Best Practices - November 2011
By Brian Hamilton
Jim Henderson, owner of Carefree Carpets in Charlotte, North Carolina, in many ways marches to the beat of a different drummer. However, the basis of his success won’t be a surprise to other successful retailers. “It comes down to treating others as you want to be treated,” Henderson says. “Call people back when you say you will. Show up when you say you will. It doesn’t mean that everything goes perfect. But if you do that and take care of problems, it goes a long way. I don’t have a product in my showroom that you can’t get in 20 other places. The thing that keeps you unique is your service. We go above and beyond most of the time. That’s what separates us from our competition,” which he defines primarily as the big box stores, especially Lowe’s, which is based in the area.
His emphasis on service might sound a little odd in light of the fact that Henderson is a numbers guy. He’s an accountant by training. He earned a degree from West Virginia University, and for a time he worked for KPMG before starting on his entrepreneurial career in a variety of retail and other businesses.
But he’s learned through experience that the numbers and how his company treats people walk hand in hand. His business is about 80% referrals, so he has a vested interest in maintaining a good reputation.
“Anytime you’re in an industry and you sell something, there’s a percentage of people you’re never going to please,” Henderson says. “I’ve literally given people floors for free, but I always preface it by saying ‘I don’t think we’re wrong, but in an effort to keep you happy, here’s what we’ll do.’ Most of the time, it’s not a matter of right or wrong, it’s just someone’s opinion. Everyone’s visions and expectations are different. We just roll with the punches and do the best we can.”
In this kind of situation, which doesn’t happen often but can have a huge impact, Henderson always asks, “If you talk about my company, say these guys didn’t fulfill my expectations, but they didn’t charge me anything.”
Service begins with the right employees
Henderson’s emphasis on customer service begins with the people he hires. His installers, all contractors, have for the most part been working with him for at least seven years, and some of them much longer. The key, he says, is to pay a little more than the going rate and provide a constant stream of work, and, in return, expect more professionalism. He keeps his installers abreast of training opportunities, mostly free through the manufacturers, and although he doesn’t require attendance he strongly encourages it.
Henderson also doesn’t specifically look to hire professional salespeople. For him, basic personality attributes are far more important, and more indicative of likely success. Effective sales people are born and not made, he says.
“I look for somebody who’s personable, even if they have zero sales background,” Henderson says. “I can’t teach you to be a nice person and be friendly and genuinely care about what you do. Typically the people I hire I get the impression that they can be my friend. We have a very eclectic group and everyone I surround myself with is my friend.”
Henderson tries to maintain a relaxed and fun environment, even coming to work himself every day in shorts and a golf shirt. He says he takes a vacation every two months and is always out the door at 5 p.m. “It’s my getaway to rejuvenate,” he says. “I miss nothing” in terms of family life. “The business can get to the point where it controls you. I believe you should give 100% at work and 100% at home.”
In this vein, he also gives his employees wide latitude to leave work for special occasions such as a child’s event at school. “They’re going to spend more time with me awake than anyone else, so we’ve got to like and trust each other. If they don’t have fun, they’re not going to make money.”
The glorified phone book
Although Henderson jokes that “20% of my business eats up 100% of my advertising budget,” he typically spends about 2% to 3% of sales on advertising, a lot of it recently on Sunday newspaper inserts. He also advertises in other publications like church bulletins and homeowner association bulletins, mostly for name recognition. Co-op dollars helps with some of the expense. He said newspaper advertising is the easiest to measure. He hasn’t cut back during the downturn and said the most he ever spent was 2007-2009.
His newspaper advertising in the Charlottte Observer, whatever the offer, generally doesn’t have a deadline. “People think about it and might not buy for eight months, but when they’re ready, they’re ready right now,” he says. He doesn’t believe that call-to-action ads are effective in flooring sales because consumers tend to take a much longer time to make decisions. “The ad needs to be something they’ll hold on to until they’re ready to buy.” Henderson also doesn’t want to create the impression that something is always on sale.
Henderson avoids electronic advertising completely, and as far as he’s concerned, the web is way overrated as a sales tool, at least for the flooring industry.
Part of that goes with his belief that retail flooring sales is largely a hand-holding industry and a very local one at that. His experience has been that people won’t buy flooring without touching and seeing it in person, and they like to be coddled. The web can’t help with that. He also says that the vast majority of flooring customers won’t drive more than 20 miles, and the web’s reach is much greater.
“We have a Facebook page but we do little with it,” Henderson says. “We have done some web advertising, with dismal results. We’ve done search engine optimization, all the things they say you should do, but I think the results have been dismal for the amount of money spent. The web for me is nothing but a glorified phone book. I’ve not been able to measure the results and I think I’ve done everything I could.”
The firm’s website is fairly understated and doesn’t scream at a visitor the way many retail sites do. But it does reinforce the emphasis on service, with a page of testimonials, and it offers basic product information, in keeping with Henderson’s “glorified phone book” philosophy, which is designed primarily to help referral customers find him. The phone number figures prominently at the top of each page.
He says that for every $200 he spends on advertising, he needs to get one buying customer to justify the expense. In order to get one buying customer, he needs two viable leads, and the average order is about $2,700. So he believes that newspaper advertising is the most cost-effective way to reach the right audience.
HENDERSON KEEPS GROWING THE BUSINESS
Henderson got into the flooring business in 1999 when he bought Carefree Carpets, an 11-year-old, carpet-only business. He had plenty of retail experience but none in flooring, having owned a convenience store and sandwich shop, among others. He was also a real estate broker and built homes for a living. He liked the flooring business because it was simple. "I liked the fact that you typically carry little inventory, and carry no receivables or payables, plus there were many subs so you didn't have employees."
In 2007 he acquired Artistic Cabinets in Charlotte, and today cabinets account for about 25% of overall sales. In 2009 he added Earl Jackson Carpets in Rock Hill, South Carolina as a partnership with the owner (who still owns the building). Last year he opened Carefree Floors in Mooresville, North Carolina, home of Lowe's. And in August this year he acquired the Charlotte ProSource franchise, giving him his first 100% cash and carry operation, which should help him compete even more effectively with the big boxes. That acquisition should also double his revenues. "Conceptually I think ProSource is a great idea but my reservation was joining a franchise," Henderson says. "But once I met with them, I realized it was a franchise created through individuals."
Overall the expansion of his business has been driven by customer requests along with the availability of product through his Shaw alighnment. "We slowly diversified (our product line) because we came to the realization that it was easier to get existing customers to spend more than to get new customers. Once you establish a relationship, most of the time people want to buy from you." Most of the business is residential replacement, with about 10% builder business. He also has a small mainstreet commercial business but only does jobs he doesn't have to bid with contractors he knows. He said there was a time when it would have been easy and lucrative to "get on the builder boat" but he's glad he didn't pursue that segment more aggressively.
Carpet makes up roughly 60% of flooring sales, hardwood and laminate take another 15% each, and resilient and tile each make up about 5%. He purchases about 50% to 60% of his product from Shaw.
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