Tuesday, March 8, 2011

Who wants you to be stupid; Part II

My January 3/10, 2011 Floor Covering Weekly column, Who wants you to be stupid?, elicited many passionate responses; more comments were made by readers to that column than to anything I’d written in the prior four years. My column was based on a Harvard Business Review blog by Michael Schrage who asked: “Should your best customers be stupid?” and “Do we make most of our margins from our ‘smartest’ customers or from our ‘stupidest’ ones?” His point, as he explained, was to examine whether the bulk of profitability is captured because customers appreciate the value of what you do, or because they're (effectively) ignorant or ill-informed and you exploit that with your product and price positioning.

Depending on ignorance is poor strategy in a consumer-centric era, particularly when the consumer is often better informed than your salesperson. One retailer told me that they were not attending Surfaces because their biggest supplier wasn’t going to be there. In my opinion the best reason to attend may be that your most important supplier is not exhibiting. The big question is, are you an agent of your supplier or an agent of your customer? Today, product takes a back seat to the consumer. Those who look to suppliers first and then customers have it backwards. You should attend conventions and exhibitions for the broad wisdom and insights from understanding the marketplace on your terms – not your supplier's.

The good news is that there is another opportunity in one week; Coverings. This is the premier tile and stone exhibition show in the Americas and runs March 14 – 17th in Las Vegas. Coverings is another opportunity for your personal and professional growth regardless of the floor coverings that you market. My Floor Covering Institute colleagues and I will be at Coverings next week and I hope you are too.  We are part of a free, professional education program presented just for you.

Hard surfaces will grow dramatically as a percent of total floor covering sales when the housing recession ends. Some predict that in the not too distant future hard surface will be more than 50 percent of all floor covering sales. If you’re not busy learning Mandarin (my next blog post) then you ought to spend your time learning about tile and stone.  As I wrote in the FCW column, “do not listen to anyone who wants you to be stupid.”

Here are some questions to ponder. Do you make most of your margins from your ‘smartest’ customers or from your ‘stupidest’ ones? Can you name any other industries that are dependent on “less than informed” customers? Is this attitude the platform for home centers and Lumber Liquidators to thrive? Is it time for the floor covering industry to become transparent? Is this issue our “elephant in the room?” If you’re a retailer or a consumer are you a victim or a volunteer?

I look forward to receving your comments.

Chris

Chris Ramey is president of Affluent Insights and a member of the Floor Covering Institute.

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