Best Practices - February 2011
By Brian Hamilton
The big box retailers have changed the landscape of the floorcovering industry substantially over the last 20 years by focusing on low prices and marketing them aggressively. For many independent retailers, the home centers are the main competition in their markets.
Dealing with the boxes has been a way of life for Pittsburgh-based Molyneaux Tile Carpet Wood for the last 15 years or so and they have spurred Molyneaux to make changes over the years in how it approaches the market, mostly by putting its emphasis almost entirely on customer service and quality.
“It’s my opinion that the traditional dealer business model is a dinosaur business model because the box stores have built a better mousetrap from a sales, marketing and low-cost structure perspective,” says Pat Molyneaux, who runs sales and marketing for the eight-store family business. “Our only weapon is to give customers more satisfaction from sales to installation. The box stores can be beat as long as you don’t try to fight them on their turf, which is low price.”
In 1995, Molyneaux Tile Carpet Wood had about $4 million in sales when the first big box store opened in the metropolitan Pittsburgh area. Last year there were 30 big box stores and Molyneaux registered $18 million in sales, its best year ever.
“We don’t apologize to customers when they tell us we are higher priced than the box stores,” Pat says. “If a customer asks if we’ll match a box store price, the salesperson is trained to respond, “Will the big box match the Molyneaux level of service?”
The biggest ongoing challenge the business faces, Pat says, is hiring, training and retaining salespeople, which is a significant factor in maintaining Molyneaux’s high standard of customer service. Consequently, the company spends over $100,000 on sales training each year, which is an ongoing, weekly process with classroom training and other techniques. Much of the training is focused on helping salespeople become better listeners. Pat believes that too many salespeople try to educate a customer rather than ask questions to discern a customer’s needs. A customer might want to make a fashion statement in her home, but she might be even more concerned about having flooring that can take a beating from her three dogs. Every shopper is different and it’s up to the salesperson to figure out what’s important.
“Strong salespeople ask the right questions, then use that information to bring the optimal products to the prospect’s home,” Pat says. “We have two ears and one mouth. In a good sales encounter, the prospect should do 67% of the talking.”
As part of creating effective salespeople, Molyneaux uses secret shoppers (he hires an outside firm) who visit his stores with hidden audio recorders (this practice is well known to the salespeople and they sign releases). The tapes are used as another coaching device to make sure salespeople are asking the right questions to determine the mental picture the shopper has for her flooring project. It also has the side benefit of keeping salespeople on their toes if they believe the next shopper might be a test.
All salespeople are also involved in Molyneaux’s Shop at Home service, in which a customer can request that samples of all types be brought to her home, free of charge. Shoppers can make an appointment by phone, online or by email, but often a visit originates from a store visit and is just part of the routine sales process. If a phone call comes in and a customer, for example, asks about store hours, the salesperson emphasizes the home shopping program.
“The home is where a purchase decision should be made anyhow,” Pat says. “Think of how frustrating it is to buy carpet from a big box store. Independent dealers can bring down the big box stores in their markets if they aim strategically. The Davids can bring down the Goliaths.
“Our Shop at Home service is an extension of our value proposition. We offer free, no-obligation, in-home consultations to anyone who contacts our store. All salespeople are required to measure and close all deals in the home. This is the antithesis of the box store experience.”
ORIGINS OF THE BUSINESS
Bill Molyneaux, who founded the company, got started in the industry working with his dad, who was a linoleum installer. After working as an installer himself, Bill opened his first store in the 1950s but died of lung cancer in 1973 at the age of 38. The family believes his death may have been caused by exposure to vinyl asbestos tile. Mary, his wife, then stepped in to run the company. His son, Bill, joined the company in 1976, his daughter, Marie, followed in 1989, and Pat started in 1990. Today, Mary, the owner, is not involved in the day-to-day operations but does provide advice. Bill runs the installation side of the business, and Marie, an accountant, handles the financial affairs. Pat, who has an MBA, handles the sales and marketing. Together they create a strong management team that has an abundance of financial acumen. The second store opened in 1977 and the company has grown to eight locations today--with the last four stores added since 2006--and none of the expansion has been through acquisition. "In Pittsburgh, there are so many hills, rivers and tunnels that make it hard to get around, and people don't leave their neighborhoods," Pat says. "You need eight locations to service the community." Molyneaux is a full service flooring dealer, selling resilient, wood, laminate, tile, and carpet. It's primarily a residential business, but also services mainstreet commercial business, apartment replacement, and builder businesses. A sizeable portion of sales is repeat business or comes through referral.
Focus on installation
Nowhere is the company’s focus on customer service more intense than with installation. Molyneaux Tile Carpet Wood has a mix of independent contractors and employees who handle the installations. Pat says he likes the blend because he wants to stay as diversified as possible, as there are pros and cons to each kind of installer relationship. Nevertheless, when Bill Molyneaux, who runs the installation business, finds an installer he likes, “I try to make his life as easy as possible,” he says, which includes paying a decent wage and providing consistent work.
That’s another big difference between Molyneaux and the home centers, which typically pay self-employed installers as little as they can get away with. That leads to a lot of turnover, inconsistent quality, and a general lowering of the quality of the installation workforce. Bill says that a substantial number of his installers have been working for Molyneaux for more than 20 years, and the majority has worked for the company for more than ten years, which is highly unusual in the industry. Many have also been certified by the Certified Floorcovering Installers organization.
But keeping skilled installers happy is one of the best investments in customer service a company can make. “You can have the best prices but the only thing the customer is going to remember is the installation,” Bill says. “That’s the last impression they’re going to have.” Molyneaux backs every installation, sometimes even if the mill doesn’t think the complaint is legitimate.
Molyneaux also has a customer satisfaction hotline, where consumers can register complaints, if need be. These calls go directly to Pat’s voicemail, and he gets back with these customers in a day or two. “That’s another way to keep a pulse on what’s going on,” Pat says. “People like it.”
Different approach to purchasing
Molyneaux Tile Carpet Wood takes an unusual approach to dealing with mills and distributors and how it decides what products to promote. Two or three times a year, the firm holds a reverse auction, in which Molyneaux identifies a cost price point and it lets vendors compete for the slot. “Our motto with the vendors is ‘may the best man win,’ ” Pat says. “It’s not about our relationships with vendors but rather the value proposition and service they offer as to which vendor gets our business. Vendors that can’t service the business with on-time delivery and claims resolution are not invited to the auction.” One of the unusual metrics Pat uses to determine the price points for carpet is cost per ounce—in other words he buys carpet by the pound.
Also, dealing with mill and distributor reps is all about business, and Pat doesn’t try to pretend anything else. “In 20 years, I have never played golf with a vendor,” Pat says. “Personal relationships with vendors can cloud good business judgment. This way, they know where they stand. They know if they don’t deliver service and value, they’re not going to get our business.”
PROMOTING THE BUSINESS
Most of Molyneaux’s advertising budget is used on television, and about 80% of that is for five and ten-second spots on both network and cable stations. The ads never go as along as 30 seconds. About half of those ads are call to action ads, and the other half are branding and image ads, perhaps featuring a quick customer testimonial. Pat figures that the networks run about one Molyneaux ad per hour from 6 a.m. to midnight, which makes it hard for a television watcher to miss them.
Molyneaux also uses a little direct mail and radio, but does very little print advertising. The company is also just starting to get involved in social media like Facebook and Twitter. While Pat says it’s too early to tell what impact that might have, he fully expects those media to be basic marketing components in the future.
Pat also says he hasn’t put as much emphasis on the store website as some other firms. “I’m still trying to figure out the website. I don’t know if anyone really has a good web strategy,” he says.
The Molyneaux website is primarily an electronic brochure for the business but it does feature a number of videos on a wide variety of flooring topics. However, there is little information on specific products or prices.
Pat Molyneaux believes that one of his company’s biggest advantages is its willingness to look at old problems in a new light. That’s why it began the Shop at Home program, began using secret shoppers, and buys products through reverse auction. While these aren’t unique to the business, they are unusual and it’s unlikely that there are many retailers who are doing so many unusual things.
“That’s the challenge with the flooring business,” Pat says. “I know I don’t have all the answers, and I’m sure there are people out there who have been more successful, but I don’t see a lot of innovation in our industry.”
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