Question
I’m looking for input, and perhaps some people have heard this before - 50% of all marketing costs are a waste, the problem is which 50%? In today's business environment it is a challenge to determine where is the best investment of precious marketing money, media, regional trade shows, national trade shows, websites, direct mail, promotions and so on. In all of our businesses, marketing is a percentage of our business cost which ultimately is built in to our sales price.
At a Carolina show for example, to exhibit an Altendorf slider and a small Brandt edgebander it costs over $35,000 for over two days. We would have to sell more than 10 machines of various sizes to recover this investment. At the show we sold no machines and collected 117 inquiries from the 2500 or so attendees. 75 of the inquiries are from within a two hour radius of the exhibition site. Eight similar events a year translates into more than $250,000.
Obviously there is an intangible value of the exposure that cannot be measured in terms of money. However, if marketing for a national company is creating the environment that leads to sales from all corners of the country, then our challenge is to convey our message nationally in a cost efficient manner as our customers (just like yours) will not allow us to build unlimited dollars into our price for marketing expenses.
My point is that today there many marketing tools competing for a portion of a shrinking marketing budget and most of them seem to offer a better return on investment for both you and I than regional shows. As a leading supplier, your comments would be greatly appreciated. After all, it's about delivering to your solutions with the right price/value ratio.
Forum Responses
(Business and Management Forum)
From contributor J:
When I have a planned purchase of a major piece of machinery such as a bander or saw I go to the IWF show. I go to compare to determine the best value. If I have an emergency purchase I rely on my local distributor. I realize all manufacturers have their local distributors, but someone 400 miles away isn't going to get my call. There is one distributor about 60 miles from my shop that comes by four to six times per year.
Conversely, I've had sales people come by and give me a card and tell me they represent brand 'x' and if I ever need anything to give them a call. Then I never see them again. I believe the best marketing would not cost a dime. Get as many dealers as possible to represent your machinery. Do not allow someone to control an area so large that they do not get out to the shops six times per year. I want someone who is somewhat local to deal with.
I have a good friend who works for a major functional hardware company and he’s told me for years that they would like to stop having a booth at the Kitchen and Bath show. They just don’t get any business from it. The problem is that they have to convince the competition that it would benefit all of them to stop.
The companies that run these shows have a vested interest in keeping them going obviously.
I agree with Joe M to a degree that it’s important for a salesman to stay in touch with their customers. That being said, it’s a difficult task to determine who those customers are. Shops open, close and move all the time and if they don’t contact you some how it’s difficult to make those connections. Regional trade shows are one of the ways to make those connections. Without machinery at those shows there is less reason for people to attend.
In the past the primary reason we’ve attended regional shows wasn’t to look at machinery but to network. One thought would be to have an educational presence at these shows instead of a machine presence.
I have to pay a surcharge for most of my material deliveries and that is a guaranteed sale, and he doesn't have to spend time selling me on what I've already ordered. Bill if it makes you feel better, young guys like me who don't know all about machinery and can't afford it today see you there and keep you in mind for the future. By the by, I have bought a couple of new tools and got sold on the customer service.
A company like Stiles, I presume, relies heavily on selling to its existing customer base. All of its customers are growing and those that are buying are probably doing so in one of three ways: At the IWF (or its west coast equivalent), from a Stiles' showroom, or directly via the sales rep. Few, if any, are spending 30 grand or more at a regional trade show where dovetail jigs seem to dominate the show.
Any company looking to buy an edgebander or sliding table saw will be doing its research and chances are they'll contact Stiles. A good sales' rep should be able to ascertain how serious the company is, what its basic financial capacity is, and whether or not the customer has potential. An invitation to visit a Stiles' showroom where the machinery is under power and the customer can see it in action without competing for time (as at a show) is probably more likely to lead to a sale. Pay the customer's travel expenses to and from the showroom, or offer to deduct it from the sale price, in lieu of spending it at a regional show and I would expect sales to increase while costs per sale decreased. A company that is willing to take a calculated risk to recruit me as a customer tells me it is confident in its product and its ability to earn my business. There is a strong tacit message in this approach.
In short, drop the regionals, perhaps host seminars at the bigger shows as well as exhibiting, and in between, focus on getting the customer into the showroom.
While they are there and have your customers full attention, they can ask about what machinery needs they may have coming up. By looking around the shop at what they do and how they put things together, they will be in a good position to suggest machinery that will work in the situation of that shop. The more you can learn about what your customers need, the better your chances of figuring out what to sell them and how.
Regional shows that we have attended were a waste of our time. The Grand Rapids show was the only one we might go back too. Because of the showrooms you have there. I have been told what it cost for these shows, and it is simply a cost of doing business I guess. But investing in your local rep that know the products and are really interested in the well being of there customers might be a way to reduce costs.
Advertising and trade shows are less so. If the show is small don't bring any machinery, bring yourself and invite all to join you for coffee and a sandwich. For those wanting to purchase I bet you can find a local past happy customer willing to demonstrate what can be done with your machinery. This kind of promotion just might be more effective, it tends to expand instead of the dead end like after a show.
As to the regional shows, it may be valuable to investigate alternative methods of displaying rather than not displaying at all. I have always thought that the concept Holz-Her did back in the 80’s (If I recall correctly, it was called Cabinet Shop 2000) was not only effective for Holz-Her, but was very beneficial for the cabinetmakers that took the time to watch the process. For those that are not familiar, Holz-Her had a husband and wife team that would cut, band, and machine and assemble cabinetry in the Holz-Her booth. Each person that wanted to view the demonstration was given a pair of headphones, and would listen to a commentary as the team would machine, process and assemble the casework.
I have always thought that having actual users running the machines would be more valuable than having the sales force talking about the features of the machines (save that for those interested in taking the next step and purchasing a machine at the show). This allows those interested to see how the machine is used in real applications, and to talk with a fellow cabinetmaker about the machine. I personally believe that by having users in the booth doing the actual machining, you remove some of the resistance we all feel towards a salesman of any product, simply because you never know what the salesman’s actual experience level is, or if his motives are to help you identify your needs, or simply earn his commission at any cost. There is nothing more annoying than to talk with a salesman about a product, only to discover that you know more about his product than he does (keep in mind that this concept allows your sales force to get ongoing training by users).
It also is very helpful to see an entire process rather than simply cutting and banding meaningless parts that are to be discarded. To watch your peers machine, process and assemble cabinetry that you can examine for quality of fit and finish is invaluable to most cabinetmakers, and I believe would lead to an opportunity to pass the prospective machinery purchaser from their peer who is telling them how they make money with this suite of machinery, on to a salesman who can show the cabinetmaker what the cost and benefits of owning the machine or machines is, and what his or her options are for financing. I also think that every single salesman should be well versed in the tax implications of machinery purchases, and be able to do a very detailed analysis of what the tax implications are of owning the machine or machines the cabinetmaker is interested in (there are times and situations that the tax incentives alone are compelling enough to justify the purchase, which might justify having a CPA in the booth, and letting your clients know that they can make an appointment to investigate their situation).
Another real benefit of this type of demonstration at regional shows is the fact that the shows are smaller, which actually allows the cabinetmaker to spend some time talking with their peers first, then with the salespeople at length. I have never had a lot of success at IWF and AFWS at doing a whole lot more than getting a short and sweet demonstration of the product, and some literature to read later (the sheer number of attendees makes it very difficult for any salesman to spend a lot of time with any one cabinetmaker at either of these shows).
From your company’s perspective, this would allow you to setup a simple and fairly small booth that consisted of a top of the line saw, a short bed edgebander, double line drill, a couple hinge machines and a dust collector, along with a well equipped assembly table. You really don’t need every machine in every configuration to know what a machine can do (unless they are just sitting there running meaningless, throwaway parts, then we want to see every single model that is available so we can see how meaningless parts are dealt with differently by the different models).
Getting users to run the equipment would be no problem at all (I think you already know this though). Almost without exception, cabinetmakers will do anything they can to help another cabinetmaker, even if it costs them money. Most cabinetmakers I know will work for food. A nice dinner at one of the local establishments in return for a few hours staffing the booth is usually appreciated, and enjoyed by all, and another opportunity for your sales team to learn from the people that know how to make money with the machinery they sell. I hope this is helpful.
