs in production the basics can suffer.
Durasol has introduced new products to the marketplace that offer new solutions to consumer problems and these innovations are feeding the product pipeline to replace older products as they approach obsolescence. When we strip research and development of new products we stop differentiating ourselves from our competition with better solutions for our clients and begin competing only on price. That is a downward spiral often doomed for failure.
This company also thinks out of the box for marketing. They recognize the Internet as the research tool consumers use to make major purchases. They have embraced Internet marketing to promote their products themselves. They co-op search engine optimization for dealers’ sites and that service is performed by a webmaster provided by them. They have identified the potential clients most likely to soon buy their product and marketed their product directly to that end consumer on behalf of their dealers. Durasol is also offering accredited educational courses to architects for their required continuing education. Alliances formed with these architects have resulted in new business as these architects specify products they have learned about in these courses.
The company has also identified unrepresented territories, increased sales staff and creatively sought new dealers to serve those territories. They have enlisted existing dealers to train new dealers to succeed. Durasol has increased dealer field support, installation training of their product and service after the sale. They are rewarding dealer loyalty with trip incentives. Those trips foster camaraderie amongst the dealer network that has proven beneficial as dealers respect territory boundaries, feed each other leads and share marketing ideas, customer and employee relationship management programs, sales techniques and other tricks of the trade.
The company’s efforts are being rewarded with higher sales volumes with higher profits for themselves and for their loyal dealers. The real question remains, “Can the window and door industry learn from what Durasol awnings has done to improve their business?” I think they can.
Recently, Terry Rex, vice president of marketing for BF Rich Windows and Doors visited my showroom accompanied by Darryl Huber, my area sales representative. They introduced me to the innovative new products they were bringing into the pipeline. They reinforced their commitment to my marketing efforts. They analyzed my showroom environment, suggested ways I could improve it and my sales process. It may be a coincidence, but since their visit my window sales have steadily climbed.
I predict that the manufacturer who cuts corners to lower the price of product in order to survive in this down economy will soon become extinct. Sending poor quality product out the door at a lower price, reducing service after the sale, cutting down on marketing efforts and postponing the offering of new products can haunt a company that does survive an economic downturn for many years… Those “cost savings” can ultimately lead to the demise of a once healthy company.
It is in these times we must remember the reason good dealers choose good manufacturers to supply them with product. These times may be our best opportunity to invest in gaining market share as our competitors cut costs.