This is a weird economic time. Unemployment dipped to its lowest levels since 1969 at 3.4%, while inflation continues to be a challenge and the Federal Reserve has no immediate plans to stop raising interest rates. Conventional economic theory holds that there is a trade-off between controlling inflation and job loss that results in higher unemployment. That is not happening. In fact, the opposite is occurring. Even though the U.S. has record-low unemployment, many economists are still predicting a recession for the second half of the year.
The housing market is also strange. After a two-year boom, housing experienced an eight-month bust, explained John Burns of John Burns Real Estate Consulting at a KBIS presentation titled “2023 Market Outlook, Remodeling, Kitchen & Bath, Custom Home Building,” hosted by Kitchen & Bath Design News and Qualified Remodeler. The reason for the bust: The Federal Reserve nearly doubled interest rates from January 2022 to December 2022 from 3.5% to 6.4%. It’s not difficult to figure out why home sales are plummeting. When you combine nearly a 100% jump in interest rates with a 40% increase in home prices, it costs 31% more to finance a mortgage in December 2022 than it did in January 2022. In other words, a homeowner who secured a $500,000 mortgage in January of 2022 is paying the same monthly charge as a homeowner who secured a $335,000 mortgage in December of 2022.
It’s a weird time for kitchen and bath showrooms as well. Many showrooms experienced record sales in 2021 and 2022 but recently showroom traffic has begun to wane. For nearly three years, many showrooms only had to open their doors to make sales, and if someone walked away, no big deal. There was always another prospect waiting in the wings. Despite long delays, multiple price increases and supply chain challenges, homeowners were not deterred. They flocked to showrooms, creating unprecedented backlogs. Burns reported that the average project backlog for remodelers at the end of 2022 was more than five months. Many showrooms find themselves in a similar position, and even many builders will be busy through the first half of the year completing projects.
“Showrooms need to position their businesses as the go-to resource during a homeowner’s research phase…making the customer journey easier.”
PREPARING FOR THE ROAD AHEAD
What will happen in the second half of 2023? That’s the question many showroom owners are attempting to answer. What will the new normal look like?
“We are budgeting like it’s 2019,” reports Richard Campbell of Bath, Kitchen and Tile Center for the company’s four showrooms in Delaware and Maryland. And that may not be negative. Campbell states, “The slowdown has given us the opportunity to reset and focus on our core processes that had to be adjusted during COVID because of extended lead times.”
While showrooms may be expecting a return to normal, will customers feel the same way? Customer service expert Shep Hyken claims that the American consumer is smarter and more demanding than ever.
Customers will continue to expect more. Attracting and retaining customers will require more than the basics of a friendly greeting and helpful, convenient service. Managing customer expectations will be as important as designing a dream kitchen. Equally important, Hyken notes, is that consumers want to patronize businesses that they trust. Hyken writes, “Trust is an emotional connection that drives repeat business and loyalty.” Trust is earned by delivering exceptional customer experiences. And most customer showroom experiences begin on a website.
Showrooms need to position their businesses as the go-to resource during a homeowner’s research phase, claims Brent Jackson of Breakfront Software, who hosts the popular 4M Sales Training program for the kitchen and bath industry. Showrooms become that go-to resource by providing content that makes the customer journey easier, Jackson explained. He asks showrooms to determine if their website provides the information that homeowners want. Does the showroom make it easy to find information? Does the showroom answer the questions that customers ask most often? What does your website do to encourage customers to call, email or make a showroom appointment? What can the website do to make your brand more relevant and useful? This is a great starting point because recent research found that consumers find nearly 50% of all brand experiences are boring. When showrooms provide consumable knowledge, Jackson asserts, they build trust before a potential customer visits a showroom.
WORKING WITH THE CUSTOMER
Once consumers cross the showroom threshold, a new paradigm is necessary. Sales professionals and designers no longer will be able to depend on a constant flow of customers and jobs. New projects will have to be earned. Everyone who enters becomes more valuable. Showroom owners will need to invest in sales training and create a defined sales process that is repeatable by every member of the team. This is especially critical in showrooms where designers are responsible for selling, because many designers and showroom sales professionals have not lived through a downturn, or worse, a recession.
A number of designers responsible for sales tend to gravitate to design parameters early in the sales process without obtaining a complete understanding of what customers want, need, desire and are willing to pay for. How else do you explain that the five biggest regrets of homeowners who remodeled their kitchen, according to a Country Living survey, are: not enough countertop space, not enough storage, poorly positioned cabinetry, not selecting better quality materials and not enough power outlets?
One showroom that is investing in designer sales training is Drury Design Kitchen & Bath Studio in Glen Ellyn, IL. Showroom owner Gladys Schanstra, a 2022 KBDN Innovator Award honoree, has hired outside sales trainers to help her designers better engage with customers, develop repeatable processes and emphasize distinctive competencies that highlight her showroom’s advantages competitors cannot match.
“We want our designers during their initial conversations with prospective clients to focus on ideas, needs and wish lists that homeowners have,” she notes. “A lot of designers/salespeople don’t like to address budgets and costs. That’s not the case at our showroom. We are constantly talking about numbers. We want our customers to know what those numbers could be. We paint a picture of what’s possible without committing to a definitive budget number.”
Jackson agrees with that approach. He advises showroom sales professionals to put themselves in the position of trusted advisor before a design is considered. The right questions to ask include: what’s the time frame, what’s the budget and how do you want the space to feel when the project is completed? Showroom sales professionals need to confirm that they understand what their clients want. Jackson also advises that showrooms can earn trust by providing content from third parties that help make decision making easier. That’s the reason BKBG developed its smart purchasing guides. These are customized for individual showrooms and provide a valuable tool to build trust.
Kitchen & Bath Design of Colorado, LLC is another showroom that is investing in sales training to develop repeatable and consistent processes to close more sales. The company has created an automated system to track customer interactions, explains CEO Jason Price. “Our system helps to ensure consistent communication is not a barrier to closing the sale. The system reminds designers weekly to follow up with different prospects and constantly keep the showroom’s name in front of prospects,” Price explains.
The company has also invested in its website. Every page discusses the showroom’s processes and also encourages web visitors to make an appointment. Seven out of 10 prospects who make a website appointment end up signing contracts. Additional creative tools that Kitchen & Bath Design of Colorado use are a bilingual website and offering customers the opportunity to work with bilingual designers. It has been a worthwhile investment because Price notes that 20% of the leads coming from the web are in Spanish.
At Cornerstone Kitchen and Bath in Louisville, KY, owner Jeremy Curran is focused on increasing closing ratios and decreasing the number of quotes that the showroom issues by focusing on improving the customer experience. The showroom invested in a new CRM system that includes customer portals that enable designers to better manage projects. The showroom has also invested in improving its website, providing visitors with guidance documents to prepare for showroom visits, budget for their remodel and learn what they should expect from a showroom professional. Curran notes that many of his processes are based on common sense. These include additional efforts to communicate directly with customers who have been frustrated for the past two years by not receiving return phone calls or the impression that showrooms don’t care about their jobs.
The party may not be altogether over, but there will certainly be fewer guests in the future. Showrooms will need to provide easy buttons to enhance the customer experience. Americans are obsessed with simplicity. Showrooms will need to find ways to make the buying and customer experience easier. If showrooms do not make it easy to buy from them, customers will go elsewhere. That’s a compelling reason for showrooms to offer a complete product package that includes plumbing, appliances, accessories, flooring, wallcoverings and lighting. Advising customers to go elsewhere for necessary products they need for their new kitchens and baths creates extra steps, requires more time and stress and there is the possibility that the other place may happen to sell the same products and offer the same service as the showroom that sent them on their way, only easier. It’s important to your business to avoid that. ▪
Tom Cohn serves as exec. v.p. of the Bath & Kitchen Business Group, the nation’s largest shareholder-owned kitchen and bath group purchasing organization. Named a 2020 KBDN Innovator, Cohn also is president of Cohn Communications, a multidisciplinary association management and marketing firm headquartered in Washington, DC.