Three years ago I was doing a consulting job in Connecticut and I took the opportunity to spend several hours with Joe at his magnificent business. Immediately I knew that Joe had won the bragging rights - hands down!
As most of you know, I travel the United States and Canada year in and year out. I get to see a lot of showrooms. I'm here to tell you that Klaff's is one of the biggest and best plumbing wholesaler showrooms I have ever visited!
I knew I was in for something special when I drove up to a large, beautifully redone brick building and there was a uniformed guard in the parking lot directing traffic and helping clients park. Yes, that tells you about the quality and uniqueness of this business!
For years I have preached product diversification to the readers of this fine publication. Klaff's diversified years ago and today operates five separate businesses all under one roof: decorative plumbing products, decorative hardware, lighting, kitchens and, most recently, tile and stone.
Klaff's is a wholesaler - selling all the traditional wholesale products. But in reality they look and act like a retail business. Joe told me that after sitting fairly stagnant for the past decade, the wholesale side of the business has picked up dramatically. I asked Joe what caused this. His reply was, “By adding new products for our contractors such as radiant heating, different lines of boilers and air conditioning equipment. We also added all the accessories to go with these products. In addition to this, we put salesmen on the road to visit the many contractors and fuel oil companies.”
The business was started in 1921 by Joe's maternal grandparents, Joe and Mary Klaff. Today, the second generation: Mollie Klaff Passero, who is president (and Joe's mother), and Debbie Klaff Katz, the treasurer (and Joe's aunt), are still very active in the business. Joe is the third generation and acts as chairman and chief operating officer.
The company began as a plumbing wholesaler. Electrical supplies were added in the late 1920s, and in the 1940s a full service lumberyard and hardware division was also added, making Klaff's one of the country's first home centers. In the mid-1960s the business strategy was changed to put more emphasis on higher end retail products. A full kitchen division was added in 1999 and tile and stone were added in 2002.
Total company revenues exceed $50 million and the gross profit margin tops 40%. The business breaks out as 85% retail and 15% wholesale. Are you plumbing wholesalers paying attention? By putting together a great mix of products and becoming a true retail marketer you can significantly grow revenues and profits.
The company employs 230 people, of which 115 are in sales. Salespeople are compensated by a combination salary (90%) and commission (10%) program. Each of the salespeople is trained for a specific product group. They do not cross over into other product groups. According to Joe, “it's hard enough to be well trained in one product group and impossible to be well versed in more than one.”
Vendor and product training is an ongoing exercise. It takes place in the showrooms, at vendor factories and various industry related training.
I asked Joe to what he attributed the company's success. He named the three main reasons:
1. “My family has given me an open opportunity to try new things and to take chances.”
2. “We are very fortunate to be doing business in one of the most affluent areas in the country. Like many other areas, we have been enjoying a building boom for the past several years.”
3. “We have a wonderful team of dedicated employees that believe in the Klaff philosophy and live it every day.”
There is a job description for each position and job performance evaluations are done on a regular basis.
Klaff's has a software operating system that was written by its chief information officer 15 years ago and is proprietary to the company. Joe credits this system with helping the company achieve its current level of success.
The business is marketed as a “one-stop shopping” source for high-end finish building products. Joe feels that “customers like being able to find as many products for their projects all under one roof” and “to be served by sales experts in each department.”
I asked Joe what changes he is considering for the business in the next five to 10 years. He said he'd like to grow three or four more retail locations in the greater New York metropolitan area and is also looking at the possibility of opening stores in Palm Beach and Naples, Fla. Now here's a man who's not afraid to really “look outside the box”!
I asked Joe if he had any advice he'd be willing to share with other plumbing wholesalers that already have or are considering doing a showroom. He said, “Don't be afraid to try new ideas. Find a diversity of products that will meet as many of your customer's project needs as possible. Finally, be sure that you do it as well or better than anyone else in your area.”
If you're ever in the Norwalk or Danbury, Conn., area, please stop in and take the tour of Klaff's. I promise you, you're in for a treat!