Lumber Association of Southern California

WAYNE GARDNER executive vice president

AN JUNE 5. 6 and 7, the Second V Growth, LASC's 40 and under group, met at the Rancho Bernardo Inn, San Diego, for their I I th Annual Weekend.

The over 100 PeoPle attending included members and meaningful associates. What a great group of people. It can truly be said that every face had a smile on it and everyone enjoyed themselves about l10o/0.

The programming was verY good with Michael Broome talking on Saturday morning about communication, stress management and how to live successfully. One of his tape presentations is "How io Be A Liver of Life and Not a Gall Bladder." This gentleman certainly lives life and his enthusiasm for it comes forth in his message, stimulating all who want to enjoy life in the same way. Maybe he was the reason for all the smiles' because he really made you feel good about yourself and your life.

Sunday morning the speaker was Bill Haynor with Great America in San Diego. Bill's outlook on housing starts andlnterest rates for Southern California painted a pleasant picture for the success of the lumber and building material business over the next couple of years.

Bill Jones and other officers, Mike Prediger, Drew Sasser and John Allen' put the program together. In addition they do four dinner meetings each year. In some industries it would be truly a miracle to get competitors working together for the benefit of competitors. But you see it within the association in this industry and that's what makes it so great.

People are alwaYs amazed, those who are not lumber oriented to find the family orientation that exists. The Second Growth group has fifth generation people participating. I feel extremely fortu- nate to be able to know so many of those families.

Participation in Second Growth is strong, but it could be stronger. Its strength now portends a strong associa' tion for years to come. For those of you who have good people 40 Years of age and younger, I would encourage you to involve them in Second Growth. There were a number of "first timers" at Rancho Bernardo, and theY all went home feeling great about attending' They will be back and they will encourage others to come along as well. It's time and money well spent in assisting your employees gain a better knowledge of the industry. Try it - you'll be very pleased with the results.

As lar as lines go, no one can top th^e Andersen@ brlnd ofwindows, roof windows and gliding Patio doors. Because Andersen is the best-known name among window brandsthe one that ovei the Years millions of homeowners have counted on for toP quality. But even with the greatest line and your own good business sense goin-g for you, you simply can't go i-t itonE to keep sales going up. As afullse rv ice stockin g A nde rse n distribut o r, t hat' s whe re Catroll Moulding ComPanY comes tn' Besidei supplying all the Andersen units you need (in varying styles' sizes and glazings) we help keep you up-todate on product developments set up consumer and window replacement itinics solve service problems. And

GARY L. SMITH executive vice president

I nenO a very thought provoking arti- I cle in a local newspaper recently that I thought I might share in part with you. It was written by a Bay Area author and founder o[several Palo Alto companies, Tom Peters.

When the Federal Express courier comes to my oflice reception area, she is greeted by Annah Salas. When she looks at Annah, she should see $ I 80,000 stamped on her forehead.

My little 20-person firm runs about a $1,500-a-month Fed Ex bill. Over l0 years, that will total $180,000. I find this simple device, calculating the lO-year (or, alternatively, lifetime) value of a customer, to be very powerful. It has profoundly altered my own thinking.

Stew Leonard, the erstwhile Norwalk, Ct., grocer, got me started on this. He says, "When I see a frown on a customer's face, I see $50,000 about to walk out the door." His good customers buy about $100 worth of groceries a week, Over l0 years, that adds up to roughly $50,000. We all agree that repeat trade is the key to business success; this quantifying procedure provides a way to add potency to the idea.

Here are two other examples. Average lifetime auto purchases will total about $150,000, not including repair work. Given car buyers'remarkably low dealer loyalty these days, it would surely alter that business' tactics if dealers and their employees focused on this bie number. Or suppose you frequent a good restaurant twice a month for a six-person business dinner. You're worth about $75,000 every l0 years to that establishment.

Though these numbers are imposing, two further twists up the ante. The repeat customer is obviously any firm's principal vehicle for word-of-mouth advertising. Conservatively, suppose a lifelong, happy customer sells just one colleague on becoming a lifelong customer ofyour superb restaurant, grocery or Federal Express, as the case may be. Suddenly, the regular customer's value to the restaurant doubles from $75,000 to $150,000, including that likely word-of-mouth referral. And that sign on Annah's forehead is now read by the Fed Ex person as $360,000 rather than $180,000.

There's a third step in the progression. If the restaurant's waiter handles five tables a night, he or she is caterine to five times $150,000, or $750.000: worth of potential business. The numbers are stunning for Fed Ex. If our courier has 40 regular stops at businesses my size, she is managing 40 times $360,000, or a $14 million, '.portfolio" of customers each day!

So the three-step formula is: First, estimate the 10-year or lifelong value of a customer, based upon the size and frequency of a good customer's average transactions. Then multiply that number by two, to take into account the word-of-mouth factor. Finally, multiply the new total by the average number of customers served per day by the sales. service, dispatch or other front-line per-

The Merchant Magazine son or group. The result is the lifelong value of the "customer portfolio" that the individual or group deals with each oay.

The implication is clear. If you look at customers in this or a related way, you are likely to take a new view of hiring, training, compensating and spending on support tools to aid the customer-serving process.

Take that waiter, managing $750,000 of your future each night. Are you still sure you want to brag about your low average wages? Are you certain that skimping on uniform quality makes sense? Does the investment in a small computer system to support order taking still look as expensive as it did?

(c) 1986 TPG Communications. All rights reserved. First appeared in the San Jose Mercury News.

Thol's How lt Goes!

?,-d yq,.! enjoy your week off, Miss Hartlv? The Merchant Magazine

CHUCK LINK executive director

T HE NEw WBMA Suppliers Coun- I cil held its organization meeting on May 17 at the Eugene Hilton Hotel, Eugene, Or., in conjunction with the WBMA All Industry Marketing Management Conference.

E. R. "Ray" Nailor, OrePac Building Products, Wilsonville, Or., was elected temporary chairman. He will be assisted by a six-person steering committee which will work with the WBMA executive committee in formalizing the council. Steering committee members elected were Stu Childers, Lumber Supply & Warehouse Co., Seattle, Wa.; Art Emerson. Lumber Products. Portland. Or.: Petra Reinenger, Rexnord Chemicals, Laguna Hills, Ca.; Kip Steele, Tri-W Distributors, Seattle; Wes Strahm, Weatherly's, Inc., Eugene; Teresa Swick, Teresa Swick & Associates, Federal Way, Wa.

The purpose of the Suppliers Council is to bring associate members (wholesalers, suppliers and manufacturers) together to discuss mutual concerns with retail dealers and to advise the WBMA board of directors. WBMA president Clayton Smith stated that "WBMA's executive committee, in giving their unanimous approval to forming a Suppliers Council, views this as an opportunity to achieve better and productive interfacing between retail members and their suppliers who are WBMA associate members. Our mutual survival, strength and growth depend on it." l) ntonlrv issues for rop manage- I ment will be the theme of the MSLBMDA Convention to be held at the Brown Palace Hotel in Denver on Nov. 5 and 6.

OSHA recently decided to reinvestigate the health effects of wood dust at the job. First, OSHA will focus on the wood products manufacturing industry and such "downstream" manufacturing sectors as furniture, kitchen cabinets and planing facilities. As yet, OSHA has not addressed whether dealers who operate truss plants or window and door shops will be affected.

But OSHA is contemplating a considerable change in acceptable wood dust exposure, lowering the workplace standard from 5 milligrams per cubic meter of air to perhaps I milligram per cubic meter of air. We will keep you informed as other developments occur.

FRED CARUSO executive secretary said board member Gary Woodward, "There will be no formal trade show at this convention and we are looking to incorporate key speakers and roundtable discussions on how to run our businesses better in a highly competitive world."

According to past president and national director Jack Davis, "The convention used to be more social. Now members are more concerned about addressing business practices."

"The trade show and convention brought up considerable discussion at the recent board of directors meeting."

In discussing the trade show which has been spun off from the convention and held in the early spring, Woodward said, "We will continue to hold the buying show in Denver and we are exploring the potential of having two other regional trade shows, one for New Mexico and one for the Utah-ldaho area so that local dealers can take advantaee of local suppliers."

NESS year.