An analysis of the survey results and comparison with previous years' surveys provides surprises and disappointments.

Here is a continuation of our comparison and analysis of the information learned from the 2006 SUPPLY HOUSE TIMES Showroom Survey vs. the 2003 version.

The 2006 survey results were published in the September issue of SUPPLY HOUSE TIMES, and a portion of the comparison and analysis was published in Part II of our coverage in October. This is the third and final installment.

Comparison And Analysis

  • Vignettes and simulated room settings still dominate the presentation in the showroom - growing to 41% in 2006 vs. 35.3% in 2003. Displays provided by manufacturers grew to 30% in 2006 from 17.7% in 2003. I'm okay with some vignettes, but I prefer grouping like products together and doing faucet mount boxes, boards and tub boxes all the same - with no manufacturer names. It gives a nice designer look and makes the showroom look more high-end - in keeping with the products being shown.

  • Here's a biggie! A whole lot fewer people are putting prices and model numbers on their display product: 30% in 2006 vs. 43.8% in 2003. Most that do show prices reflect the manufacturer's list price: 63% in 2006. Of those that show model numbers, 76% show the true manufacturer number vs. 24% that show their own number. I am opposed to showing the real manufacturer numbers. You spend three to five hours or longer helping in the selection process, and the client walks out with the real numbers to go shopping at several other places for a better price. I don't think so! Over the years, I've done a complete 180º turn on my own personal philosophy in this area. I used to preach no model numbers and no prices. Now I preach your model number and your price on all products. Your price would be the higher, direct-to-the-consumer price - manufacturer list or a little less. For tradespeople you offer a discount. By doing your model numbers, you take some of the mystery out of it for the client, and you don't give away your expertise and hard work.

  • I was very pleased to learn that showroom managers and salespeople are being paid more. These positions are being treated with more importance. (See Part I of the SUPPLY HOUSE TIMES showroom survey, September 2006, for the actual number.) My philosophy has always been “pay more and expect more.” In other words, as productivity (sales and margins) goes up, I'm happy to compensate more.

  • Both the number of full-time salespeople and the number of salespeople per showroom are growing. More salespeople are being paid on a combination salary/commission basis: 54% in 2006 vs. 50% in 2003. More importantly, the commission is being driven by gross profit or the combination of sales and gross profit. In my opinion, this is very good. If you allow the salespeople to be in charge of their own compensation to a certain degree, they'll sell more at the higher margin and make more money. I've written several articles on this subject. You can find them at

  • How companies train their showroom salespeople has long been a concern of mine. As I travel the country and work with various companies, I rarely find a well-defined, written, formal training program. The 2006 SUPPLY HOUSE TIMES showroom survey shows there's reason to be concerned. Only about half (54%) indicated that they have a formal training program. Quite frankly, I'd like to see many of them. I wonder just how formal they really are. Question 25a in the survey asked, “Do you have any formal sales skills training?” Of the 147 people who responded, only 22% (that's 32) said yes. I don't get it! Showrooms are a selling business. Nothing happens until the sale is made - and most companies don't do any sales training. If nothing else, log onto, check when my next eight-hour “Showroom Selling Skills” seminar is scheduled and sign up for it!

  • Question 26 asked, “Do you sell direct to the consumers visiting your showrooms?” Of the 151 people who responded, 84% said yes! That's almost exactly where the numbers were in 2003 and 2000. It certainly is a fact that the trend of showrooms selling direct to the homeowner is sweeping across America. I'll go out on a limb and predict that by 2010, the percentage of people that say yes to the above question will be well in the 90% range, and by 2015, the plumbing trades will have lost virtually all of the buy/sell involvement in the luxury products. You'll be selling to anyone and everyone.

  • The survey revealed that a large percentage (33%) of total sales still goes through the plumbing trades and that a number of companies offer rebates to the plumber. This is certainly very understandable. The plumber has been the core customer for a very long time.

  • Respondents indicated that home centers are considered their most serious competitor (53%) and that other wholesalers with showrooms were second (35%).

  • Respondents were asked to indicate what services they offered in their showrooms. Accepting credit cards was first at 90% (should be 100% in my opinion); delivery to the job site was second at 87%; 68% indicated they are open on Saturdays - down from 74.4% in 2003. Most of you know my feelings on this subject. Saturday is the biggest shopping day of the week. You should be open! I was pleasantly surprised to see that 39% indicated they were open one or more evenings.

  • Fifty-three percent answered that they routinely make sales calls on builders, designers and other professional specifiers. This number was up from 45.7% in 2003. I agree with this strategy. Don't just sit in your showrooms waiting for clients to come in - go out and find them!

  • The amount of money budgeted for advertising, promotions and public relations was all over the place. It ranged from 1% of gross sales to more than 10%, with a 3% to 5% range being the biggest. I budgeted 5% of sales at my business and got almost 2% back in co-op dollars.

  • The type of advertising and promotions that people said they used was spread out between all of the media choices. Yellow Page advertising was still No. 1, with 73% showing they use it. This was down from 80% in 2003. Newspaper was second, but also showed a decline. Trade and home shows were up - as were consumer/metro magazines.

    Talking Dollars

    Here's one that really mystifies me! The survey asked: “Estimate your showroom operating costs as a percent of total showroom sales.” Seventy-six people responded. I believe this was a low number because a lot of businesses don't treat the showroom as a separate profit center and they just didn't know the answer to the question. What a shame! But, putting those personal thoughts aside, the responses were: 17% said less than 10%; 29% said 10-19%; 36% said 20-29%; and 18% said 30% or more. The less than 10% numbers just can't be! It costs more than this to operate a showroom. I find the 29% in the 10-19% range doubtful also. If your operating expenses as a percent of total sales are over 30%, then your bottom line isn't going to be very attractive unless your gross profit margin is 35% or more. I believe the right percentage is 25% plus or minus.

    Average monthly sales volume from all of the companies' showrooms were: less than $80,000 per month - 37%; $80,000 to $300,000 - 36%; and $300,000 or more - 27%. This was a new question, so no comparison is possible.

    Here are two of my favorite questions: 1) “Are your showroom operations profitable?” Ninety-one percent replied yes! 2) “How do you know they're profitable?” Fifty-seven percent replied that “we isolate showroom sales and expenses from the rest of our operations so we have the hard data to prove it.” That means 43% of those people responding don't really know if they're making money or not. What's with that! You invest a lot of money into a showroom and you don't know if you make money? I bet if you invested the same amount of money in the stock market, you'd know if it was a winner or not. Why not the showroom?

    And here's another beauty! The survey asked, “Which one of the following is the primary reason why you operate a showroom?” Would you believe that out of 137 respondents only 31% (42) said they did it for “bottom line profitability?” Oh my goodness! Whenever you invest money in a business it should always be with the intent of making a profit. That sounds a bit Republican, doesn't it? It wasn't meant to be - it's just good business.

    The final question in the survey asked people to list the things that need to be done to improve showroom profitability. There were a number of items listed, of which the top three were: 1) promote more aggressively to builders and designers (67%); 2) promote more aggressively to consumers (42%); and 3) improve staff selling techniques through training (40%). I really liked all these answers. Hurray for these folks!

    There you have it: Some great benchmarks, guidelines and information against which you can compare your business - use it to your benefit. The survey shows that wholesalers really are starting to embrace showrooms in a very positive way. That puts a smile on my face! Keep up the great work!