The Depot Dispatch
by Ed Kalaher
January 17th, 2019

One Man’s Philosophy on Showrooms

I’ve been asked several times recently: “In the replacement window business, do you need a showroom?”

The short answer: No.

The longer (and hopefully more insightful answer) is: It depends.

We all know that home improvement sales are predominantly made in the home. Meanwhile, we all know that ‘walk in traffic’ isn’t generally enough to justify investing in high traffic retail show spaces.

So what do I mean by “It depends?”

Let me explain by answering these questions:

  1. When should I consider investing into a retail showroom?
  2. Why should I have a retail showroom?

WHY

There are three reasons you should consider a retail showroom:

  1. Leads: Again, we know that walk in traffic for home improvement businesses is minimal. But, very often, the walk in traffic that you do get includes extremely warm leads. It doesn’t take too many of these leads per month to pay for the investment.
  2. Trust: This is the biggest reason you should be thinking of a retail space. A public presence that’s professionally outfitted enhances the legitimacy, authority and trust of your business in the eyes of consumers. As a result, it will enhance all of your marketing efforts.
  3. Mindset: I’ve often said, “If you want to get paid like a professional, conduct yourself like a professional.” Far too often, we treat our “small businesses” as too small.

Once you realize that your organization represents the very best of the U.S. economy, and start treating every aspect of your business with the respect you’d give a Fortune 500 enterprise, your culture will change and so will your bottom line. Imagine the sense of pride your employees, sales staff and sub-contractors will feel, pulling into a well-manicured place of business. Want to earn like a professional? Start acting like a professional. And start watching all those involved in your business do the same.

WHEN

My philosophy on when is this: It depends on the size of your business, the capital you have to invest in growth and, for a more specific metric, the size of your marketing budget. Let’s break that down.

First, the purely tactical approach.

You should choose to invest into a retail space, once your rent is less than or equal to 20 percent of your marketing budget. In other words, retail rental space should be considered a marketing expense. And the percentage of your total marketing spend that the rent comprises should never go above 20 percent. Here are some examples:

 

Monthly Marketing BudgetRent Allocation
$5,000.00$1,000.00
$10,000.00$2,000.00
$15,000.00$3,000.00

Prices per square foot will vary by location, demographic, etc., and you’ll ultimately have to decide what space gives you the best return. But following this equation will keep your expenses in balance with your lead generation needs/goals.

Next, the strategic approach.

Being strategic means thinking not just of the here-and-now, precise budget equations, but also of the future—of your goals and milestones.

The strategic approach to retail showroom consideration means the following combination of thought:

  1. Follow the equation presented above.
  2. Allocate an additional monthly amount of investment capital to that rental budget. This money is NOT considered part of your overall marketing spend, but rather, monies that you’ve decided to invest purely into the foundation and growth of your business, because you know that an investment in TRUST (see above) will enhance all of your marketing, and accelerate your progress towards business milestones you’ve laid out.

Here’s an example:

Susan, operating WDUSA of Anytown USA, has a startup marketing budget of $10,000.00 per month, therefore a rental budget of $2,000.00.

In addition, she has $40,000.00 in investment capital that she has saved for starting and growing her enterprise.

Susan makes the strategic decision to allocate $1000.00 per month of her investment capital into the rental budget. This expands her showroom options from a small, mid-level traffic strip plaza, to a heavily trafficked shopping plaza adjacent to the local Wal Mart. She believes the extra 20,000 cars per day (and thus eyeballs on her brand) will pay dividends.

But her belief is not enough. From this moment forward, Susan will make sure to track walk in traffic, and ask customers if the showroom played a role in their decision. She’ll do this to continually be mindful of her strategic decision, and to consistently evaluate whether the decision was merited.

Further, in nine months, Susan will be budgeting for her next business year. And, at that time, her sales goals should merit a marketing budget that now fits within the parameters of the ‘tactical approach.’

If you’re considering a showroom, I hope this helps!

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