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Our guest today is COO Alliance Member and COO of Timberlane, Inc, Russ Andersen.
Russ was originally the VP of Sales for Timberlane, Inc from May 2009 until September 2021, when he was promoted to COO of the company.
Prior to that, Russ was the Principal of Nolan Andersen Homes, a real estate company from 2004 until 2008. There he led the charge in purchasing single-family properties for rehab and resale as well as multi-family properties to create his rental portfolio.
Russ is motivated, experienced, and results-oriented with established success in leadership, operations, sales, and coaching.
Russ considers himself a natural servant leader, equally adept at leading from the front to teach, motivate and inspire.
Russ enjoys spending time with his Lisa, wife of 32 years, and their dogs – Myles and Gracie. He also enjoys traveling, boxing and reading.
In This Conversation We Discuss:
- How to know what your market potential is and where to shift your marketing spend
- How to know how much of a market is available for you
- How effective was direct mail in the earlier days of marketing
- How to identify your A, B, and C players in your company
- The qualities Russ looks for when hiring the A players
Resources:
Connect with Russ Andersen: LinkedIn
Timberlane – http://www.timberlane.com
Connect with Cameron: Website | LinkedIn
Get Cameron’s latest book: The Second in Command – Unleash the Power of Your COO
Subscribe to our YouTube channel – Second in Command Podcast on YouTube
Get Cameron’s online course – Invest In Your Leaders
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Our guest is a COO Alliance member and the COO of Timberlane, Russ Andersen. He was originally the VP of Sales for Timberlane from May 2009 until September 2021 when he was promoted to the COO of the company. Prior to that, Russ was the principal to Nolan Andersen Homes, a real estate company from 2004 to 2008.
There, he led the charge in purchasing single-family properties for rehab and resale as well as multifamily properties to create his rental portfolio. Russ is motivated, experienced, and results-oriented with established success in leadership, operations, sales, and coaching. Russ considers himself a natural servant leader, equally adept at leading from the front to teach motivate and inspire. He enjoys spending time with Lisa, his wife of many years, and their dogs, Miles and Gracie. He also enjoys traveling, boxing, and reading. Russ, welcome to the show.
Cameron, thanks very much for having me.
I didn’t know you were into boxing. That’s random. It’s pretty cool.
Into boxing, you’re getting beat up in two different things. It’s a way of getting rid of frustration. Once a week, I go up against younger guys and get very humbled.
Is it the fitness side of things that you’re into there?
Yes. My wife has been a fitness trainer for many years. She’s pushing 60 and she doesn’t look like anything like it. For me, being short and fat isn’t good for business. It’s somewhat reluctantly, but I know as I get older, that’s certainly going to pay off.
Tell us a little bit about Timberlane so we know the story, what the company is, and what you guys focus on, then we’ll go back into some of your skills and how you’re building it.
The CEO and Founder Rick Skidmore start it back in 1995. This was born out of an experience he had. He bought an old house in a local town. He was rehabing it and he wanted to redo the exterior window shutters. He couldn’t find a good experience so he’s going to lumber yards, ballooning supply places, and the like. He decided he was going to build his own. Luckily for him, his father worked as a machinist so they knew their way around woodworking equipment. He built his own.
From that, he decided, “I wonder if there’s a way that this would have a mass appeal.” He did something that was revolutionary and somewhat disruptive back in the late “90s, and he went direct to consumers. At that time, through magazine ads and certainly direct mailing, he created a following. He started the business from there and grew it before the recession. He built Timberlane up to about $12 million. It survived the recession where a whole lot of product manufacturers didn’t, then came out of the recession and built the business back up to what it is now. We’re striving to hit our target of $15 million.
Is it just shutters?
That’s funny because that’s what I said to Rick when I originally met him. That’s a business and it turns out it is. The core business is exterior shutters. We’ve ventured into handcrafted higher-end custom garage doors as well of late. We’re using that as a bolt-on crow strategy. Exterior shutters live well, especially in the Northeast of the country where the architecture makes sense for the type of product we built.
You do have total geographic differences as well. Do you only sell into the US markets or are you global?
We do quite a bit up in Canada. We’ll do some down in South America, and certainly, we own the Caribbean with The Bahamas-style shutters.
What areas of the Caribbean do you sell to?
Bahamas and Bermuda. We’re doing a large project on Antigua and pretty much the islands that make up the Caribbean.
Are you selling direct to the end user, retail, or the installers? Who are your contractors and customers?
At the end of the day, it truly is the end user. We will interface with a homeowner if they’re inclined to want GC to cut the entire project, and we’ll walk them through that. Ultimately, the majority of our business is made up of the trades, home builders, contractors, and renovators, but knowing that they’re serving their customers who turn the homeowner.
If Mr. and Mrs. Smith decided to go online and buy your shutters and then figure out somebody to install them, you’re a B2B or you selling to them and then they’re telling the contractor, “These are the ones we want.”
All of the above. We’ll have people that we market to that come to us, get interested in the brand, understand the value proposition, and they will either come directly to us to go through the entire process and we’ll help them with measurement, we’ll manufacture, and then we’ll even hook them up with an installer. We provide the installation, or at least we subcontract that out to get them to hit the easy button if they want to GC it on their own. We can also get them interested in the product, and then they tell their contractor, “I want Timberlane shutters,” then that contractor will call us and we’ll deal with them directly.
I remember I was in Italy and I remember sending Rick, your CEO, an email saying, “There are freaking shutters everywhere. This is shutter heaven.” He goes, “They all buy cheap shutters or something.” I’m like, “They all need to be replaced.” There’s that old story of the two guys that work for Nike and they both go over to Africa. The one guy calls back and he goes, “Put all of our marketing into Africa. Nobody is wearing shoes.” The other executive calls back and goes, “Don’t spend any money in Africa. Nobody wears shoes here.” Is that like some of these markets where they won’t spend the money and they put slap something up? Walk me through the differences.
Shutters anymore, at least within the US, have become more fashioned than function. Back in its original inception, shutters were the original storm windows. If you think about early settlers coming and at times when they built their houses out of the field zone, they didn’t even have glass for windows. They would use timbers to build shutters.
Market Potential: Early settlers built their houses out of the field zone and didn’t have glass for windows. They would use timber to build shutters.
They would build the panel-style shutters on the first floor so that they could close them and have some protection. The lured style or the sled type, as some people call them, goes on the second floor where you sleep you can close those and still have air circulation that weather won’t come in. There was a function back in early America. Certainly, in Europe, are still very much more functions than fashion. If you take a look at those Italian shutters, they’re beaten, but I’ll bet you they’re sound because the construction in the wood that they used way back then is almost everlasting.
It’s weird. Normally, we talk deeply about the product and we’ll switch gears into the operations of the business in a second, but that was something that grabbed me. I’m also a resident of Barbados. I see a bunch down there for the storm, and you’re right, it is all function. In North America, the shutters, you couldn’t even close them over the whole windows. It’s like these two little things, but they wouldn’t cover any of the window itself. In Italy, they are functional and look like they’ve been there for 80 years and well made. Why can’t you go back into those markets and replace them all? Is that not coming?
In the European market, the cost of getting products across the pond can be prohibitively expensive. They have folks that do their localized manufacturing there. If you think for the US, we’ve been at this for a couple of years. It’s a double-edged sword. Our value proposition is we only build from the finest materials. When we started, that was Western red cedar.
Since then, it’s migrated away and it’s more of the mahogany style. They’re very expensive and exotics, but they’re also extremely long-lasting and well-performing. We’ve built shutters for folks many years ago who send us pictures. We have this amazing little cult following, “Look how great my shutters look.” You go, “That was a customer. It’s A transaction.” You can’t get anything more out of them because those shutters look good.
You have to constantly find new. There’s always an old residence that’s getting turned into a museum. I’m thinking of Old Westbury on Long Island. That was a great old residence that they turned into a museum. They had 98 pairs of original shutters that were in bad shape. They brought them to us. We did take-offs. We made exact replications. That’s the kind of thing that we excel at. There’s still that around, but then as you move further West, to your point, it’s disparate. There are pockets where Eastern transplants have settled somewhere where the architecture is such that they can utilize my product, but my product doesn’t make sense on an adobe structure in New Mexico.
When we were building 1-800-GOT-JUNK then even prior to that, when I was building College Pro Painters, both of them had very different but similar in some markets like service market and contractor market. We used to go out and try to figure out what our market potential was and what our saturation point was in the market. I knew that at College Pro Painters, the most we could ever reasonably expect to do in the ZIP code would be 30% of that summer’s available house painting. If we were doing more than that, we were probably overspending on marketing. It was too hard to get that. We were only there for four months. It was too hard to get that and we weren’t charging enough.
We tried to stay around 18% to 22% of the market. It would be optimal. How do you know what your market potential is and then how do you decide where to shift your marketing spend or your sales focus? Are you getting sold out in Boston until a certain point or is it enough with new builds that are happening? Can you walk us through the thoughts and playbooks?
It’s the core of our strategy because we don’t have outbound lead gen. Our sales guys aren’t cold callers. We don’t take the white pages and call Mrs. Johnson and say, “Do you own a home? Does it have windows? Do you have shutters that are ineffective?” We create demand and interest and we get people to come to our website.
From a marketing spend perspective, for us, we target the upper end of the market. The shutter market is vast. There’s a whole lot of volume that occurs below our price point and our target audience. We’re very specific in who we target to draw interest from. It’d be the one percentage, but we have to have an average house value of over $1 million.
Market Potential: The shutter market is vast. Be very specific in who you target and draw interest from.
We have to have an average household income over a certain threshold. We have to have square footage over a certain amount and we use that in our target marketing approach to try to get the type of customers that understand that our quality and value proposition is such that you can go spend $50 on para shutters, but you can also go spend $1,500 and we’re going to tell you why. That’s how we target whom we’re going to solicit.
How do you know how much of a market is available for you? How do you know when you’re getting sold out in a market and you should shift to a new city or a new region? Are you selling everywhere as hard as you can?
It’s pedal to the metal in all markets within those filtered target audiences that I spoke to. What we try to do is we don’t necessarily have a recurring revenue model because we sell shutters of good quality so they can last. There isn’t much to do with them after that. We take a look at the product and we try to figure out how to repurpose it. We’ll do a little ninja-style marketing campaign. For instance, a few thin shutters, hinge together can make a shoji screen and a room divider for you to make a couple of designs like that, then you go out and solicit market to interior designers.
We found an interesting little niche a few years ago, outside shutter surrounds are four large louver shutter panels. We took those, marketed them to individuals that were making those types of shutter surrounds, and found a nice little niche audience. What we do is nichey, and then it runs its course based on those geographic boundaries, but overall, there’s always going to be some old structure that needs new and there’s going to be new construction that as part of the design is going to have some type of traditional accent like shutters.
Is new construction 60% or 70% of your business? Do you know roughly what your split might be?
It’s quite the opposite. One thing about new construction, everybody is familiar with the modern farmhouse design. In the old days, the old farmhouses, we love them. They were stoned, maybe with some siding on the slate roof and they utilize shutters, whether it was function or fashion depending on the time. Now the modern farmhouse is sleek with black trim and aluminum windows, and they’re not putting anything on the outside. We are fighting the fact that modern design isn’t friendly necessarily to the type of product that we manufacture.
We need to get the designs changed. Do you push on PR or that kind of marketing? Do you push for press coverage in regional, local, and even in the trades to get some of that exposure?
My CEO, Rick Skidmore, has done a series of guest spots on HGTV types of shows. We have that footage. We’ll slice and dice that, and then we’ll send out mass marketing announcements to draw people to it so they can get more awareness of the product and our company rather than a sales pitch. Thanks to you and the great content at COO Alliance. When I got back from the live event, which was fabulous, I googled building products podcasts, and I got a half dozen.
I did a form of, “Would you be interested in speaking to us? It would be all things shutters.” I gave them a list of 4 or 5 things that we could speak about. Three of them got back to me and said, “Absolutely, I’ll be interested.” I forwarded those to Rick. He is in the process of getting geared up to sit down and have those podcasts. Once we get those, we’ll get the content and use those to go out and try to promote the brand and the product.
When Brian and I built 1-800-GOT-JUNK, we spent 5% of our week, which was two hours a week, phoning the media. We did it every week for about four months, then we finally hired a full-time PR person because we realized it was working if we had somebody doing it 50 hours a week instead of Brian and I, who were supposed to be the CEO and the COO. Imagine if you spent two hours a week every week for the next 6 or 8 weeks phoning all the decorating magazines, journalists, writers, or photographers. Also, all the photographers’ names are in those trade journals and you phoned a bunch of the home and garden newspaper writers like you phone, newspaper, print, easing, magazine, online bloggers, and anything with visuals.
If you spent 5% of your week for 6 to 8 weeks phoning all those outlets, then you’re right, you understand it. Most companies don’t. Most companies think, “If I’m on that podcast, it’ll change my business.” No. Once you have that episode, you can share it five times on Facebook and LinkedIn, slice and dice it, repackage, put it up as captions and Instagram photos, etc. You guys could be onto something very big to get the press and then use that press for sure and push that out to the contractors, remodelers, and business audience that they have no idea how easy it is to get press. If all of a sudden you’re everywhere, they want to work with you.
I love that bridge activity. We did something like this, and this is maybe an interesting side note back in 2020 when the pandemic hit. We shut down for a week and we thought we were a non-essential product in the sense of the overall building. You don’t need shutters to close on a house or to sell a house. We didn’t know if anybody was going to buy a shutter again. What we did was we pivoted and based on current events at that time, the lack of PPE, we have all this amazing equipment that can cut and do pretty much everything. We had a whole lot of people that were out of work. We utilized the press and we had our people in culture specialist at the department of one, but she’s amazing.
We reach out to all the local press. We got a lot of local airtime and a little bit of regional airtime because it was 58 individuals from the unemployment line. We ran three shifts of building face shields. We created #FightForTheFrontLine then we switched to desk shields. We bought all this plexiglass. We had all this cutting equipment and mobilized the sales team. We focus on hospitals, hospital buying groups, and medical device companies then had the marketing company put together a website. That’s what kept us going through the pandemic up until the end of 2022. We were nimble enough to pivot. We were smart enough to leverage the press. We did well and it kept a whole lot of people working.
It could be intriguing to see what you guys could utilize with the press. Go back to the earlier days for me and talk to us about direct mail. What was working with direct mail and do you still use direct mail in the business or why you moved away from it if you did?
Direct mail by far was number two to magazine ad placement. If you’re old enough to remember that, there was a postcard on the back of a magazine, you grip that out, fill in the little checkbox for the advertiser that you’re interested in and then we would get those as leads. The inside sales team would then follow up on those. That was supported with direct mail. That was the go-to until the advent of the internet. The first thing that went well is direct mail.
The budget for that went down significantly because Rick saw the power of the internet and the reach that it could obtain. It’s been the internet ever since with some magazine ad placements. We’ve got a new director of marketing and this is a multi-task guy. He comes from the agency world. He is a smart guy. He believes in a tactical approach. What we’re doing is we put shutters on the house. We’re going three blocks to the left, right, behind, and ahead. We’re being very targeted. The budget is low, the message is very specific and they have something that they can go look at right in their own backyard. We’re finding that is gaining us some good interaction.
At College Pro Painters, we called that the marketing bingo. I taught everyone at 1-800-GOT-JUNK the same thing. When you do a job, you put a sign-up and then you put flyers out or door hangers out on five houses on each side of the one you’re doing and the 7 or 8 houses across the street because everybody sees you. You need to market to those people, not the whole neighborhood.
It’s amazing how our team gets lazy or they find excuses, then it’s like, “If my 42-year-old installers are too lazy to put out flyers, I only have two pals. They’re going to put a promo code on there so that they get a spiff. If we get a client, they might get $50.” Now it’s like, “I’ll put up my flyers so I might make money or I’m going to hire a sixteen-year-old kid and they’re going to drive around the city once a week and put out flyers around all the jobs that we did because a sixteen-year-old would love to have that kind of a job.
We call that the scrappy approach and it works.
There are flyers going out. What do you do? Do you direct mail them?
In pre-pandemic, we did that. Rick’s kid graduated high school. He and his friends were looking for something to do. We loaded them up with flyers and we sent them out in the four pretty historic towns around here, outside of Philadelphia, and ripe for what it is we do. They were stuffing indoors and got great traction with it.
Would you ever go back to doing any direct mail at all?
I believe the Golden Triangle or the bingo approach is suiting us. We’re focusing efforts more on the new vertical with garage doors and trying to gain a foothold and some traction in that vertical. We’re trying to use all of our digital marketing resources towards getting that launched and starting to understand the numbers there to figure out how to scale that.
Let’s slide a little bit into the operations and the factory floor a little bit. First off, how many people have you got at Timberlane?
Depending on seasonality. We get busier in the warmer months and then it cools off after Thanksgiving. We will run between 45 and 65 for our headcount.
On the factory floor, that’s got to be a tough gig. These are people that have to come to the office. They’re typically blue-collar. They’re not minimum wage though. Are you paying them well or do you have to pay them better than you used to? Where are they on the pay side of things?
That’s one thing about my CEO. He wanted to make sure that there were a lot of reasons to come here. Factory jobs become less desirable maybe for the up-and-comers. We’ve always paid well. We reset as needed across the board. We’re pretty exceptional on the pay scale.
Great Resignation is I think amazing. It’s about darn time that employees quit the crappy company jobs that they were doing and they went to go work for a great company. Are you seeing any impact of that whole Great Resignation or are you seeing people deciding to come and work with you instead of with others? Where are you guys there?
The labor market is tight. Everybody knows that. It’s certainly tight in manufacturing and in production. The Great Resignation has not infested our ranks and for people who maybe aren’t exposed to a mature manufacturing business. We’re a big wood shop. They may think hot, sweaty, dirty, dusty and the like and working on the plant floor. It has some aspects of that. In the summer months, it can get a little hot. I’d have to hands down and give it to our people and culture specialist who make sure everybody’s engaged. We have routine events that not only bring in the people that have gone or have worked remotely since the pandemic but also everybody on the factory floor and have created a culture of inclusion.
Overall, the culture of, “We want you here and we recognize that you want to be here.” The big thing are we top grade on a regular basis and have done it for so long. C-players figure out a way through our hiring process that doesn’t last long. You got to have Bs and then you have aspirational As and actual As. We do a great job of creating a growth path for them because even though we’re not scaling at the moment at lightning speed, you still have to give people a reason to come in, want to learn, and then advance themselves. We’ve been lucky, but I don’t think it’s luck. It’s the way Rick’s designed the business.
I love that you identified As, Bs, and Cs and that you need some Bs. It’s strange to me when people say things like, “We only have A players.” It’s impossible. I’ve never seen a company yet that is only A players. I’ve always said A players are racehorses, B players are the workhorse, and C players have to go to the blue factory. You need to have about 80% or 85% of your team that good, solid workhorse plowing through stuff. Good culture people are there but the A players for me are the God forbid ever quit. I’ve said it publicly, “If Meredith left, I would shut it down because it’s not worth it anymore. I’m out and peace out.” She’s my executive assistant. I’ve got a good solid team. I’m happy with them. How do you get rid of the C players, and how do you identify that you have them as well?
We have a tight 90-day onboarding process. It’s well documented and you’ve got to follow all the different steps. I’m thinking more about production than I am, like the administrator reports to the sales team. Routine, scheduled, and check-ins with your direct supervisor who then reports to the VP of manufacturing. We’re sound in our training. I say training on the shop floor because you’re learning how to use different machines, tools, and whatnot more so than the coaching aspect.
We have check-ins and tests. You have to make sure that you can pass the test in order to get certified on a machine to utilize it and work your way through the process. People self-select pretty easily if they can gain the hiring process, say all the right things and act in a certain way, can recite our core values, and say that they live by them.
We find out within the first 30 days the true nature of the person comes out. Once it does, we have great steps 1 and 2, and you checked yourself out the door. I’ve never had an issue with holding on to seize on the plant floor. Sales guys are the same thing. I’ve been at this for a long time. You can sniff out the people that want it, want to work hard for it, and don’t allow excuses to get in their way versus someone who tells you that they’ve been to three different places.
I’m all about moving around for variety, but when you come to me with a resume that your last sales stop, you raised the territory and volume by 113%, but you were there for 5 months, did the territory not have any sales and you sold three? Walk me through that. We’re pretty strict on the front end and we look for people that are hungry. We’ll coach and train them in the sales process. I hope that answered your question.
I also love the fact that you are screening the resume carefully. I don’t understand why some leaders have never been properly trained in interviewing. It’s one of the twelve modules in my Invest In Your Leaders course because I think that every manager is doing interviews and most people don’t know how to do them. You mentioned one of the basics which is screening the resume and noticing on the resume their little hops.
Market Potential: Every manager is doing interviews, but most people don’t know how to do them.
I would never hire anybody who goes from job to job three times in the last two years because I know they’re going to be leaving me. Even if they are the younger Gen Y, I still want somebody who is a little bit more loyal and sticks with it. What do you look for in the interviews? Let’s go into the two sides of the business. Let’s call it the front stage and the backstage. On the sales, marketing, and op side, what do you look for generally? What do you look for on that shop floor side and the backstage people?
I’m blessed in the sense that I’ve got a VP of manufacturing that handles, for the most part, the majority of that. He is a seasoned guy. We’re wired very much the same. We have the same DISC and Enneagram profile. He and I are very much alike. We’ve built a relationship of trust that if he says it is, then it is and I feel great about that. To be able to leverage that and not have to be into the day-to-day hiring aspect of that is ideal. I can speak more to the front end because I came up through sales. I’ve been a sales guy my whole life. I came to Timberlane through sales and grew a sales team that we still have the majority of the people here to this day.
Sometimes people hear that and go, “Old wood tired iron.” You get people that are used to something that workhorse mentality. In an inside sales environment where lead gen is through marketing and we’re very consultative, you got to strap in and have some long conversations to get somebody across the finish line. Having somebody that understands, is willing to do that, seeks enjoyment out of that, and then is compensated well for that makes it easy. We do have some new hires. Maybe we’re blessed or I have a good eye for talent. As I migrated into this second-in-command role, I assumed a lot of the duties when I still had the VP title became formalized.
I had one guy that had been with us for a year. The old adage that your best sales guy doesn’t necessarily make a good sales manager. I lucked out he did because I watched how he took his territory and ran a mini business. This guy did not let anything come at him. He was well prepared for every day. He wasn’t reactive. Through coaching and some training was able to get him up to the level where now he’s responsible for the new employees coming in from the sales end. I’d like to have a quick cursory conversation to get a feel for somebody because there are a lot of measurements in interview techniques that you can deploy. Victor, my sales ops manager, is great at it, but I’m a guy that likes to look in the eye and ask you some lighthearted, but serious questions.
I also believe in a firm handshake. If you ask somebody, “Where are you in five years?” If somebody tells me that they want to be here at Timberlane, it’s like, “You got to have bigger aspirations. Talk to me. Work with me.” Something as simple as, “Tell me something about you that I’m not going to find on this resume.” If they turn around and start reciting things on the resume, that appears you don’t listen. That’s how I view it. It’s those quick little hits that I get a vibe. Ultimately, Victor will have the majority of the weight and the decision. I’m blessed to have a guy that can do that. I’m on the soft skills. Everything else can be coached and trained.
What’s nice about what you’re talking about is you’re getting the emotional commitment from people, but you’re also raising the bar at the interview stage. The A players love that. The B players are a little nervous, but they want that. The C players run away and hide and they won’t join you anyway. You’re screaming out the wheat from the chaff real quickly, which people are scared to do. Most interviewers spend far too much time selling.
At our COO Alliance event, we had Roland Frasier speak from the war room. He was talking about some of the economics of marketing, some of the numbers side of things related to the pricing and increasing our gross margins in times of inflation. Can you walk us through some of the changes that you’ve had to make at Timberlane during this last period when we’ve seen wood prices go through the roof up 35% to 40% in Canada coming down from global? We’ve seen shipping costs go up. We’ve seen labor costs, material costs and inflation going crazy. What have you guys done on the pricing and on the gross margin side of things?
I love Roland’s presentation. Five percent decrease in your price and you’ve got to raise sales 33% if you’re at a 20% margin. When I heard that, I had to come back and do the math. I’m like, “He’s right.” Cutting prices is not the way to go. It’s certainly the way to volume, but there’s no guarantee. You’re going to make that 33% up and buy it. For us, it’s been difficult. We used to employ a strategy of maintaining pricing because of being at the upper end of the shutter market with regards to price. Every time we would raise a price, we’d basically bring the floor closer to the ceiling because everybody that could afford us and understood the value proposition would buy regardless.
Nobody was not buying from Timberlane because we weren’t expensive enough. We were able to get all those folks, but each time we had any type of incremental price increase, we’d take a volume hit because some of those aspirational buyers were kicked out of the market. We decided to get away from that type of process and then simply move in lockstep with what’s our margin target.
With each incurring price increase, how does that affect the overall cost, and then bake in our margin and adjust the price accordingly? What we’ll do is we’ll advertise that. You’ve got a finite period of time to close at your old price because we still have inventory that was purchased at a lesser price. We feel okay about that, and then we have a hard cutoff. For everybody that doesn’t move, we reprice, go out and try to reengage.
Our goal is serving margin. We’re seeing certainly in the building product space because to your point, everything is through the roof and going up by the week. People understand it and we’re finding that we’re getting much better engagement with people and we have to explain 2%, 3% or 4% increase in the overall dollars of their order compared to the contractor. Remember, I’ve held my pricing for 2022 when everybody else has gone up. Now I have to hit you with 15%. The contractor doesn’t want any of that. We’ve passed it along as it’s coming to us and we’re having much better engagement with
That’s smart. I love that approach to it as well. I’m glad you pointed out one of Roland’s tips. That 5% deduction means you have to race with 33%. I’m like, “What? That’s a lot.” We completely missed that stuff. I want to go into the last couple of questions. You mentioned the culture person that you have and somebody focusing on the culture within the organization. What specifically are you doing? If you gave us some tactical things to make it a better workplace for the shop floor people or the people that are there grinding it out backstage.
It is two halves. Those folks roll in at 6:00 and leave at 3:00. Admin and/or sales and finance roll in at 8:30 and leave at 5:00. This is a testament to the CEO. We have a happy hour once a month and that faded with COVID, but it’s coming back. We have a beer keg and guys from the shop floor can come in. People that are on the 5:00 can certainly stop, come in and have a beer. As a matter of fact, it’s encouraged. She makes sure that that’s well attended and that people are interacting.
We are real big on what we call core value cards. We have five core values. We have integrity, energy, team, growth, and transparency. Each one of those has a little tagline and she’s constantly reminding and encouraging everybody, “You see an act of integrity. You see somebody displaying good energy. All these cards that have different core values on them are hanging on a board underneath everybody’s picture in the employee hub. You’re encouraged to grab that, put your name on it, and the date real quick, what did you see, and then quick signature.”
What we do with those is every quarter when we have our quarterly recap meeting that Rick gives, we meet in the hub. Brandy is her name. She grabs all the core value cards, and the person that receives the most gets a free spin of the gift wheel. We have Amazon gift cards and Yeti coolers. There’s even some PTO time for people which they value. It encourages people to act according to our core values, and then to report it when they see something like that. I don’t know if I’d say you’d be surprised, people want to win to spin that wheel so there is great participation in that. That was her brain trust to figure out how to make that interactive and then continue to support it. It’s been important for us in this labor market to retain our talent.
I love that you’re gamifying it a little bit. I love that the focus on those employees. I love that you’re doing it frequently. I also love that you are clearly communicating, talking about it, and celebrating the core values from the shop floor up versus management always talking about it when you percolate it from the bottom. It’s powerful. I want to go back to the 22-year-old Russ Andersen. You’re embarking on your business career. You’re going to give yourself some advice. What advice would you give yourself that maybe you know to be true now but you didn’t know back then?
In 22, you’re invincible. It would be, “Get comfortable without being the smartest guy in the room,” because at 22, all you did was run your mouth to try to impress people that you were the smartest. You never were. Certainly, being elevated to this role and attending live events at COO Alliance, even the once-a-month over Zoom. A lot of smart people know a hell of a lot more than I do, and I can learn from them. If I’d had employed that tactic at 22 who knows where I’d be now? You got to be open, be a sponge, and be vulnerable to understand what you don’t know and then go seek knowledge to know it better.
I love that you’re seeing that as well. I shouldn’t say you’re certainly not the smartest person in the room. We have a great room at the COO Alliance, but you have raised the bar by joining the group. I’m not the smartest one in the room either. It’s a pleasure to have you as a member and to get to know you as a friend. I’m looking forward to seeing you. Thanks for sharing with us.
I appreciate it. Have yourself a great day.
