The brand leader SFI (Sell – Furnish – Install)

SFI’s lead fees range from 5% to 18%. If your current fully loaded marketing costs are 10-15% or more, this may seem doable. However, remember that you may be called upon to set up displays in stores as well as to manage those displays.

Do the math, when you add in the cost of in-store displays, demonstrators, or others needed to make time on the floor, you can spot another 8 or 9%, which when added to the fee paid could add up to 24 or 25% .

You must confirm leads, schedule appointments, and train salespeople to handle this “third party source”; still, it might work. As long as you can achieve margins that allow for this excessive marketing cost and still make a net profit.

Most of these SFI partners provide a lot of traffic for their exhibit and many are equally demanding as to what and how the products will be sold. They have a legitimate concern because they fear that aggressive sales will “push” their customers. Therefore, the need for up-to-date sales training is required. Beyond which, you’ll also need to develop an ongoing relationship with the store manager and those other people you need to interact with. Whether you feel the terms or actions are excessive or unfair, it is your turf and you must learn to act in accordance with your culture.

SFI partners may require you to cover multiple stores and respond to each lead promptly. Therefore, the smaller sales organization can quickly be inundated with leads that it cannot serve promptly. Furthermore, it requires a mixture of two extremely different cultures. SFI dealers (home improvement contractors) often salivate over the potential for abundant leads, not realizing that big box stores advertising “every day lowest prices” encourage that kind of thinking for their customers, so the prospect you get may be conditioned on getting the lowest prices regardless of what top-of-the-line product you can offer. As one of our customers who has a relationship with SFI puts it: “The customer is looking for Nordstrom quality and service, at Walmart prices.” Therefore, SFI distributors need to take a hard look at their attitudes about customer satisfaction and then expand on them to meet the requirements of their new strategic partner.

Another concern is whether the relationship will last. A few years ago, Lowe’s had such a program involving numerous manufacturers and hundreds of dealers. When they abruptly canceled the program, the dealers involved were forced to remove their samples and displays from Lowe’s stores, stop accepting leads, and discontinue sales practices.

The dealers involved discarded their sample boxes, display books, brochures and, sometimes, uniforms that identified them with the Lowe’s program. In addition, programs and staff dedicated to the SFI program for which recruitment, training, and development costs had been spent, had to be cancelled.

Lowe’s arguably had experiences with some dealers within the program that they found unfavorable. If they saw this as a threat to their customer service image, they think they acted wisely. However, this case makes it a requirement for a dealer to thoroughly examine and act prudently before simply jumping on the bandwagon with an SFI program.

The same can be said of involvement with a brand that offers exclusivity in terms of product and territory. Deals often tend to be openly in their favor, which raises questions: What if they decide to introduce a similar product in your territory? What if they introduce a product under a different name, but with a similar design or demand unrealistic fees for the purchase or performance of the product, or have favorable unilateral cancellation privileges for them?

On a positive but sobering note, for those who get involved in an SFI or branding program, a retraining process is necessary. Many of our valued clients have strong associations with brand name merchants. However, it does require developing a new or modified sales and marketing model with explicit controls over sales styles and presentation methods, but with all these precautions, it is still feasible for those who plan structures and control their new model.

Two questions are inherent in our assessment of this type of relationship. The first is: Are the rates fair? The answer is – not in all cases. Certain “big box stores” make a pretax net profit of 2 or 3%, which requires purchasing, stocking, merchandising, packing, and tons of staff. In the case of a 10-18% SFI fee, they may put little effort into the partnership except to extract a fee that requires little or no investment beyond their good name and some interaction with middle management.

The other problem is a “clash of cultures”. Large home improvement oriented retailers rarely understand the true dynamics of how a home sale is made and don’t put much energy into figuring out how it’s actually done. They are also unaware of the many puzzling issues associated with recruiting and training specialized salespeople to deliver a customer-appreciated sales methodology.

In truth, the “big box in-store customer” often places a high value on the relationship with the brand, but is accustomed to buying without the need for the extensive discussions involved in a home improvement project or the psychological dynamic that is present in a professional home presentation, the lack of which can lead to high levels of customer dissatisfaction if the sale is made.

In many cases, the SFI distributor is unwittingly subject to the “big box” policy; for example, the store may have a policy of “If you’re not completely satisfied, return the product and we’ll refund the purchase price.” While this is great for cash and carry products, it can be expensive when a customer wants to cancel much later than 72 hours.
[3 working days] the termination rule has expired. In some cases where custom windows were sold, measured, and then made to order, the policy, when enforced by the store, leaves the dealer with inventory that might not sell due to custom sizing.

The final caution deals with cash flow. Once you make the marketing investment, advance your salesperson a portion of the commission, order and pay for your product, permits, and installation costs, and ultimately have a satisfied customer (in most cases), you’ll be waiting. payment because their “big box” partner does not remit payments until the job is fully completed and customer satisfaction is assured.

The latter is not a condemnatory statement. Your strategic partner has every right to have these guarantees, however, it is important to understand that you will dramatically increase your accounts receivable with this model of engagement.

All that said, SFI’s relationships with brands or big box stores represent an effective method of developing leads as long as there is fairness on both sides and a proper plan for utilization and control is in place.