“How Do You Make a Small Fortune? Start With a Big One and Develop Your Special-Order Business.”
Like many dealers, a significant part of our sales volume came from special orders. To me, special orders are a huge component of what the lumber and building materials business is all about: adding indispensable value to customers.
Believe it or not, you can actually make money on special orders, but the key is understanding your true costs. I don’t mean margin vs. markup; that’s child’s play. I’m talking about the indirect costs of quoting, selling, ordering, handling—and most importantly, handling errors.
Fortunately, we had a cadre of veteran salespeople who were both knowledgeable and conscientious. Unfortunately, that’s no guarantee against the occasional meltdown.
Several years ago, we received a call from Joe, a good and longtime customer. He was doing a very large remodel project for Mr. and Mrs. Finickie. He told us he was going to send them to us for a kitchen design, along with picking out cabinets and countertops. Joe warned us that they were tough clients—picky, yet indecisive. He failed to mention they were both attorneys.
Our lumber salesperson told me that Joe had referred his clients to our kitchen department. For a moment, I was pleased to get more business than just lumber and building materials. But then I was told what Joe said about his clients. I cringed, as there are numerous details that have to be nailed down perfectly for things to go smoothly. The smallest mistake can delay a project for weeks.
I was glad to hear that one of our seasoned kitchen salespeople, Debbie, was taking care of the Finickies. True to form, she walked through the design and selection process smoothly and efficiently. The only hitch came a day after they signed off on the order, when Mr. Finickie called to say they changed their minds on the color of the cabinets. But Debbie was prepared. She had told them that she would be placing the order a day before she actually planned to do so, just in case something like this happened.
The plan was for the Finickies to go on a two-week vacation while Joe installed the kitchen and finished up the project. When they returned, everything would be ready for the Thanksgiving gathering they had planned. Joe finished up right on schedule and did a beautiful job. The new kitchen looked perfect, except for one thing…
Debbie had forgotten to change the cabinet color when she placed the order. Even veteran salespeople make mistakes, and correcting them is an expected part of the cost of doing business. We reordered the cabinets and agreed to pay for the reinstallation.
What I didn’t expect was Mr. Finickie’s demand that we also pay for Thanksgiving dinner—for 24 guests, no less—and at one of the best restaurants in town. It seems Mrs. Finickie was so upset she refused to use her “wrong” kitchen. I believed Mr. Finickie feared long-term emotional damage, and after talking to Mrs. Finickie, I understood where he was coming from. On top of everything else, Mr. Finickie made it very clear that he and his wife were attorneys.
Now, I’m not afraid of attorneys, but I weighed the cost of 24 dinners compared to being taken to court. I took the lesser of two financial evils.
Debbie was distraught and assured us that she would double-check every little detail on every order going forward for every customer. She was a very good employee, and I fully believed she would do what she said. Debbie also said she understood and was okay with having a negative commission due to the amount of money the company lost.
If there was a silver lining in the cloud, it gave us a concrete example of why we preach to all our salespeople to “dot the I’s and cross the T’s” on ALL special orders, regardless of size. Once I explained how much money this cost us, I believed our message finally sank into our entire sales force.
Mike McDole brings 40+ years of actual hands-on LBM experience, including serving as SVP of a major regional pro dealer. As principal of Firing Line LBM Advisors, he helps LBM dealers across North America improve management efficiency; drive profitable sales; sales training; KPI’s; and more. He can be reached at 774-372-1367 or Mike@FiringLineLBM.com.
