I spent this past weekend reflecting on the ways LBM dealers can break out of stagnation and become crisper in their marketing, pricing, and delivery of products to customers. Where and how did I do this? At the local mall, creating a pink stuffed unicorn with my youngest daughter. The trip cost me $27. The lessons I learned about running a building materials operation were far more valuable.

Virginia Rader, Chris' daughter, with the fruits of their product research
Virginia Rader, Chris' daughter, with the fruits of their product research

My mother-in-law started all this when she gave my daughter a coupon good for $12 at the local Build-a-Bear Workshop. This brings me to my first conclusion: while coupons may be old school, you are in retail and you have to have coupons to drive people to your store.But if you can, toss out the paper coupon. You can touch your customer electronically for almost zero cost.

If you are 100% pro, you already have relationships with your existing customers, but you need something else that will convince new customers to enter your facility. A vendor fair might be a great option. Or how about my favorite: a truck wash. This is usually on a Saturday. The contractors drive in with their truck and while your staff (not a contract worker) is cleaning your customer vehicles, you are bonding with them and possibly their family. And as one salesperson stated once, you also see your competitors' receipts between the seats as you are vacuuming.

A location is as important as your products, selection and service. I do not suggest that dealers locate in malls, but I do recommend that if they are expecting customers, they have to be located in places that are easy to find and have complimentary shopping nearby. If you are a pure distributor, locate near highways.

If you have not visited a Build-A-Bear, you need to visit before you build your next display. It was so easy and simple. The motivated, kid-friendly clerk made us feel welcome by asking our names and then remembering our names. She explained the coupon that I was holding and said I could pick any animal on that wall befeore us. I think I counted about 20 animals, all of which had a clearly labeled price and were perfectly displayed. My 6-year-old daughter can't analyze price and value, just as many of your customers can't. So, by looking at the display she chose the one that was pink and cost $20.

The $20 price minus the $12 coupon means I was starting this shopping experience $8 in the hole. But I'm happy, though I am not sure if it was my daughter's face or the positive attitude of the clerk that made me feel that way.

The selling prices ranged from $12 to $30 and it looked like the cost (not the selling price) of building each stuffed animal was similar. That led me to think: Just because you have a product line like glass inserts for doors, you do not have to use the same markup or margin when pricing. I remember working with a millwork company and the owner showed me 12 available glass inserts that cost him the same. However, he had much higher margins--double in some cases--for those inserts that looked "rich."

Chris Rader
Chris Rader

Now take a product line like crown moldings. Do you have a display in your store that has all available in-stock crown moldings, neatly organized, with a price that the contractor or homeowner can read? Do you have the products in stock? Are these easy to load?

It took my daughter about 10 minutes in front of the product wall to decide on a stuffed animal--a pink unicorn. Why? Because it was pink and a unicorn? Why do your customers choose a certain high-profile crown molding that is different than any other? We don't know the answer. Could it be they want to be unique or do they just like the style and color? What matters is that you have a higher margin on the unique products, a much higher margin. Crown molding is only an example.

The environment within the Build-A-Bear Workshop was clean and organized. The items were grouped accordingly and they had nice background music. I did not hear the employees' lunch room conversation or detect any fighting in the back office. Is your facility welcoming and pleasant? Is it peaceful and welcoming?

After we picked the pink unicorn, we were on to the next phase, which I will call "Pump the cotton in the animal." This makes the animal fluffy and full. During this process we had a choice between two hearts: one that was free but plain looking, or one that was $5 and had a beeping noise. You guessed it: $5 for Papa. The clerk said, "Do you want this [plain] one or do you want the one that you can listen to?" Now I have a unicorn that I have not yet paid for with a heart sewn in it that adds $5 to the price. I guess I can't turn back now.

After we pumped the critter with cotton, we moved it and its $5 heart over to the washing station. I liked this station because it did not cost me anything. We just blew air on the stuffed animal and combed its hair.

We then migrated to another part of the store and picked out clothes. There was an option for shoes. But since a unicorn has four legs I would have to buy two pair. So I convinced my daughter that unicorns do not wear shoes. She agreed, but then bought $5 panties instead.

Let's recap: I have a $20 animal that, with the coupon, should have cost me only $8. But because of the heart and panties I'm now spending $18. And I'm not yet out the door.

At this point I was thinking about millwork and how we can add value to a door unit. The value can be solid casings, an extra hinge, possibly ball bearings, a beautiful secure lock, a threshold that makes a statement, a kick plate.I wonder what additions to a basic product a customer would purchase from us if only we offered them. You can apply this to every category. If you are selling roofing, upgrade the flashings. If you are selling paint, sell the best paint brush that you stock.