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Columnists

How To Grow Sales And Gross Profit Margin

By Hank Darlington
August 1, 2009
Banner Plumbing Supply’s showroom in Buffalo Grove, IL.


In past articles I have “preached” that learning how to sell the many “add-on” products that you have available and by adding a nice diversification of products you can grow both your sales and the margin you make on those sales.

A friend of mine who is the manager of a very nicely built-out and well-run showroom not only took my words of wisdom to heart - she has incorporated an “Add-on Sales and Upselling Exercise” to her formal training program for showroom sales consultants. She has given me permission to share this with you. (Thank you S & B). I will also give some other examples that I hope will make my case.

The training exercise is broken down into four segments: Basic Order; Slightly Upgraded Order; Nice Upgrade Order; and finally the Ultimate Upgrade Order.

#1 - Basic Products Order:

Total Product Value $2,392.87

2 - brushed nickel widespread lav faucets
1 - pressure balance tub/shower valve trim
1 - standard pressure balance valve
1 - two-piece round front white water closet/seat
2 - 17-inch x 14-inch under-counter white lavs
1 - 72-inch x 42-inch white acrylic soaking tub
1 - brushed nickel waste and overflow

#2 - Slightly Upgraded Order:

Total Product Value $3,741.79

2 - lav faucets (no change)
1 - pressure balance tub/shower valve trim (no change)
1 - pressure balance valve upgraded from standard to standard with stops
1 - water closet upgraded from two-piece round front to two-piece comfort height
1 - water closet seat upgraded from standard to soft close
2 - lavs (no change)
1 - 72-inch x 42-inch tub upgraded from acrylic to cast iron
1 - waste and overflow (no change)
Added: Standard 1/4-inch sliding glass shower door
Added: Medicine cabinet

#3 - Nice Upgrade Order:

Total Product Value $5,678.98

2 - lav faucets (no change)
1 - pressure balance tub/shower valve trim (no change from order #2)
1 - pressure balance valve upgraded from standard/stops to high pressure
1 - water closet upgraded from two-piece comfort height to elongated
2 - lavs upgraded from basic 17-inch x 14-inch undermount to a more decorative style
1 - 72-inch x 42-inch tub (same as order #2)
Shower enclosure upgraded from basic 1/4-inch slider to 3/8-inch frameless slider
Medicine cabinet upgraded from basic unit
Added: Twin elbow for shower rough
Added: 2 - 24-inch towel bars; 1 - towel ring, 1 - toilet paper holder; 1 - robe hook; 1 - brushed nickel trip lever

#4 - Ultimate Upgrade Order:

Total Product Value $11,397.79

2 - lav faucets (no change)
Pressure balance tub/shower changed to therm system with stationary head/wall bar/hand shower and upgraded tub spout
1 - water closet changed from two-piece to elongated one-piece
2 - lav sinks (no change)
1 - tub, added a whirlpool system
Tub/shower enclosure changed from clear glass to rain glass
Accessories (no change)
Medicine cabinet upgraded to include electric
Added: Brushed nickel trim for whirlpool system
Added: Brushed nickel supplies for water closet
Added: Towel warmer
Added: All therm components

Now, let's look at some summary comparisons:

#1 - Basic Order
    Total Order
      $2,392.87

    Approximately 30% Gross Profit Margin
    717.86

    10% Sales Consultant Commission on GP
    $ 71.78


#2 - Slightly Upgraded Order
    Total Order
    $3,741.39

    Difference      
    1,348.92

    Approximately 30% Gross Profit Margin      
    1,122.54

    10% Sales Consultant Commission on GP      
    112.25

    Commission Difference            
    40.48


#3 - Nicely Upgraded Order
    Total Order         
    $5,678.98

    Difference      
    1,937.19

    Approximately 30% Gross Profit Margin      
    1,703.94

    10% Sales Consultant Commission on GP      
    170.39

    Commission Difference            
    57.89


#4 - Ultimate Upgraded Order
    Total Order         
    $11,397.79

    Difference      
    5,718.81

    Approximately 30% Gross Profit Margin        
    3,419.34

    10% Sales Consultant Commission on GP        
    341.93

    Commission Difference             
    171.56


From Order #1 to Order #4
    Total Order         
    $2,392.87 to $11,397.79

    Approximately 30% GP Margin        
    $ 717.86 to $3,419.34

    10% Sales Consultant Commission   
    $71.78 to $341.93


As you can see, I (we) made a couple of assumptions. First, in Order #1 we used a minimum selection of product and grew it from there. Second, the company that put this together pays a sliding scale commission (on top of salary) which is driven by the gross profit margin. We plugged in a 10% commission to keep it simple.

I believe there are even more opportunities to add on to this order. How about a steam generator? Why not boutique items - a magnifying mirror, heat lamp and fan, cleaning supplies, a bidet seat and so much more?

If you really, really were diversified you might have door and cabinet hardware, furniture, tile and/or granite. Start putting additional sales, margins and commissions to all of these items. Wow, I almost forgot the tankless water heater that can be placed right next to (or on the outside wall) of this newly built bathroom.

Then if you’re smart - and most of you are - you will do a similar list of kitchen products. Don’t stop at just selling the kitchen sink and faucet. Fill up all those holes in the sink with soap dispensers, water filtration with chiller and instant hot water; color-matched push button switch for the disposer. And you’ll add the new disposer if you’re doing a good job. Don’t forget the upgraded strainer, cutting board, colander and other sink accessories. Turn that sink and faucet order from a $600 sale to a $1,900 sale.

Now I know not every customer is going to buy every add-on item that you offer. But they will buy into many of them, and they’ll appreciate the fact that you brought these nice convenience items to their attention. If you’re really smart, you’ll sell most of these add-on items at more attractive margins. Customers may price shop the big items, but most will not shop the “add-ons.” You have established the trust factor by being a very competent salesperson and by being competitive on the “big” items.

Use this training exercise as just the beginning of your program to learn how to sell add-ons and upgrades to grow your sales and margins. Good luck!

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Hank Darlington, owner of Darlington Consulting, writes several monthly articles for magazines, teaches seminars, and offers a full range of small business consulting services to kitchen and bath dealers, distributors and manufacturers. Hank Darlington was inducted into the Hall of Fame by the National Kitchen & Bath Association in April 2004. He can be reached at 2010 Granite Bar Way, Gold River, CA 95670. Phone: 916/852-6855, fax: 916/852-8866, e-mail: darlingtonconsulting@gmail.com.

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