developing a more customer-centric dealer business model€¦ · developing a more customer-centric...

Developing a More Customer-Centric Dealer Business Model

NeoCon 2019 Seminar, 1pm Monday, June 10, 2019

Solomon Coyle Overview follows the handout

material.

Presenter: David Solomon

Solomon Coyle, LLC 2560 Huntington Avenue, Suite 404 Alexandria VA 22303

(703) 574-9100

solomoncoyle.com

Copyright 2019 Solomon Coyle, LLC | All rights reserved.

H A N D O U T

NeoCon 2019 Seminar Handout 6/12/2019

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© 2019 Solomon Coyle

Developing a More Customer‐Centric Dealer Business Model

© 2019 Solomon Coyle

www.solomoncoyle.com

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Copyright © 2019 Solomon Coyle LLC

All rights reserved. No part of this presentation may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher.

2560 Huntington AvenueSuite 404Alexandria, VA 22303(703) 574‐9100

solomoncoyle.com

© 2019 Solomon CoyleINDUSTRY EV

OLU

TION

© 2019 Solomon Coyle© 2019 Solomon Coyle

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“In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.

“

What is the Amazon Effect?

Amazon.com (AMZN) is everywhere. By disrupting the way people shop, Amazon has created economic ripple effects that go far beyond the customer’s wallet to, directly and indirectly, impact economic activity, whether that impact is inflation, jobs or investment.

Source: Investopedia.com

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The Effect on Customers

Source: Bain & Co. 2018

Online Catalogs and Stores

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Additional Distribution Channels

Online Catalogs and Stores

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BUYER SHIFT AND

COMMODITIZATION


The Buying Process: Then

Initial buyer/seller contact

Purchase path

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The Buying Process: Now

Initial buyer/seller contact

Purchase path

Commodity Curve

Corporate/Complex

Project or Mid‐Market

Transactional

Solution‐based selling

Commodity‐based selling

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Low

Low

High

High

Service Complexity

Product Complexity

Customer Types

Corporate/Complex

Project or Mid Market

Transactional

DEA

LERCHANGE


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Dealer

Customers

Competitors

Manufacturers

Influencers

Impacting the Dealer

Aggregate Product Revenue for All Dealers ($Million)SCI 2018 Financial Benchmarking

All Divisions Furniture Only Furn % of All

Number of Dealers 236

Total Revenue $11,937 $11,087 92.9%

Total Product Revenue $9,822 $9,164 93.3%

Total Product COGS $8,038 $7,528 93.7%

Product Margin $ $1,784 $1,636 91.7%

Product Margin % 18.2% 17.9%

Furniture COGS as a % BIFMA* 53.8%

* HIS/BIFMA YE2018 is a projected Monthly Consumption = $1,166M

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Dealer ProfitabilitySCI 2018 Financial Benchmarking

53.5 51.6 51.8 55.0 52.1

46.5 48.4 48.2 45.0 47.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018

% Dealers Above and Below Average

% Dlrs Below Avg % Dealers Above Avg

18.10% 17.50%16.70%

21.50% 21.60%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

2014 2015 2016 2017 2018

% Dealers with Negative Operating Profit

Aggregate Product Revenue for Middle 50% of All Dealers ($Million)SCI 2018 Financial Benchmarking

Year: 2014 2015 2016 2017 2018

Revenue ($million) $42.53 $42.53 $46.15 $49.29 $55.80 ↑

Average Invoice Size $9,044 $10,967 $11,599 $11,978 $11,466 ↑

Number of Invoices Processed 5,532 5,666 5,885 5,117 5,685

Invoices per $Million in Revenue 130.1 133.2 127.5 103.8 101.9 ↓

Sales Support Staff 7.19 8.01 8.13 8.63 9.47 ↑

Invoices per Sales Support Staff 769.8 707.7 723.4 592.9 600.0 ↓

Accounting adjusted for AP/AR 3.0 3.0 3.0 3.0 3.0

Invoices per Accounting adjusted for AP/AR 1,844.1 1,888.6 1,961.5 1,705.5 1,895.0 ≈

Sales Support + AP/AR Cost per Order $140.23 $143.64 $141.03 $176.57 $178.25 ↑

Total Cost per Invoice Inc Design & PM $329.27 $326.43 $341.71 $432.34 $430.11 ↑

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Resource Requirements Are Changing

S S

S

D

S

S

D

2011

2018

2.2 : 1

1.2 : 1

Sales to designer ratio

© 2019 Solomon CoyleBUSINESS PROCESS

COST RED

UCTION


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Sales Support Models

Hybrid Sale Support Models

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Strategic Account Team Model for $8 ‐ $10 Million

Business Development Team

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Bid Team

Reducing Transaction Cost

Document and Refine Process

Job Cost

Strategic Sourcing

Ancillary Specialists

Transaction Processing Team

Technology Investment

Sales Compensation

Strategy and Planning

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Key Dealer Success Factors

Well‐defined business model Strong financial position

Superb selling organization Operational excellence Strategic planning and execution

© 2019 Solomon CoyleQUESTIONS…

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ResearchThrough our ongoing research activities, Solomon

Coyle provides dealers with much-needed per-

spective on a competitive landscape that has been

dramatically reshaped by sweeping economic,

technological and demographic changes.

ConsultingOur Strategic Solutions help defi ne and fi ne-tune

a direction that will sustain the dealership. Opera-

tional Solutions use a fi nancial focus to fi x things

that stand in the way of achieving your potential.

HR Solutions are best practices for the manage-

ment of your business’s most important assets.

EducationOur education program focuses on an approach

to project management that preserves margin and

an approach to sales leadership that promotes a

selling organization and culture of accountability.

Peer GroupsSolomon Coyle peer groups are uniquely effective

learning environments. They are communities of

students of the industry with a shared passion for

improvement in performance and profi tability.

Every contract furniture dealer’s path is unique, and each dealer’s path can be rewarding.

Solomon Coyle is delivering on that promise for hundreds of dealers and their aligned

manufacturing partners across North America.

Through our uniquely holistic combination of

research, consulting, education and peer group

management, we assist companies along a path to

better performance, greater profi tability, and

a sustainable future.

Every contract furniture dealer’s path is unique, and each dealer’s path can be rewarding.

Solomon Coyle is delivering on that promise for hundreds of dealers and their aligned

manufacturing partners across North America.

Through our uniquely holistic combination of

research, consulting, education and peer group

management, we assist companies along a path to

better performance, greater profi tability, and

a sustainable future.

Solomon Coyle laid out a strong blueprint for managing our business. We now have a dynamic, coherent culture and continue to grow with sustained, above industry average profi tability. Goals are established throughout the company using the SC benchmarking data. And our team continues to learn and improve by participating in WPA [our Solo-mon Coyle dealer peer group].LARRY BORN, PRESIDENT/CEO,

PROFESSIONAL OFFICE ENVIRONMENTS

SOLOMONCOYLE.COM 703 574 91002560 HUNTINGTON AVE, STE 404, ALEXANDRIA VA 22303

Helping today’s

dealers perform

better, profi t

more and

prepare for

a sustainable

future.

DEALER COMPETENCIESWHAT WE DO AND HOW WE IMPACT DEALER EFFECTIVENESS

CONTACT US

RESEARCH / CONSULTING / EDUCATION / PEER GROUPSSOLOMONCOYLE.COM 703 574 9100

2019-05-01

RESEARCHOperational Performance and Financial Benchmarking ✩ ✩ ✩ ✪ ✩ ✪Compensation and Practices Survey ✩ ✩ ✩ ✩ ✩ ✪ ✪Market Outlook ✪ ✪ ✪State of the Industry ✪ ✪ ✪Dealer of the Future ✪Installation Estimating Workbook ✩ ✩ ✪ ✪Custom Research << client-driven objectives and impact >>

CONSULTINGSTRATEGIC SOLUTIONS

Dealer of the Future ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✪Business Planning ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✪Executive Coaching ✪ ✪OPERATIONAL SOLUTIONS

Dealer Self-Assessment and Gap Analysis ✪ ✩ ✩ ✩ ✩ ✪ ✪ ✩ ✪Dealer Diagnostic ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✪Dealer Development Program ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✩ ✪Compensation Analysis and Program Development ✩ ✩ ✩ ✩ ✩ ✩ ✪ ✪HR SOLUTIONS

Employee Selection and Development ✩ ✩ ✩ ✩ ✩ ✩ ✪ ✪HR Regulatory Compliance ✪ ✪ ✪

EDUCATIONProject Management ✩ ✩ ✩ ✪ ✩Leading Sales in an Age of Complexity ✪ ✩ ✪ ✩Dealer Management Development ✪ ✪ ✪ ✪ ✪ ✪ ✩ ✪ ✪Guest Speaking (presentations, workshops, webinars) ✪ ✪ ✪ ✪ ✪ ✪ ✪ ✪

PEER GROUP FORUMSPrincipals ✩ ✪ ✩ ✩ ✩ ✪ ✩ ✪ ✪Sales ✩ ✪ ✩ ✩ ✩Marketing ✪ ✩ ✩ ✩Design ✩ ✩ ✪ ✩ ✩ ✪ ✩Operations ✪ ✩ ✩ ✪ ✪ ✩ ✩ ✩Finance ✪ ✩ ✪ ✪ ✩ ✩HR ✪Architectural Products ✩ ✪ ✩ ✩ ✪

✪ primary impact

✩ secondary impact Quote to

Invoice

Sales and M

arketin

g

Design

Project M

anagement

Operatio

ns

Finance

Technology

Talent Management

General M

anagement

https://www.solomoncoyle.com/contact/

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