Review from the Summit: S.F.I. Programs - - The Promise and the Problems (Part 3)

The final presenter on S.F.I. Programs at the Home Improvement Economic Summit was Rob Levin. Mr. Levin holds a degree in Accounting and a CPA certificate, and moved through public accounting to became the controller at a large wholesale building supply company. In 1982 he became part of a newly founded retail siding and window company (American Remodeling) which became a licensee for Sears under their SFI program. AMRE eventually became a public company with average annual volume ranging from $250 to $300 million with 65 offices. He is currently president of Statewide Remodeling of Grand Prairie, TX, which was established in 1994, and is today listed as the 24th largest company in Remodeling Magazine.

Mr. Levin's extensive background in S.F.I. Programs made him an ideal choice to conclude this part of the program. A summary of his key points regarding S.F.I. included:

Positives:

• Brings a good lead flow
• National name gives credibility
• Excellent financing options are frequently available
  
• Can add income to your bottom line

Negatives:

• You are creating your own competition
• Seasonality of traffic
• Higher marketing cost due to licensing fees
• Cash flow difficulty at beginning
• Cash flow can be slower
• May affect core business

Steps for Success:

• Start slowly
• Keep the hours down
• Understand the seasonality factor
  
• Analyze S.F.I. business separate from core business
• Assign separate salesmen when possible
• Make one person responsible for in-store activities
  
• Build relationship with the store manager
  

If you did not have the opportunity make sure to read the previous two posts on S.F.I. Programs. You will discover that all of the presenters shared many of the same key points. The key take-away was that S.F.I. programs can be effective if the right elements are in place; however, they are not for everyone.

The next topic I will review from the Summit will be how to get the most out of shows and events.

Review from the Summit: S.F.I. Programs - - The Promise and the Problems (Part 2)

The next presenter at the Summit who spoke on S.F.I. Programs was Michael Redman. Since 1993, Michael has been the National Manufacturer Representative for TEMO Sunrooms. His responsibilities include leading the team of manufacturer's reps in recruiting, training and servicing their national network of dealers. Under his supervision, each rep is required to have a successful background in in-home selling and the ability to provide “hands-on” training for the salespeople representing the dealer. He has a national reputation as an efficient trainer. In addition, he interacts with the dealers on their activities as SFI providers to brands such as The Home Depot and Sam's Club.

First, Michael touched on the benefits of using an SFI program, primarily:

• They are an excellent lead source
• Other sources may not be available
• Other sources may be too costly
• Other sources may provide limited results
• Face-to-face (SFI) is proven to work

The primary keys to an SFI program being successful are that the corporate entity must work within the contractor's structure (challenging, but crucial) and that contractors don’t use SFI as their sole marketing strategy. Also, customer service and satisfaction are a must and relationships have to be cultivated that build trust with store management teams.

The displays that TEMO uses in their program are mobile, expandable, affordable and have marketing flexibility.

In the next posting I will recount the presentation from Rob Levin who has one of the most extensive backgrounds in S.F.I. within the home improvement industry.

Review from the Summit: S.F.I. Programs - - The Promise and the Problems

Continuing on in our review of the Home Improvement Economic Summit - our next panel discussed S.F.I. (Sell - Furnish - Install) Programs and what the primary issues are that arise when home improvement companies work with a large, nationwide retail services network like
The Home Depot or Sam's Club.

S.F.I. Programs have a longer history within the home improvement industry than many realize, however, the negative publicity these programs have received tends to outweigh the positive results that they can sometimes achieve.

The first speaker was Murray Gross who is the Chairman and C.E.O. of US Home Systems which specializes in the sale of cabinet refacing. They operate with 42 offices in the United States, approximately 300 salespeople and have a marketing center in Boca Raton, FL. They are a public corporation with revenues of $132 million. They currently act as an SFI outlet for Home Depot in over 1,900 of their stores. Their products are manufactured in their own factory. Mr. Gross was formerly president of Facelifters, a public corporation, acting as an SFI for Sears and producing revenues in excess of $60 million prior to selling that company to another corporation in 1996.

Some of the benefits of S.F.I. programs include:

• Exposing your business to a new section of the market
• Building trust, loyalty and security in your brand
• Incremental revenue and profit
• Access to advertisement and promotions
• Access to financing options

Potential challenges include:

• Being a "guest in someone else’s home"
• Protection of the brand
• Sensitivity to marketplace pricing
• Consumers’ heightened expectations
  
• Compliance, insurance, licensing, permits
• Cash-flow considerations

The key walk away point from his presentation is that to succeed in an S.F.I. Program you need to understand that you are working with a "800-lb gorilla", you need to understand the financial model and most importantly you have to focus on what you as a business do well.

In the next blog posting I will continue to review the panel's presentation on S.F.I. programs.