TFC #44: Homeowner Versus Dealer Model - Part 1

Ever caught yourself staring at the neighbor's lawn, certain it's greener?

Making the move from a direct-to-homeowner model to a dealer/wholesale approach can feel like peeking at that lush greenery. (or vice-versa)

But how can you make sure that this new way is actually better than what you had before?

What's the secret to successfully navigating this change and ensuring it's an improvement?

First note to make.

I’ve talked to shops on both sides of this model and it seems like most of them are always convinced that the other side is better.

The direct-to-homeowner shops think that the shops that sell to dealers have it easy.

The dealer/wholesale shops think that the shops that deal directly with customers make more money.

This topic is going to be split into two parts.

In this Part 1 article, I am going to focus on a direct-to-homeowner shop switching to a dealer/wholesale shop.

Definition

What is a direct-to-homeowner shop?

This can look several different ways, but generally, a direct-to-homeowner shop will do most of the following.

• get referrals from previous customers or builders/contractors

• go to job sites to measure

• meet with the customer at a showroom

• does not have a standard catalog (is “custom”🥳)

• create detailed plans and 3D views

• deliver the cabinets

• install the cabinets

• provide countertops

• provide knobs/pulls

Keys To A Smooth Transition

So for the direct-to-homeowner shop that decides to switch to a dealer/wholesale model, here are a few key things for you to consider.

Structured Catalog

Pulling a “Standard Base” out of your manufacturing software and turning it into 1,000 different products is not going to work as well in a dealer model.

Think of it like this.

As a direct-to-homeowner shop, you are basically selling a service.

When you switch to a dealer/wholesale model, you will need to start selling products.

Dealers want to have a nice list of products they can choose from.

Most of them will be adamant that you need a PDF catalog or catalog software in order for them to buy from you.

This is going to be a dramatic change and one that looks like a mountain.

The key is to start simple and grow as you go.

Don’t try to build a massive catalog right out of the gate.

Prioritize simplicity.

Avoid the nagging thought that you are no different than a box cabinet manufacturer now as you work on your catalog. 🤣

Simple and Easy Pricing

As a direct-to-homeowner shop, you have a lot of options for pricing. You might be using Cabinet Vision’s bid center, a fancy spreadsheet, or a simple linear foot cost. All of these can work as a direct-to-homeowner shop.

However, when you decide to switch to dealer, this becomes a little bit harder to accomplish.

Some shops will ignore the inevitable and continue pricing all their jobs in-house

The thing that I see when working with dealers is this:

Most of them want to price the cabinets themselves. (my opinion)

Even if you can promise them next-day returns on quotes, it’s still too late.

My advice, ditch the complex pricing method based on material cost, cubic foot, finished area, and who knows what else.

Stick with simple product prices and allow them to add modifications to those products.

It makes it easier on everyone and the dealers are already accustomed to this style of pricing.

You can still use your fancy pricing method to calculate what those product prices need to be in order to be profitable.

Don’t let your complex pricing method be a hurdle.

Nobody likes to be confused. Keep it simple and predictable.

Prioritize Training and Support

In order for your new dealer model to be successful, you need to prioritize making sure your dealers have everything they need to properly sell your cabinets.

You need to educate them on styles, construction methods, pricing, profiles, installation, and troubleshooting.

This doesn’t mean meeting with them once and then letting them figure it out from there.

Communicate Clearly

Setup effective communication channels with your dealers.

Provide regular updates, marketing materials, and tips to help them sell your product.

You will need to respond to their inquiries quickly and provide information as they need it so they can relay it to their customer.

A lot of manufacturer>dealer relationships fail because of poor communication.

Create Contracts and Agreements

Establish a few simple documents to outline your terms, responsibilities, and expectations to avoid misunderstanding.

It's amazing what you can avoid by taking care of this first thing.

Be Flexible and Patient

One big problem that I see with a lot of shops making the transition from a direct-to-homeowner shop to a dealer/wholesale model, is they bring in a little too much of their own ego in the picture.

What I mean is this.

They approach the dealer with the attitude that they build the best possible cabinets and the dealer should feel honored to have the opportunity to sell their cabinets.

Confidence is good, but remember, you are switching to a dealer model for a reason.

Sales and marketing is one of the hardest parts of business, and you are essentially turning that part of your business over to the dealers when you switch to this model.

So before you go into a dealer and make a bunch of demands that they will have to meet, take a moment to appreciate the potential of what they can do for you and figure out how you can make it easy for them to sell your cabinets.

Be flexible, be open to feedback, and be patient.

Conclusion

I’m sure there are a few people reading this right now who have been weighing this decision for a while, maybe even years.

Hopefully this article gives you a fresh perspective of how you can approach the transition.

But at the end of the day, new information is probably not going to help you make the jump.

Here’s my advice.

It is so important that we focus on a specific type of customer in our business. We can’t just dabble here and there and expect to have as much success as someone who is giving 100% to that specific customer.

I wrote an article on this back in May 2023. TFC #16: Who Is Your Customer?

If you decide to make the transition to a dealer model, you will have to focus on dealers.

99% of shops will not be able to effectively serve these two vastly different markets.

That means, if you decide to pursue a dealer model, your direct-to-homeowner jobs CAN and SHOULD suffer as you work on serving your new dealers better.

Hope this was helpful,

If you still have a few questions on your mind, shoot me an email. I’d be happy to chat with you if you think it would be helpful.

Thanks for reading and have a great winter weekend,
Myron