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news
Herman Miller Dealer Tom Klobucher Publishes New Book on Workplace Transformation
Herman Miller dealer Tom Klobucher has published a new book, The Great Workplace Transformation, in which he describes how to create great places to work and accommodate the growing reality of multiple generations working side by side in the workplace. Klobucher, who is CEO of Thomas Interior Systems in Bloomingdale, IL and a speaker at OFDA’s upcoming Dealer Strategies Conference, says the book is designed to “help fast-track your organization into a truly great place to work… help you hire and retain the most, creative, loyal, and growth-driven employees… and transform your workplace into a powerhouse that thrives during the most challenging and exciting multi-generational decade in history.” It is a sequel to his highly regarded The Great Workplace Revolution, which focused on showing leaders, front-line employees, and everyone in the between how to wage “a revolution where everybody wins.” For more information, email Klobucher at tomk@thomasinterior.com or visit www.thegreatworkplacerevolution.com.
Washington, DC-Based WorkSpaces LLC on Strong Growth Curve Even if business today is still plenty challenging, there are still expansion opportunities for growth-oriented dealers. Case in point: Washington, DC-based WorkSpaces LLC. WorkSpaces is a relative newcomer—the dealership was founded by president Tom McGuire in 2006—but it has been on an aggressive growth curve from day one. Its Washington, DC headquarters has seen two moves to larger facilities as business has grown. Expansion to Baltimore took place in 2010, followed by New York City and completion of a Baltimore showroom the following year. With the dealership’s latest move, in August, Workspaces has a nine-person staff and a 5-6,000 sq. ft. showroom, still being finalized, in downtown Chicago. Not surprisingly, WorkSpaces was listed recently by the Washington Business Journal as one of its "2012 Fastest Growing Companies" and, reports COO Adrian Massiah, there’s still more to come.
There’s Still Time to Sign Up for OFDA’s Dealer Strategies Conference OFDA’s 2012 Dealer Strategies Conference is just around the corner and if you haven’t yet signed up to attend, do it. Now! Putting it simply, you won’t find a better opportunity to take the pulse of our industry from an authentic dealer perspective and learn from office furniture experts, consultants, business partners and, most important of all, your fellow dealers. It’s never hard to find a reason not to attend … too many industry meetings, too much going on in the business, not enough money in the kitty for any more business travel, etc., etc. But none of those stand up against the single most important reason for attending: Our industry today is more competitive and more challenging than it’s ever been and no matter how successful you might be today, you need all the help you can get to make sure your dealership will be stronger and more profitable tomorrow. Looking for new ways to strengthen relationships with the A&D community and other key customer segments? Trying to figure out how to make the most of social media marketing opportunities? Want to make sure you’re taking advantage of every opportunity to use technology to run faster, leaner and more profitably? Wondering what it will take to manage multiple generations of employees and keep them productive and motivated? You’ll find answers to all those questions and more at this year’s OFDA Conference. Plus, you’ll benefit from a unique opportunity to hear thought-provoking panel discussions featuring key manufacturers on the next ten years in the workplace and top technology providers on the implications for dealers of BIM, IPD, Rivit and other powerful new tools. If you’re serious about your business and its future, you need to be there. Call 703-549-9040 or visit www.ofdanet.org/2012-Conference-Online-Registration and sign up today. You owe it to yourself and your business not to miss it!
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Dealer News continued from page 3 Future plans include expansion into at least one more new market—South Florida, with locations later this year in Miami and Orlando—and a third move for headquarters scheduled for Q1 of 2013 into some 21,000 sq. ft. of space just north of downtown DC.
In Grand Rapids, Custer Marks Steelcase Anniversary at Special ArtPrize Event Now in its fourth year, Grand Rapids’ ArtPrize bills itself as the world's largest art competition and with over 1,500 entries, 616 different venues and $560,000 in total prizes, they may well have a point! This year’s event had an added dimension as Grand Rapids dealer Custer Inc. hosted a special celebration on the opening night as part of a year-long recognition of Steelcase’s 100th anniversary and its focus on the future of work. The Steelcase-Custer relationship is one that goes back to the 1920s, when the grandfather of Karen Terrell Custer, wife of current president Dave Custer started the Terrell Equipment Co. which supplied product to SteelCONTINUED ON PAGE 5
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Dealer News continued from page 4 case, then known as the Metal Office Furniture Company. Since then, nine members of the family have worked for Steelcase, many in executive level positions. Some 400 customers, prospects and business partners turned out for the event, which featured showings of Steelcase's One Day commemorative video and the opportunity to participate in its Share Your Dreams project. “Our event this year was a great success,” reports Custer’s Tara Simmons. “We had great food, live music, a raffle, photo booth and trolleys to take our guests downtown to various ArtPrize locations and a good time was had by all!”
Major Showroom Renovation for Loth In Cincinnati, Rick Naber and his team at Loth, Inc. have been enjoying the benefits of a brand new showroom after completing a major renovation. The new space combines interior architecture, furniture and technology to create an environment designed to reflect the latest in workplace research and provide a state of the art working showroom for some 3540 Loth team members. The showroom consists of some 25,000 sq. ft. of space, plus a mezzanine area for the dealership’s healthcare market offerings and is positioned not only as a showcase for the latest office furnishings but also as a research and education resource for clients.
Kentucky Dealers Office Resources and Cardinal Office Systems Combine Kentucky Steelcase dealer Office Resources, Inc. (ORI), headquartered in Louisville, has purchased substantially all of the assets of Cardinal Office Systems, also a Steelcase dealership, with offices in Lexington/Nicholasville, Frankfort and Bowling Green. The new organization essentially provides statewide coverage. “This is truly meaningful for our customers, who depend on us to help them create innovative and harder working spaces that inspire, foster collaboration, optimize their real estate footprint and promote wellbeing,” said George R. Bell III, president & CEO of ORI. Jim Gray, president of Cardinal Office Systems, said, “I am confident that our clients will benefit from this strategic change as we intensify and expand the products and services offered and modernize our order management process and infrastructure.” Gray plans to continue with ORI, as do other members of the Cardinal leadership team. He will be a member of the ORI leadership team and will lead sales and marketing efforts at the Bowling Green location.
Maryland Office Interiors Hosts ‘Industry Day’ Educational Event for Sales and Support Team Baltimore-based Maryland Office Interiors recently came up with an innovative way
to provide their sales team and others in the dealership with some valuable industry education by hosting a special “Industry Day” at its Washington, DC showroom. The event brought in some of MOI’s key manufacturing partners in a tabletop format to showcase new products and trends. Featured vendors included Janus et Cie, Peter Pepper Products, Potomac Lighting, Highmark Seating, McLain Group, Schneider League Associates and BBA Contract. “At MOI, we pride ourselves on having an educated salesforce and while we all get a lot of exposure to our primary lines, there are several hundred other manufacturers we draw on and this was an outstanding opportunity for some of them to present their solutions,” commented MOI’s Joanna Hoffschneider, VP of business development and marketing. Some 40 MOI sales and support team members participated and the event was so successful, plans are already underway for a follow-up session at MOI’s Baltimore headquarters.
Corporate Interiors Helps Out on Technology Upgrade for Local School District Students in Pennsylvania’s Springfield School District got a technology makeover recently, thanks to a generous assist from Corporate Interiors, a Steelcase dealer with locations in New Castle, DE, and Conshohocken and East Norriton, PA. CONTINUED ON PAGE 6
Loth, Inc., Cincinnati, OH
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Dealer News continued from page 5 The makeover came in the form of 220 liquid crystal display (LCD) flat-screen monitors which were donated to four different schools by Children’s Hospital of Philadelphia. The monitors became available due to the hospital’s own technology upgrade and gifting them to the schools fit right in with its “good corporate citizen” philosophy. Fortunately, they were able to draw on the support of another good corporate citizen in Corporate Interiors, who packed and shipped all 200-plus monitors to the district free of charge. “We are fortunate to be able to assist Children’s Hospital of Philadelphia in distributing such a beneficial gift as these computer monitors, enabling students to learn and develop for years to come,” commented Corporate Interiors principal Janice Leone. “Supporting this charity initiative by Children’s Hospital of Philadelphia is what Corporate Interiors is all about.”
The school district is not the only beneficiary of the dealership’s community involvement. Corporate Interiors is also a generous supporter of Children’s Hospital of Philadelphia, Habitat for Humanity, the American Cancer Society and many other worthy causes.
well as leading product launch strategies and steering corporate learning programs for sales personnel as the company’s senior field marketing manager.
Seattle’s Apex Facility Resources Adds New VP of Sales and Marketing
Sobczak also founded Triad Leadership, Inc., an entrepreneurial startup designed to coach and develop high-performance work teams and sales leaders.
Seattle-based Apex Facility Resources recently announced the addition to the company of Paul Sobczak as VP of sales and marketing. Sobczak’s previous experience includes building and leading sales teams as a regional sales director for Herman Miller, as
He also served as principal of Knoll dealership Bauhaus Interiors Group, where he helped drive business revenue from $3 million to $18 million over the course of three years.
“Paul has more than 25 years of hands-on experience in nearly every level of this industry,” said Apex president Marlaine McCauley, “He brings rare insight to the needs of sales reps and customers alike, which enables him to empower his teams to serve as consultative partners, provide our client partners with guaranteed added value and bring them peace of mind as their businesses grow and prosper.”
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BIFMA Releases July Market Statistics, Updates Industry Forecast
The Business and Institutional Furniture Manufacturers Association (BIFMA) recently released its market statistics for July and the numbers showed a disappointing loss of momentum. BIFMA estimates July orders decreased 4% year-over-year, while shipments were off 5% from the same month last year. “The July data were a clear disappointment relative to our pre-report expectations,” commented analyst Budd Bugatch of the Raymond James investment firm. “Given the easier prior-year comparisons, we were anticipating significant year-over-year order growth, even accounting for the normal seasonal June to July decline. Instead, July orders declined year-over-year and worsened versus June on a two-year stack basis,” he commented. Bugatch noted, however, that July typically tends to be a bit soft ahead of the normal seasonal pick-up going into the fall and suggested the mid-week July 4 holiday this year may have caused
some of the negative numbers. “While the July stats were certainly a ‘shot across the bow’ for our favorable industry thesis, we continue to expect the industry to reaccelerate in the second half of 2012 due to easier comparisons and healthy order activity from commercial customers,” he said. BIFMA also recently updated its industry forecast for this year and next. BIFMA now expects 2012 orders and shipments to increase 1.1%, revised downward from its prior estimates of 4.2% order and 3.4% shipment growth. BIFMA also lowered its 2013 outlook. The association expects 2013 orders to increase 3.3% (previously +6.8%) and 2013 shipments to increase 2.9% (previously +6.7%). Global Insight, the research firm which develops the forecasts for BIFMA, cited a more muted GDP forecast, recent weakening in employment/manufacturing orders, and uncertainty regarding the Eurozone crisis and the looming fiscal cliff as factors contributing to the downward revision.
Haworth Acquires Strategic Interest in AIS
INDEAL Adds to Full-Time Staff
Haworth has acquired a strategic interest in office furniture and seating manufacturer AIS.
The INDEAL dealer group has announced the addition of Michael Cuviello to its full-time staff. Cuviello, had been with INDEAL part-time for the past two years as director of dealer program implementation and also as an on-line trainer.
Haworth vice president of global sales Todd James said of the deal, “This new association will help Haworth’s network of dealers broaden their offering to smalland medium-sized businesses. We currently focus on that market directly, through our ‘Start-It-Up’ program, and in-
directly through our alliances with Groupe Lacasse, United Chair, and now AIS.” “We are excited for the mutual opportunity to add AIS products to Haworth’s distribution network,” said AIS executive vice president Rob Lazarus. “This association with Haworth, and our continued relationships with AIS dealers and sales representatives, will help us to continue our journey of growth and success.”
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Industry News continued from page 8 In addition to his current duties, Cuviello will assist dealers with special product-focused programs and share his previous knowledge and success with the INDEAL programs as well as his implementation strategies.
Teknion Opens Newly Designed Showroom in Montreal Teknion Corporation recently announced the official opening of its redesigned Montreal showroom. The 7,000 sq. ft. showroom has been registered with the Canadian Green Building Council with the certification goal of LEED-CI Platinum. The redesigned showroom reflects the French culture of Montreal by taking a traditional French brocade pattern and manipulating it into a high-tech modern dot pattern for use in the feature screen walls. To further enhance the reflection of natural light, walls were removed to open up the space and a white, light material palette employed. Environmentally sensitive materials were used throughout, as well as sustainable wood and wall finishes. Teknion’s showroom is located at 1010 Sainte-Catherine Street West in The Dominion Square Building, a landmark structure situated in downtown Montreal.
Inscape Appoints Vice President of Sales for Canada Inscape has announced the appointment of Edward Collins as vice president of sales, Canada. Collins will be responsible for all sales functions for Canada, including development of distribution channels, building strategic business relationships and providing vision for all sales strategies and execution. Collins most recently served as vice president of sales in Canada for Neopost, a supplier of mailing systems and solutions. He started his career at Xerox, where he held progressive sales and marketing positions during his 13 years with them.
Global Introduces Proietto, New Seating Line Global - The Total Office has introduced Proietto, a new seating series that features both high and medium back task chairs as well as a complementing side chair. The Proietto series includes a Synchro-Tilter and Multi-Tilter equipped with a ratchet style back height adjustment. Chairs are fully upholstered with distinctive top-stitching, available in fabric, vinyl and leather.
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announces first
Dealers Choice Survey Awards WINNERS OFDA) has announced the winners of its 2012 Dealers Choice Survey. Formerly known as the Dealer Manufacturer Satisfaction Index Survey (DMSI), the newly revamped survey is more comprehensive and aimed at providing product-category-level feedback from dealers of all sizes on the full range of support they receive from their primary non-aligned suppliers, including more specialized furniture manufacturers. CONTINUED ON PAGE 12
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Awards
continued from page 11
Dealers were asked to rate their top-volume non-aligned suppliers in each of six product categories recognized by the Business and Institutional Furniture Manufacturers Association (BIFMA).
2012 Dealers Choice Survey Award Winners
“Nearly 2,000 votes were cast in the Workstation/Systems, Seating, Casegoods, Filing, Tables and Storage categories,” said Chris Bates, OFDA\president.
W O R K S TAT I O N S / S Y S T E M S
“We were very pleased with the number and range of responses for this first year and believe that the survey data will be invaluable both to dealers, who will be able to see where suppliers rank, and to those manufacturers mentioned, who will benefit from the feedback on their companies’ product offerings and support services,” he added. “OFDA and office furniture dealers throughout the country are honored to have these winning manufacturers as strong supporters of our industry,” stated Sandi Jacobs, OFDA chair and president/ COO of Sidemark of Santa Clara, CA.
SEPTEMBER/OCTOBER 2012
AIS, Inc. S E AT I N G
Global-The Total Office CASEGOODS
National Office Furniture TA B L E S
Global-The Total Office FILING
Great Openings STORAGE
The HON Company
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“These manufactures have earned special recognition through their support and dedication to the dealer community and are models by which to gauge best practices that contribute most to future industry success.” The award is based on a carefully structured, anonymous dealer poll that measures the six functional areas of manufacturer performance considered to be of greatest importance to a diverse crosssection of dealers throughout North America. The award program recognizes those manufacturers that deliver the most consistent and effective overall support to dealers in all of those areas in each of the six product categories. Awards will be presented to manufacturers on the closing morning of this year’s OFDA Dealer Strategies Conference, October 2830 at the Cosmopolitan Hotel in Las Vegas.
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Can
Sabermetrics
Help Create an Action Plan for Salespeople?
By Jim Heilborn I was born in Oakland, CA, and have been a lifelong baseball fan. I followed the San Francisco Giants because they moved to the Bay Area first but I also became a fan of the Oakland Athletics when they left Kansas City and moved to Oakland in the late 1960s. And yes, I still follow both teams. For those of you who haven’t read Moneyball: The Art of Winning an Unfair Game by Michael Lewis or seen the film version starring Brad Pitt, it follows the Oakland A’s 2002 season, when the A’s set a team record of 20 wins in a row. As recounted in both the book and the movie, the key to that new record was general manager Billy Beane and assistant GM Peter Brand and their highly analytical, evidence-based, sabermetric approach to assembling a competitive baseball team despite Oakland's much lower payroll and overall budget. At that time, most teams selected players using much different methods and criteria. Although both methods depended on past performance, sabermetrics was less interested in traditional statistics like batting averages and RBI’s (Runs Batted In). Instead, “sabermetricians” looked at different ways to identify and define leading indicators of success for ballplayers.
games and that a good measure of a player's worth is the ability to help their team score more runs than the opposing team. Players who got on base with walks, therefore, were as valuable as those with hits. Those players who could get on and steal extra bases also had a high value, even though it didn’t always show up in the more traditionally valued statistics. If you’re still with me, you might start to see that sabermetrics is about outcomes and creating the opportunities that lead to them. Sales are very similar in that regard. The first step is to make sure you’ve identified the right outcomes for your company and your staff. It took some clever computations to conclude that games weren’t won by batting averages, but by OBP (On Base Percentage) and slugging percentage because these were a more useful measure of a player's overall offensive production. In the past, the traditional sales winners were those salespeople who brought in and closed large sales. Today we have come to learn that the largest sales often have the lowest margins and can be a drain on the company’s resources, manpower and cash flow.
They would say that runs win ballCONTINUED ON PAGE 14
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COVER continued from page 13 A better measurement is not the size of the sale but the gross profit generated from that sale. Salespeople who hit “homeruns” in the past may not be as valuable as those salespeople who have a better record of selling at higher gross profit. The right gross profit is the outcome companies need today, as it is what wins in the sales game. It is important, therefore, to evaluate your sales plan and your people based on their ability to generate these kinds of sales. Once you have created a sales plan based on the right outcomes, the next step is to break it down into action steps for each salesperson. Just as baseball players must constantly practice the skills needed to play their positions, salespeople need to keep their sales skills sharp. Ongoing sales training is important if the staff is to continue to perform at a high level.
Just as important as OBP is to a baseball player, NQA (new qualified appointments) are important to salespeople. This is the player’s “turn at bat.”
pointments the salesperson needs to make, as only a percentage of them will turn into a sales opportunity…a desired outcome.
Will they get to first base with the client and get a sales opportunity or just strike out? If the salespeople aren’t able to create enough appointments they may need to be sent down to the minors (too many baseball references yet?).
Only a percentage of the opportunities will lead to a proposal and only a percentage of those into a sale…another desired outcome.
Let’s look at some other possible “sabermetrics” for salespeople…activities that will lead to desired outcomes. The sales process starts by obtaining appointments…enough appointments to create sales. These can be achieved by cold calling, networking, referrals, leads groups or call-ins. Nothing else happens till the salesperson has met with a potential buyer and started the discovery process.
The better the salesperson gets at each skill, the greater their chance of success in the next activities. Unfortunately, if the salesperson isn’t having success in the first steps, they won’t get close to making a sale. Train or trade the “player” not scoring well in this first metric. So what should companies be measuring, especially for new or under-performing sales reps.? In basic terms, what are the desired outcomes? What are the leading indicators of success and profitability?
The first step is to identify how many apCONTINUED ON PAGE 15
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COVER continued from page 14 Here are some suggestions: Measureable Activitiy
Desired Outcome
Number of appointment-setting calls/contacts per day..........................................................One appointment Number of appointments conducted per day....................................................Identify a proposal opportunity Number of orders placed per day..............................................................................Reach daily GP dollar goal Ratio of appointments to proposals.......................................................................Increased opportunity to bid Ratio of proposals to orders ......................................................................................Reach daily GP dollar goal Average dollars per sale .............................................................................................Reach sales volume goals Average GP dollars per sale....................................................................................Reach company profit goals Average daily sales ...........................................................................................Identify goal attainment position Average monthly gross sales .....................................................................................Identify cash flow position Average monthly GP dollars earned .............................................................................Identify cash flow trends What other metrics should a sales manager be looking at in order to reach the right outcomes? Sales Mix Number of new accounts opened in next 30 – 60 - 90days Number of orders/dollars/GP generated from new accounts per month Number of orders/dollars/GP generated from established, ongoing accounts Product Mix—Low GP vs. High GP products Low volume vs. High volume products Product-only sales vs. Product and Service sales If we now agree that sabermetrics is about the leading indicators of performance and the need to reach certain outcomes, then the next items for consideration have to be the skills and tendencies of the individual players/salespeople. Oakland A’s general manager Billie Beane had to find players who he felt could attain the outcomes on a very low budget…a daunting task at best. This meant he had to be willing to pass over some bigger name players and find role players who could best perform the needed activities—getting on base as opposed to just trying to hit home runs; getting pitchers who could strike out one or two batters, as opposed to throwing the occasional no-hitter. These types of players led to wins. He evaluated players based on their ability to fulfill these roles as opposed to being superstars. As the 2002 season proved, teams with superstars didn’t always win big. SEPTEMBER/OCTOBER 2012
Dealer owners and managers need to define the roles they need from their salespeople and realize that they need a variety of sales types to be profitable. The new business developers might find great new major projects, but they may not be as profitable as the mid-size projects. Both types of sales have a place in reaching the desired goal, but they need to be weighted based on the true objective, which is not sales volume but net profit. It has become increasingly important to identify the types of salesperson needed by the dealership and their ability to help it reach its goals. If the business is based primarily on large, existing companies, then salespeople are more likely to be account managers…good at maintaining relationships. A new business developer may not be as interested or detailed in the longer, slower process required by these accounts. The account manager may not have the perOFDEALER
sistence or personality needed for developing new business opportunities. The challenge is to manage a blend of salespeople…role players who can help reach the desired outcomes. Billie Beane was looking for players who would fit in with his team, his “company.” He wanted players with the ability to make the contributions that would help them reach their goals. Sabermetrics gave him a new way to identify those players. Sales organizations can learn from this model by establishing their own metrics and training and coaching their players to reach their desired outcomes…then everybody wins. Jim Heilborn is an independent business consultant, trainer, speaker and writer who specializes in the office furniture industry. Jim will be a featured speaker at the OFDA conference in Las Vegas on October 28, 2012. For more information please visit his website www.jheilbornassociates.com or view his LinkedIn page. He can be reached directly at 916.434.9811 or jim@jheilbornassociates.com. PAGE 15
Comparative
benchmarking A Look Back at Ten Years of Performance Trends for Office Furniture Dealers By Michael Becher This year, OFDA asked me to write an article on the Dealer Financial Comparison and Benchmarking Guide (DFC).
the construction industry and housing market and small and large businesses being forced to close their doors.
While I do not bring to the table the intimate knowledge that comes from being a dealer within the industry, I am able to bring the unique perspective of someone who has been involved with the execution, compilation and analysis of the Dealer Financial Comparison and Benchmarking Guide since 2005.
Simultaneously, recent years have seen a high degree of uncertainty due to impending tax increases and costs associated with financing national debts, the effect of government regulations on businesses and the new national healthcare legislation.
Having conducted over a hundred benchmarking studies for industries that range from office furniture dealers to healthcare practitioners and concrete manufacturers, I have unique insights into numerous industry segments and business types. This year, I wanted to take a somewhat different approach to the analysis from previous years. With over 10 years of data collected for the DFC, I thought this was a good opportunity to take a look back and see how the industry has changed over the last decade.
Throw into the mix an election year and the impact of struggling foreign economies and it all can begin to seem just a little overwhelming. That said, the good news is that through the highs and lows, office furniture dealers—or at least the survivors—have remained focused and determined, and have found ways to evolve and not just survive but successfully compete. Moreover, through the DFC, we have over 10 years of data to view and assess the industry’s past and present from a financial perspective.
With so much movement and change encapsulated in the DFC data over the past 10 years, what better time to reflect back on the journey the industry has endured?
What Has Changed and What Remains the Same To provide a little background information, the majority of respondents to the DFC operate in the United States. Data is also collected from companies in Canada and other countries, but the largest participation comes from those based in the U.S. Due to the large sample size of U.S. firms, we will focus on these dealers as we compare figures over the past decade. By doing so, we will eliminate data skews that may occur by looking at a smaller subset and it will remove any currency conversion bias that may affect the data. To give an overview of how the industry has fared over the past 10 years, Exhibit 1 CONTINUED ON PAGE 18
So much has happened in the industry over the past ten years and to some extent the office furniture dealer business bears little resemblance to that of the early 2000s. Consolidations have occurred, products have changed, and the overall approach to business operations has transformed. Also, over the past decade, we have been on an economic roller coaster ride that has seen incredible highs and devastating lows. We have recently seen unemployment rates nearing record figures, a collapse of EXHIBIT 1
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Benchmarking continued from page 17 illustrates the year-over-year sales growth of those U.S. dealers who participated in the DFC and Exhibit 2 shows the net profit before taxes for the past decade. Sales growth has had large swings from year-to-year which includes three years of losses; the largest coming in 2009 with a
revenue loss of over 21% as compared to 2008. The industry can also claim three years of double-digit growth with the largest increase being in 2011 - a 16.6% increase as compared to 2010. Impressively, despite the large variance in sales growth, the industry has maintained
consistent profitability numbers. Net profit before taxes has ranged from essentially flat to just under three percent. Even in 2009, when the industry saw sales plummet, companies were able to remain profitable by adapting on the fly. Many companies are still fighting to get their sales figures back to the levels they saw in 2007 or 2008, but the rebound over the past two years is certainly encouraging and a welcome breath of fresh air for everyone. To further dissect how the industry has changed over the past decade, Exhibit 3 shows the summary income statement and a select few key performance measures for fiscal years 2002 and 2011 and the directional change of each. A number of very important changes—and in some cases non-changes—in industry performance are readily identifiable. CONTINUED ON PAGE 20
EXHIBIT 2
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Benchmarking continued from page 18 n Service revenues in 2011, as a percent of total revenues, have increased by more than three hundred basis points as compared to 2002, as dealers have sought to diversify their revenue stream and offset margin pressures on product sales. n Cost of sales has remained almost identical which leads to nearly identical gross profit figures. n Overall operating expenses. All of the operating expenses components as a percentage of total revenue were down or flat in 2011 as compared to ten years prior. Selling expenses, office expenses and administrative expenses were all lower in 2011 and occupancy expense
remained flat as compared to 2002. In every industry, the best way to be profitable is to control costs. The two main components that negatively affect profitability are the cost of sales and operating expenses. With cost of sales remaining flat over the past 10 years, the ability of dealers to lower operating expenses by three percent lead us to… n Higher net profit. Better control of expenses in 2011 translated into an improvement of two hundred basis points in profitability as compared to 2002. n Employee productivity. Employees are often considered the most important asset for any business and that makes an extremely important driver to prof-
itability the productivity you are able to get out of your employees relative to their cost. Looking at how employee compensation expense and total revenues per employee have changed in the past decade is very telling. In 2002, each employee was generating sales of $296,635 at a total employee cost of 16% of total revenues. In 2011, office furniture dealers were generating $482,021 of sales per employee at a total cost of 14.5% of total revenues. This indicates that over the past decade, not only is each employee producing 62.5% more revenue than 2002, but they are doing so at a proportionately lower cost to the company.
benchmarking FY2002
FY2011
Direction of Change
Total Product Sales.....................................................................................................88.1%
85.0%
q
Total Services Revenues ............................................................................................11.9%
15.0%
p
TOTAL REVENUES ..................................................................................................100.0%
100.0%
tu
TOTAL COST OF SALES ............................................................................................69.2%
69.3%
tu
TOTAL GROSS PROFIT PRODUCT & SERVICES.....................................................30.8%
30.7%
tu
TOTAL INSTALLED GROSS PROFIT ..........................................................................20.9%
20.0%
q
TOTAL OPERATING EXPENSES ................................................................................21.1%
18.2%
q
OPERATING PROFIT...................................................................................................-0.2%
1.9%
p
Total Other Income (Expenses).....................................................................................0.5%
0.4%
tu
NET PROFIT BEFORE TAXES ......................................................................................0.3%
2.3%
p
Employee Compensation Expense ............................................................................16.0%
14.5%
q
Total Revenue per Employee .................................................................................$296,635
$482,021
p
DETAILED INCOME STATEMENT-% OF TOTAL REVENUE (US DEALERS)
EMPLOYEE PERFORMANCE MEASURES (US DEALERS)
EXHIBIT 3
SEPTEMBER/OCTOBER 2012
CONTINUED ON PAGE 21
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Benchmarking continued from page 20 Summary and Conclusions The Criteria for High Profitability Have Not Changed While some of the basic economics of running an office furniture dealership may have changed, the fact is, for the past 10 years, the components for success in the industry remain largely unchanged. Each year’s DFC includes a special analysis that compares the performance of the most profitable firms (defined as the upper 25% best performing companies based on the measure Operating Profit as a % of Total Revenues), versus other companies in the industry. Year in and year out, the same components for success almost always show up, as listed below: • Sound expense management • Disciplined control of cost of sales • Solid sales growth • Effective personnel management • Strong accounts receivables management
SEPTEMBER/OCTOBER 2012
In summary, while there have been some dramatic changes in the industry and in the economy at large, the bottom line is that success and profitability is created by those companies that follow the basics of business. They focus on four or five of the areas identified above that result in the most significant profitability impact. Moreover, those companies that are the most profitable are not necessarily significantly superior in each of these areas. Rather, their success is the cumulative result of being even somewhat better in all of these areas to generate substantially higher profit margins.
Michael Becher, CPA, is senior project director at Industry Insights, Inc. Becher has personally worked on the OFDA Dealer Financial Comparison and Benchmarking Guide since 2005 and has managed over one hundred benchmarking studies, across many different industries. His work has also been cited in The Wall Street Journal, USA Today and many other publications.
Remember, those who do not learn from history are condemned to repeat it. Fortunately, we have more than a 10-year history of the DFC to learn what leads to success in the industry.
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profile
Joe DiMaggio Children’s Hospital “We treat your children like our own.” It's this motto that defines the Joe DiMaggio Children’s Hospital in Hollywood, FL and is the foundation for the recently completed 180,000 sq.ft., four-floor LEED-gold certified expansion designed to not only allow hospital staff to perform at their best, but also keep things as normal as possible for young patients. SEPTEMBER/OCTOBER 2012
Through an existing relationship with the hospital, Office Elements, a Pompano Beach, FL-based Knoll, Kimball and National dealer, was recruited to bid on the project which consisted of waiting/reception areas and several patient room pieces.
“We needed furniture that would be appealing, practical, safe for children and feature very vibrant colors,” said Chantal Leconte, associate administrator for the hospital who was responsible for working with the dealer, architect and facilities manager to bring to life the needs of the CONTINUED ON PAGE 23
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project profile continued from page 22
administrators, staff and patients. “Each of the four floors was to have its own color scheme but a cohesive feel,”
said Office Elements’ account manager John Goldberg. “Using renderings and sample boards, we were able to showcase
a clean, modern, fun look while maintaining a consistent and efficient feel. We used Wieland recliners and gliders with a cusCONTINUED ON PAGE 24
You Can Teach An Old Dog New Tricks! Vibrant Colors & New Tasks for Old Parts Out of black trash management liners, out of rectangular computer printer slot liners come new and colorful recycle bin drop liners – green for compostables, blue for recyclables, red for confidential, and black for traditional all-around use – making it easy to identify designated waste bins!
TM1-60 - Green
Our TM Series of Trash Management liners and our three sizes of CP Series printer slot liners are now available in the usual Black, as well as brand new (and made of regrind) Green, Blue and Red. Make an eco-friendly statement!
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“FINE ARCHITECTURAL HARDWARE FOR YOUR FINE FURNITURE”®
w w w . m o c k e t t . c o m Ü 8 0 0 - 5 2 3 - 12 6 9 SEPTEMBER/OCTOBER 2012
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project profile continued from page 23 tomized Spec side chair for patient rooms and really wowed the client with National’s Eloquence, Reno and Swift for resource centers, reception areas, lounges and the spaces outside the procedure and treatment rooms. Plus all the National products in the expansion are level 2 and SCS Indoor Advantage Gold certified which contributes to healthier indoor air and would help in the hospital’s pursuit of LEED Gold certification.” With a team of 8-10 in-house installers, Office Elements went floor by floor for five days to complete the project. “We had to work around a few contractors and move a few pieces so painters could do touchups but all in all, the installation went very smoothly,” said Goldberg. “The furnishings blend perfectly with the décor and really create a place that’s warm and inviting…not so scary both for the children being treated and their families.” From the colorful wayfinding elements to
the vibrant graphics of the themed floors of sports, arts, games and dreams, the Power of Play is at the heart of the facility’s design and provides patients and visitors with a positive distraction from the medical equipment and procedures. “The furniture is very versatile and free
manufactured products are certified to level
Green product information made simple certified by SCS
NationalOfficeFurniture.ecoScorecard.com
®
EPIC
100% of National Office Furniture
flowing. We have already rearranged the furniture to match the function of the room and are very pleased with the durability,” said Leconte. “The furniture creates a child-friendly environment and we feel great about the design and selections we made.”
800.482.1717 www.NationalOfficeFurniture.com
SEPTEMBER/OCTOBER 2012
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Go Organic With Your Search Results By Jennifer Schulman
Just Google It. You hear those words, and probably use them yourself, every day. Think about how many times you Google or search for something each day from your PC, Believe it or not, most of the websites that show up on page one of your search results worked hard to get there. Whether it be from running strategic paid ads, also called Pay-Per-Click (PPC) or sponsored ads, or by showing up in natural or organic search results, these websites know the importance of being found online. So how do you go about increasing your own chances of showing up on that all-important first page of a search? Let’s start by tackling how to appear in organic or natural search results by deploying Search Engine Optimization (SEO) to your site.
Keyword Research It all starts with a good keyword list. You have to identify what you would like to be found for, what your competitors are being found for and of those terms, which searches may be the most popular. Here’s a threestep plan to build a great keyword list: 1. You know best. You and your colleagues are the people who know the services you provide, the markets you provide them to and your customers the best. What do you think they would search for? What words are currently used on your website now? 2. What keywords are being used on your competitors’ sites and which keywords are your competi-
laptop or mobile device—whether you are looking for the address of that new restaurant you’ve wanted to check out or trying to track down a new supplier for your business.
tors ranking on page one for? 3. Run your keyword list through Google. Start with the keyword tool, which will give you more keyword ideas as well as global and local traffic for those terms. The tool will give you keyword ideas by entering the URL of any website or just one primary keyword. Access it here: http://tinyurl.com/27uvznm
Go Local For those of you that do business in a geographically targeted area, take your keyword list and append the terms with your primary geographic locations. Keep in mind that most users will append a search with a city or town name, not necessarily a county, but you should account for both in most cases. Engines also personalize search results, one way by showing results close to the searcher’s location. That said, your site will also start to rank for broad terms like “Office Furniture Installation” if your business and the searcher’s locations are in close proximity to one another. We also highly recommend creating local business listings: Google + Local (formerly Google Places), Yahoo Local and Bing Local Listing (via the Bing Business Portal). They are FREE and can really help boost organic search presence for your business.
On-Site Optimization As the name explains, these are SEO tactics you deploy to your website. The top on-site techniques are: • Focusing on 3-4 keywords per page. Anything more can be deemed “Keyword Stuffing” and is considered spam by search engines. • Creating custom title tags and meta data for each page. Title tags should be no more than 70 characters, while meta descriptions should remain at 160 characters or less. • Internal linking. This is the practice of linking keywords in your body copy to other areas of the site. For example, if you mention “cubicle installation” in your body copy, you need to link those words to that page on your site. • Keeping your HTML and XML site maps up to date.
Content Creation Content is King. You probably have heard this before, but it is very true when it comes to SEO. Here’s why. • Engines know how often you update your site. They are in the business of providing the most relevant results to end users so if your site is providing “old” info, they will not show it. CONTINUED ON PAGE 27
SEPTEMBER/OCTOBER 2012
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Go Organic... continued from page 26 • Each new page you create can be centered around keywords you need to improve or obtain new rank for.
online directories, blog posts/comments and even link sharing on social channels.
• Good content will be picked up and shared by other sites, thus leading to more inbound links, which are integral to a good SEO strategy.
You want to follow the 80/20 rule: 80% of the links you acquire should be one-way links and point to interior pages of your website, while the remaining 20% should be reciprocal links.
• Your audience loves good information. Give it to them.
Inbound Links Simply put, the more qualified, authoritative and relevant websites that link to your site, the better search result rank you will have. Link building is critical to SEO. There are two types of links: • Reciprocal links: A link to your site goes on another website and you return the favor. • One-way links: These are weighted heavier than reciprocal links. They can include business directories,
SEPTEMBER/OCTOBER 2012
A word of caution: DO NOT BUY LINKS! This is considered spam by search engines. The latest algorithm changes are looking for this and will penalize your site.
Always allow at least 90 days to start seeing page one rank and increases in organic traffic, although if done right, you should start seeing results faster. Another must for tracking your efforts is to install Google Analytics (also free) which will allow you to easily identify traffic, leads and/or sales coming from organic results on search engines. Whether you have in-house resources or are hiring an outside agency, make sure you start with the right keywords, deploy the right techniques and, most importantly, track your efforts.
Seeing Results There really is a science to deploying SEO and it starts with the steps above. But recognize that SEO does not happen overnight. Search engines have to re-crawl your site, pick up on the keywords you are trying to be found for, index your site and decide where they are going to initially rank you.
OFDEALER
Jennifer Schulman is president of Fortune Web Marketing, a full service Internet marketing agency offering consulting and managed services for search engine marketing, social media, e-mail marketing, analytics, local online marketing and other Internet marketing initiatives. Visit www.FortuneWebMarketing.com for more information.
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