Creating Long Term Success by Differentiating Your Firm

Chris Ramey Stairbuilders and Manufacturers association April 25, 2018 Santa Fe, New Mexico USA “Differentiation is one of the most important strategic and tactical activities in which clients must constantly engage. It is not discretionary. And everything can be differentiated, even so called ‘commodities’ such as cement, copper, wheat, etc.”

Ted Levitt Harvard Professor Considered one of the ‘Fathers of Marketing’ What do Blockbuster, Sear’s, Borders & thousands of other business have in common?

They failed to recognize the future.

Major Influences

. Technology . Poverty . Terrorism . Economy . Demographics . Consumer trends . Online purchasing . Standards of living . Healthcare . . Politics . Renewable resources Unemployment . . Growth of Asia . Capacity for credit Home affordability . . Design trends Remote customers . Divided government . . Demise of bricks & Consumer confidence . Unemployment mortar . Inflation . Excess real estate . etc.

Spending by Age of Head of Household

$50K

$40K

$30K

$20K

$10K

$ 0K < 25 25-34 35-44 45-54 55-64 65 +

Henry Dent “The Roaring 2000 Investor” Shifts in population

“In the years to come, millions of people, thousands of businesses, and tens of billions of dollars of net income will flee high-tax blue states for low-tax red states.” Wall Street Journal April 24, 2018 Shifts in population

Usually occurs when someone outside the category rethinks the category.

With stairs, it’s a battle for the attention of the consumer. Creating Long Term Success by Differentiating

I. Your brand is sacred Your brand is the sum of every touchpoint; everything you, and everyone in your company does and creates. We’re going to lose to brands: • Kitchen appliances • Washers and dryers • Mattresses • Decorative plumbing/bath • Passion products (jewelry, cars, art, apparel, etc.) Creating Long Term Success by Differentiating

I. Your brand is sacred II. The past doesn’t reflect the future

The luxury market grew 14% in 2015*

‘Designer Furniture’ lags most categories.

* Inserted slide is from Bain & Company ‘High-Quality Design’ lags most categories.

* Inserted slide is from Bain & Company ‘High-Quality Design’ continues to lose share of luxury dollars.

* Inserted slide is from Bain & Company 1. Travel hospitality $45b 19.2% 2. Automobiles $40b 17.0% 3. Art $25b 10.3% Passion products 4. Jewelry Watches $25b 10.3% and objects 5. Private aviation $23b 9.8% 6. Yachts $22b 9.4% 7. Apparel $15b 6.4% 8. Accessories $12b 5.1% 9. Home $ 8b 3.4% Insignificant 10.Wine / Spirits $ 8b 3.4% 11.Food $ 7b 3.0% Bought often 12.Beauty $ 4b 1.7% Total spend $234b

You don’t sell to the affluent They choose to buy from you. The only thing certain is products for the home are diminishing in importance as they’re neither passion products, recognized brands or bought often. We are ‘bottom of mind’ businesses. Competitive advantage is increasingly based on an organization’s ability to change. What makes you better/unique/innovative over than any competitor? 1. Service 2. Quality 3. Selection 4. Price The most grievously overused terms in business That’s what everybody says... What do you have that is unique, distinct and special that I can’t get anywhere else? Who cares about another ‘me too.’ That’s what everybody says... What do you have that is unique, distinct and special that I can’t get anywhere else? Who cares about another ‘me too.’ Hyper competitive environment Successful brands are… “changing the rules of the game to embrace the new values of the customer.”

Claudia D’Arpizio Partner Bain & Company Creating Long Term Success by Differentiating

I. Your brand is sacred II. The past doesn’t reflect the future III. Identify and communicate your USP/DNA/POV

‘Hamlet’ Act IV, Scene III Two choices in business: 1. Own and market your unique DNA 2. Be a commodity “Instilling DNA is essential to brand sustenance.” Luxury Daily February 11, 2014 Every touchpoint is an opportunity to differentiate/demonstrate your DNA.

If you only do whatever the client wants then they need hire only a handyman. What do these individuals have in common?

• Kelly Hoppen • ZZ Top • Dolly Parton • Karl Lagerfeld • The Beatles • Moe Howard My Way

Recorded by • Paul Anka • Samantha Jones • David Bowie • Shane MacGowan (The • Herman Brood Pogues) • Mika Nakashima • Gabriel Byrne • Mina • Jay Z • Oscar the Grouch • Jon Bon Jovi • Elvis Presley • Julio Inglesias • Frank Sinatra • Sid Vicious (Sex Pistols) Creating Long Term Success by Differentiating

I. Your brand is sacred II. The past doesn’t reflect the future III. Identify and promote your USP/DNA/POV IV. Be a marketer Anonymity is a poor strategy. "Because the purpose of business is to create a customer, the business enterprise has two - and only two - basic functions: marketing and innovation.

Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Peter Drucker The Practice of Management

In a competitive market, the best marketer always wins. In a competitive market, the best marketer always wins.

Stairbuilders and manufacturers are not excluded from market forces. “Shifted from a society of many long-term loyalties to a society of transactional relationships and ephemeral contacts.”

Timothy Keiningham Lerzan Aksoy

əˈfem(ə)rəl/ Lasting a short time. Creating Long Term Success by Differentiating

I. Your brand is sacred II. The past doesn’t reflect the future III. Identify and promote your USP/DNA/POV IV. Be a marketer V. Serve design professionals; you need each other You don’t sell to design professionals They choose to buy from you. Architects and Interior Designers provide value by being experts in their category: . Selling or specifying your brand . Acting as your brand Apostle . Increasing your sales and profitability . Stakeholder in your business Considerations

• The most important brand in your life/showroom is your Interior Designer’s brands and your Architect’s brands. • You curate to their needs. Each profession brings different responsibilities, perspectives and challenges. What creative people are really good at:

1.Observation 7.Creating narratives 2.Framing problems 8.Envisioning unseen opportunities 3.Prototyping solutions 9.Casting visions of future. 4.Working with imperfect data 10.Synthesizing information 5.Focusing on people 11.Systems thinking 6.Caring about details 12.Abductive (logical) thinking

‘Business Needs Design Now’ by Stephen Anderson I’m going to create the most amazing home and stairs ever designed. And I’m going to protect my client to ensure they get a good value.

An architect is a person who plans, designs, and oversees the construction of buildings. To practice architecture means to provide services in connection with the design and construction of buildings and the Architects space within the site surrounding the buildings, that have as their principal purpose human occupancy or use. The budget is tight. My subs are great, but the client hated the decorative plumbing. Back to the drawing table. I better go to ….

An Interior Designer must comply with state and local building codes, including building and energy codes, indoor air quality and the Americans with Disabilities Act requirements, among other health and safety issues.

Interior designers are trained to work in a specific element of the built environment — the interior space within the building envelope — and have accrued years of education, training and experience to become experts in interiors. Unlike many architects, interior design students take classes in anthropometrics, schematic interior design, furnishings and finishes, lighting and many other courses specific to interior Interior design. Designers Are tested to ensure and affirm specific knowledge, skills and abilities. What do Interior Designers provide for consumers?

According to ASID, an interior designer provides real value by: • Saving you time • Sharing sources and resources • Answering your questions

ASID website What are their credentials?

Architects: 5 year degrees; Explorer 20%, Engineer 60%, Creative 20%

Interior Designers: Educated; Explorer 30%, Engineer 20%, Creative 50%

How do they make money?

Architects:

Interior Designers: What do they need from you?

Specific information, bandwidth, fast answers, samples, images, communication skills, ideas to make them look great, etc.

Quick, fast and to the point Raison d'être 1. Good Service is cost of entry 2. Measurable superior quality 3. Expanded Brilliance & perspective 4. Price doesn’t matter as much because nobody does what I do. Commonalities?

Resourceful team Your firm’s strengths/traits

Architects:

Interior Designers: Know and empathize their plight Architects & Interior Designers

• Hyper-competitive market filled with poseurs • Profits are squeezed • Starved for time • Legislative battles • Consumers are less inclined to commission design professionals Architects & Interior Designers

Join their tribe(s) Organizations

• ASID – American Society of Interior Designers • IIDA – International Interior Design Association • IDS – Interior Design Society • Preservations Society • Institute of Classic Architecture and Art • Etc. Architects & Interior Designers

Intellectual resource What do you know that mitigates risk? What do you know that mitigates risk? • Expertise on product is expected • What can you bring to the table? • Clients & contacts • Broader understanding of the stair market • Broader understanding of marketplace • Broader understanding of affluent consumers • How can you help them grow revenues? • Product limitations • ROC Know their business model

• You must know how they price their products • Pricing business model • How can you make them more profitable? • How can you become so invaluable they can’t live without you? Build a relationship that is not dependent upon money. Tactics

• Stay in touch. Ping often. • Have a reason for every conversation. • Ask questions • Fascinate with industry images • Position yourself as the expert Time is currency Make Architects and Interior Designers a part of your team & showroom

• Vignettes • Credit on photography

Make Architects and Interior Designers a part of your team & showroom

• Question: • What have you seen that you liked? • Is this rail attractive to you? • People generally like to help others • People ‘buy-into’ things they help create • Creatives/design professionals generally like ‘concept-stage’ conversations • Find ways to meet your other clients and influencers: • Be their market connector Serve them. Never assume familiarity or think they’re your buddy Architects and Interior Designers deserved to be served. “I buy people; I can get product anywhere” Design professionals deserve and require extraordinary service

“I need a fast response, professional follow through with a sense of urgency. Where are you? 14 points to remember when serving design professionals

1. Communicate 7. Be empathetic 2. Know their vision. Be an interviewer. 8. Support their tribe 3. Specific information fast 9. Intellectual resource 4. Respect their credentials 10. Know how they define ‘value.’ 5. Ask what they need. Ask how they’d 11. Be their master resource like it ‘delivered.’ 12. Publicly promote your Architects 6. Manage your team; and Interior a) put the right players in the right 13. Treat designers professionals seats. as if they’re on your team too. b) play to your own strengths and 14. Serve, Spontaneity and weaknesses. Gratitude. Creating Long Term Success by Differentiating

The Affluent

. 84% Describe themselves as middle-class . 72% Don’t feel like they have a lot of money

Harrison Group The Affluent

. Have been affluent for less than 25 years . 61% still on the front lines of business . Expect you to work hard (that’s how they got there). . 70% of their children attended public school

Harrison Group

Unity Marketing & American Affluence Research Center 57.8% <$500,000

Unity MarketingUnity 14.5% & AmericanMarketing &Affluence American >$1m ResearchAffluence ResearchCenter Center “The one commonality amongst the affluent is they are aggressive savers of money.”

Ron Kurtz American Affluence Research Center Affluent ‘Baby Boomers’ versus their affluent children who’ve become adults and are buying homes.

Harrison Group Affluent ‘New Aristocracy’

. 25-49 years old . 77% Lifetime of exposure to luxury and wealth . Want larger homes . What used to be luxury is now ‘how they live.’

YouGov (formerly Harrison Group)

Creating Long Term Success by Differentiating

I. Your brand is sacred II. The past doesn’t reflect the future III. Identify and promote your USP/DNA/POV IV. Be a marketer V. Serve design professionals; you need each other VI. Never prejudge a consumer VII. Raise your margins To thrive we must forget everything we believe to be true about pricing. What is price?

. Competition . Cost . Your monthly expenses . How much effort you put into it . The sum of its parts What is price?

Price = Value to buyer

The amount of money that a buyer is willing to give you for the product you’re selling. Consumers inherently believe the higher the price, the better the product must be.

And vice versa.

Price is determined by the ‘environment’ (person, place, etc) in which it’s sold Situation One Situation 1 – January 16, you’re driving in Boston after a long day and need to stop for gas at a 7-Eleven.

Your friend/passenger asks if you want a Stella Artois. You say “YES, if it’s not too expensive.”

What is the most you will pay for a bottle of Stella Artois at 7 Eleven in winter in Boston? Situation Two Situation 2 – July 22, you’re in Orlando, at 2:30pm behind the convention hotel, next to Denny’s with Outback next door.

Your friend asks if you want a Stella Artois. You say “YES, if it’s not too expensive.”

What is the most you will pay for a bottle of Stella Artois during the summer in Orlando? Situation Three

Situation 3 – January 21, you’re on the beautiful Nevis beach, at 1:30pm directly behind your Four Seasons Resort.

A gorgeous tanned beach concierge approaches and asks: Situation Three

Situation 3 – January 21, you’re on the beautiful Nevis beach, at 1:30pm directly behind your Four Seasons Resort.

A gorgeous tanned beach concierge approaches and asks “May I please bring you an ice cold bottle of Stella Artois?” You say “YES, please.”

What is the most you will pay for a bottle of Stella Artois at Four Seasons in Nevis? Do you think Four Seasons Hotel paid appreciably more for their bottle of Stella Artois? Creating Long Term Success by Differentiating

I. Brand your stairs

Differentiating your brand

I. Brand your stairs II. Personify with wife, child, dog, etc Differentiating your brand

I. Brand your stairs II. Personify III. Create a generic brand or change your name Marriott’s hierarchy of brands Differentiating your brand

I. Brand your stairs II. Personify III. Create a generic brand or change your name IV. Reposition stairs But, the stairs define the home. Differentiating your brand

I. Brand your stairs II. Personify III. Create a generic brand or change your name IV. Reposition stairs V. Reinvent USP / know the code The Culture Code

In each product resides a sort of a cultural unconscious, which is hidden even from our own understanding, but is seen in our actions in where we invest.

The Culture Code Clotaire Rapaille Author Differentiating your brand

I. Identify your brands as part of everything you do. II. Personify III. Create a generic brand or change your name IV. Reposition stairs V. Reinvent USP VI. Improve, upgrade and innovate

Differentiating your brand

I. Brand your stairs II. Personify III. Create a generic brand or change your name IV. Reposition stairs V. Reinvent USP – what do stairs really do? Clotaire Rapaille’s code VI. Improve, upgrade and innovate “You can differentiate anything.” “There is no reason for any company to get stuck in the commodity trap, forever confined to competing totally on price along”

Jack Trout Author Marketing Guru Creating Long Term Success by Differentiating

I. Your brands are sacred II. The past doesn’t reflect the future III. Identify and promote your USP/DNA/POV IV. Be a marketer V. Serve design professionals; you need each other VI. Never prejudge a consumer VII. Raise your margins VIII.Differentiate I. Identify/brand everything II. Personify your brand III. Revisit current brands-reposition IV. Reinvent your USP V. Improve, innovate and upgrade www.thehometrust.com/sma

Christopher P. Ramey Affluent Insights / The Home Trust International

561.876.8077 / [email protected] www.AffluentInsights.com / www.thehometrust.com

401 South County Road, #2754 Palm Beach, Florida 33480 USA

This presentation is the property of Affluent Insights and Christopher P. Ramey. Any unauthorized copying, disclosure, use or distribution is strictly prohibited without the express written consent of Mr. Ramey. For more information please contact Chris Ramey at 561.876.8077 or [email protected].