Suppose your little decorative concrete flooring business suddenly could make deals as if it were a coast-to-coast firm?
That’s the principle behind buying groups, which exist in many industries. Carpet stores have Carpet One Floor & Home. Commercial flooring contractors have Fuse Alliance and Starnet. Restaurants, plumbers, furniture stores and many other retail businesses can join buying groups, enjoying rebates, discounts and marketing assistance.
This year, Decorative Surface Solutions Group became the first buying group for the decorative concrete and flooring industries. Curt Thompson, a flooring industry executive, and Mike Price and Jonathan Vasquez, of Bay Area Concretes, introduced DSSG in January and rolled it out at World of Concrete in February.
Instead of offering a discount directly to in-network contractors, suppliers will provide a rebate — typically a low percentage of sales, Price says, depending on the margin of each product — to DSSG. DSSG will take some of the rebate for its own costs and then pass along the rest to contractors based on their purchase volume.
Suppliers will be able to afford the rebates because they’re getting access to the cream of the industry’s customers. “Manufacturers are not always so happy about offering discounts,” Price says. “But the DSSG member is best in class. [The supplier will think] ‘We have less callbacks, we have less sales issues with our products that are being contracted and put down. So we don’t have to expend any more dollars to market through this channel other than our rebates.’”
One supplier’s take
One of the suppliers that joined DSSG early on is Ardex Americas, which manufactures supplies for substrate preparation, flooring installation and concrete restoration and repair. The company already participates in buying groups for the commercial and residential flooring industry, such as Fuse Alliance and Starnet. But it welcomed the opportunity to network specifically with decorative contractors, especially contractors vetted for good performance by DSSG.
“This is a pretty unique organization,” says Bob Dalton, director of customer operations and commercial excellence at Ardex Americas. “They’re very focused on the decorative contractors and vendors. The other buying groups will do some of that, but not with the same focus that DSSG has.
“The big advantage it provides for us is we provide a topical, leveling layer to get a uniform look from project to project, and unless you have a really educated installation group, there are a lot of problems that can happen,” Dalton says.
“Managing the difference between expectations and results for designers and architects, it’s critical that you have a well-trained, knowledgeable, good-understanding group of contractors that know how to do this type of installation. If you don’t, you’re opening yourself up to problems. If the customers are unhappy, they’re not going to buy that type of floor again.”
Buying options abound
Price says the network will include multiple suppliers for each product. “No contractor wants to be shoved in a box and told this is the manufacturer you’re buying from 100 percent of the time, and this is what you’re going to say and this is how you’re going to sell it,” he says.
“These guys are entrepreneurs. They don’t want anyone telling them how to run their business. What they want is an opportunity to join a group like DSSG that has multiple channels for each product that they may want to install.”
In addition to suppliers of tools and materials, DSSG is negotiating with financing and insurance companies, vehicle manufacturers and wireless service providers. As time goes by, DSSG may roll out additional services, such as conferences and dashboard software for purchasing, that members would pay for.
Size doesn’t matter
The network will include contractors of all sizes. “There’s no minimum size that a business has to be on the contractor side,” Price says. “All contractors are treated equally, whether they are a $300 million annual concrete company or a $2 million annual polished concrete company.”
Decorative concrete professionals, polishing contractors and flooring contractors will be invited into the network. “We decided, let’s bring everybody together,” Price says. “We’re going to teach everybody within the network how to work with each other, so the polished concrete guy in San Francisco can work with the flooring guy in San Francisco. We’ll create a partnership if you will, bring down the cost of doing business together, and go into the market as one entity where you control the project.”
Contractors will pay a flat, one-time fee for admission to the network, regardless of their sales volume. Suppliers and manufacturers will pay an annual fee based on their revenue.
Sold on the idea? Well, you’ll have to wait for DSSG to call you. Contractors will be admitted to the network on the referral of suppliers and other contractors. But DSSG will be happy to review contractors’ own requests to join DSSG, Price says.
“They have to be vetted by our board of directors here at DSSG as a best-in-class business enterprise. They have to be best-in-class people-wise, too. We’re not just bringing anybody onto the network,” Price says.
“Think of maybe a country club or an exclusive group where everyone has to be of similar mindset in that they want to be the best that they can be. They’re going to use the best products available on the market. They’re not going to cut corners. They have an excellent contractor reputation,” Price says. “So with each and every person we bring on board, the process isn’t as easy as just saying in advertising, ‘Hey, want to be a DSSG member?’
“We want to keep it an elite group of partners, and that doesn’t mean we’re the highest price points in the market. It just means we’re the best, we’re good people, because part of this success of this formula is the ability to have the flooring guy work together with the concrete guy in a market and trust each other.”
Steve Bulach of Bulach Custom Rock is one of the first contractors DSSG invited to join this winter. For him, the idea of being part of a network of trusted contractors was appealing. Bulach compares joining the network to his association with other groups, such as the American Society of Concrete Contractors and the Decorative Concrete Institute. “We do quite a bit of traveling in our work, and it’s good to know other contractors in other cities to help out with labor and equipment when we get work out of town,” he says.
Bulach says he’s been looking over the price lists he’s received from in-network suppliers and is planning to experiment with some new diamonds for polishing. He says he hasn’t really explored all the possibilities because he’s in the height of his short Minnesota construction season.
In fact, one of the things that intrigues Bulach about DSSG is the potential for extending his season with interior floor work. “We’re a seasonal business, and we think of pouring concrete,” he says. “But there are millions of square feet of concrete floors out there that need repair work.”
When his business slows down later this year, Bulach plans to incorporate his DSSG association into his branding — for example, in the monthly project profile he mails to architects.
“You’ve got to get creative and think outside the box here,” he says. “Working with other associations for 30 years, just knowing the power of good contractors working together is exciting.
“Relationships are huge,” he concludes. “And trusting people.”