January 18th, 2011
Price Busting or Marketing- What Sales Approach Will You Choose?
This year selling windows will be very different from what we have become accustomed to during the last two years. Once we maneuvered to get the 30-30 rating in place, and later on, simply Energy Star labels, it was oftentimes as simple as advertising that our windows qualified for the tax credits made available by Uncle Sam!
Now comes 2011, and with only a $200 tax credit available, the prospect of government subsidized upgrades will not be the driving force that it was in the last two years. So what are window manufacturers doing to prepare for this year’s more challenging market environment?
I am seeing two different approaches among window manufacturers. There are the “price busters” and the “marketers.” The price busters are looking at everything they can do to cut costs. They are demanding unrealistic discounts from their vendors oftentimes at the risk of losing long-term supply relationships. They are shopping for substitute materials and components that are lower in cost but oftentimes unproven. Some are slashing capital budgets and limping along with old equipment that is sorely in need of upgrading or replacement. Others are foregoing wage increases and slashing employee benefits. The plan is to offer windows at the lowest possible prices and therefore grab increased market share.
Then there are the marketers. They are busy getting ready to roll out new window designs with exciting new features. They are working closely with their suppliers to release exciting new frame designs and glass packages that not only look great but offer improved energy efficiency, ergonomic features and durability. There are lots of options – foam filled frames, low-E glass, warm-edge and non-metal spacers, internal blinds, grids, safety glass, windows with improved acoustical properties, and glass packages comprising multiple panes of glass. Well, I even have customers talking to me about QUADS. The options seem endless! Once they decide which new products they are going to market, they are investing in new equipment as well as advertising, promotion and sales training focused upon marketing value to the consumer!
So, who will have greater success … the price busters or the marketers? Well, there is one bad thing about selling only on price …. the margins are terrible! The plan, of course, is to overcome the lower margins with higher volume. However, it seems that no matter how hard one may concentrate on offering the lowest price, there is always a Crazy Eddie out there who, because he is insane, will offer even a lower price and therefore beat you to the sale!
“Come on Down … Eddie is CRAZY.” In the 80s he was giving away “insane” prices on fans and air conditioners, and today, someone like him may be giving away “insane” prices on windows at a dealer near you! Now, when Crazy Eddie beats you to the sale, not only will your margins still look terrible, but your sales volume will fall, and that’s a recipe for disaster!
In case you are too young to have seen those Crazy Eddie commercials in the 80s, or too old to remember them, I found one on YouTube to either introduce you to Eddie or refresh your memory of him, whichever the case may be…enjoy!