Kamikaze Trading

I read a brilliant article in the latest GGP Magazine about what Danny Williams calls 'Kamikaze trading'. He explains the frustration and stupidity of sub-selling very well:


The double glazing industry is not sophisticated. In fact, that is one of its charms. It is, in many ways, an 'Essex' industry, full of characters who, like me it must be said, have made their relative fortunes based upon the purest of human instincts - a desire for beautiful women, expensive cars, Rolex watches, big foreign homes and an insatiable need for cash to fund them all.


All joking aside (!) whilst the industry may have had its fair share of fast-buck cowboys in its heyday, what is left are people whom, I sincerely believe are in the main, serious about their business and who want to do well in an ever tougher market. No one is in it for the quick cash these days, because there ain't no such thing anymore.


What remains however, is a tendency to slash prices at the merest sign of resistance from a potential buyer, if indeed any attempt was made to offer a reasonable and well calculated price in the first place. It happens at all levels, not just the one man band, sticking in a house full a week to pay the mortgage, feed the family and buy his Friday night beer. The hackneyed 80% off for a decision now close remains of course, a bastion of the big national retailers who also appear to be unable to drag themselves out of the 'Seventies rut that passes for sales 'technique'.


The upshot is that with prices remaining at an all time low in the present market, the number of companies at every level of the market making any sort of money is now also at its lowest. With each recession or even the merest market dip, those happy to sub-sell even in those rare times when home owner are happy to splash their cash, are succeeding in eroding prices to the point at which wholesale bankruptcies are inevitable. According to some figures I saw recently, more than 2000 double glazing companies went pop last year, a figure that would warm my heart usually on the basis that most of them were cowboys. But we know that most of them re-emerged the next day under a different moniker to carry on just as before. it's like Groundhog day.


I know I am repeating what many before me have uttered and I am preaching to the converted; but the editor invited me to offer my opinions and so I will do just that. We just don't seem to learn, as an industry, with sub-selling rife at all levels. The fundamental principles of cost and margin calculations are ignored, with an eye only on getting the sale at any cost. Most white van man operations will know simple what their trade supplier is quoting and they will stick a few hundred quid on the price, often not enough to cover their basic overheads. I expect it will always be that way at that level.


What worries me however, is that so many window fabricators are also supporting this downward spiral of slashing costs without doing the most basic maths. I run a lean operation, buy well and constantly examine costs. So how can so many window makers sell at prices that barely cover the component and labour content of their products? It's like sailing towards an iceberg in the fog because they didn't buy a radar.


The key word in the fight against sub-selling is 'value', the mental estimation a consumer makes of the product or service they are considering. Make the buyer believe that they are receiving far more for their money than from any other supplier and the sale will be made. This is also supported by better products, service and support, with communication of all of those factors a key to it all - communicate to the customer through superb brochures, a website and direct communications and the rest will drop into place. Just don't give it away!


I know that I am voicing a complaint that has become perennial, one that is reeled out every time there is a dip in the market. The biggest offenders will bite the dust and, you may say, good riddance to them. But the damage that they wreak throughout is irreparable. Prices - and therefore margins - will never recover as a new line is drawn in the sand. Our principle suppliers must accept their part - their responsibilities in this, by refusing to re-supply the repeat offenders, the serial phoenixers and by intelligently supporting those manufacturers that strive to maintain and improve standards - and margins.


Only then will we be able to re-invest in the wider economy with the lavish spending that otherwise would be the other typifying characteristic of double glazing man; or at the very least, allows us to run businesses on a sound, intelligent footing.


Danny Williams describes this inherent problem perfectly. There is nothing worse than losing a job to another company which has so blatantly sub-sold the contract. We come up against it every week. But we do as Danny Williams described; promote our products and services to the point where the customer knows what were are providing is far better than others, and then back this up with clear communication and provide good literature and a good website. We win most orders, even though other companies so obviously under-cut. It is however still very frustrating when we lose one to a company which sub-sells and damages their own business in doing so.


I now want to pose a challenge: if anyone is reading this and knowingly sub-sells, I urge you to respond to this post to defend what you do and justify it. There is obviously a reason as to why companies do this, and we would like to hear why you think this is good business sense.


You can find this article on page 74 of the latest GGP Magazine.