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David Geller

Your Phone’s Camera Could Be Your Best Tool For Boosting Custom Bridal Sales

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Margins on diamonds have shrunk. So what else is new?

Margins on custom design work have always generated better returns. Another great thing about selling a custom bridal engagement ring is that unlike selling one from the case, you don’t need hundreds of thousands of dollars worth of inventory to make a $2,000 sale. Pictures, CAD programs, even a pad and pencil will do.

I did a survey a few years ago, and most jewelers said that two-thirds of their custom sales were between $750 to $3,000 with a 70 to 80 percent closing ratio. So, how to enhance and increase this business and do it for free?

Use your own phone, camera or video camera to send texts or emails to your clients as their ring is being built.

At the start of the custom order process, be sure to get a cell phone number and email address. After the client leaves the store and while you are carving the wax or building the CAD file, have someone take a picture or short video of what you’re doing. In addition to allowing you to send email, most phones today feature a microphone icon that enables you to dictate a message.

“Hi Michelle, I’m working on the wax model now as you can see. Will contact you when it’s ready to view.”

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Send this to the client; she will be ecstatic.

Then when the wax is ready to view, send a photo of the model. “OK, here it is, comment on it to give your OK. Feel free to share.”

People love to forward emails, texts, chats and Pinterest photos. Believe me, this will go viral! One client will share with others. Don’t be the one to post it on Facebook. Let them do that.

Time to cast the ring into metal? Take a video of the torch, melted gold and casting machine in action. Send this to the client (in fact, you can send anyone this video). Do the same with the file-up and setting stages. Once finished, show the ring up close in a video or photo and send it again.

This will make it special for the client. If it’s for a surprise proposal, they can share the videos and pictures after she has received the ring.

And don’t stop there; do this smartphone marketing for all your custom jobs. Keep customers in the loop.

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If the couple picks up the ring, get pictures and forward the images to them with their smiling faces. They will share.

At the bottom of the emails, add a button to share via Facebook/Twitter/Pinterest, etc. Also, add a certain dollar amount coupon for any of their friends to come in and have something custom made. Let the couple know that anyone coming in with a copy of their email or coupon will get a discount, while they’ll get some sort of future credit for sharing.

Keep that phone charged up!

The Staff: Weekly training for all staff to improve their skills and knowledge. Sales staff would have sales goals and at least 50 percent of their total income would come from commission and bonuses

The Shop: Everything would be state-of-the-art and visible to customers through glass

One laser welder for every four jewelers on staff. Each bench would be well lit along with bench scopes for closer work along with a GraverMeister to assist in setting.

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Sales: Majority of income would come from the custom design side along with sales of loose diamonds for the pieces we make. (We’d have a good-sized wallet of loose diamonds and color.)

Many cases would have “brass and glass” models, making it easier to sell our own designs or special orders from outside vendors.

First 15 months, we’d want sales to be $1 million. Then growth at 25-35 percent per year for the next three years.

Store Hours: Open seven days a week. 11 a.m. to 7 p.m., Monday to Friday. Saturday until 6 p.m., Sunday 12-5 p.m. Open one long day for the convenience of clients: 8 a.m. to 8 p.m.

Margins & Inventory levels: Profit margin on repairs: 65 percent; on custom jobs: 60-68 percent

Shop inventory: Between $25,000 to $50,000 in inventory. Mostly casting grain, sizing stock, findings and small stones.

Now I’ll go see a “shrink” and think this over again.


David Geller is a consultant to jewelers on store management. Email him at dgellerbellsouth.net.

 

This article originally appeared in the September 2016 edition of INSTORE.

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David Geller

Can You Make Money at 12 Percent Margin? Yes, But Here’s What It Takes

As one factor decreases, another must increase.

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CAN YOU MAKE a living on a profit margin of just 12 percent? Did the word no come to mind? You’re wrong.

For coin or bullion dealers, 8-12 percent gross profit margin is the norm, and they make a lot of money with little debt.

The “magic triangle” includes profit margin, inventory turn and inventory level. The combination of all three tells your future in a store, how much money will be left over to pay all bills and have money in the bank.

Let’s take a simple store math example for a year using keystone. A typical jewelry store would have a net profit of 5 percent. Here’s how a P&L would look:

Total Product Sales: $500,000
Cost of Goods: -$250,000
Gross Profit: $250,000
Expenses (45%): -$225,000
Net Profit (5%): $25,000

Are you making money? Absolutely. Do you have any money left over after paying expenses? Depends.

Imagine if last year, you sold everything at Christmas, not a stitch of inventory left. January 2nd, you fly to New York with three suitcases and buy the $250,000 of inventory that the cost of sales above pays for. You’ll have no debt. If something sells within six months, you have the money to reorder the replacement for the case, thus always having a stocked showcase.

Divide $250,000 in cost of goods by inventory of $250,000 and you get one turn a year.

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Now assume the same figures above, but instead of three suitcases costing $250,000, you bring five suitcases and bring back $600,000 of inventory for the store. Same sales and profit numbers as before. Did you make a profit, make money? Yessiree Bob! Do you have money? No! You bought $100,000 more inventory than the sales you took in. So how do you pay for it?

  • Owe vendors way past the due date
  • Put it on credit cards
  • Go to bank and take out a line of credit
  • Personally skip paychecks
  • Take money from your personal checking accounts

In this scenario, your inventory is $350,000 higher than the cost of goods sold. Divide cost of goods by inventory level, and it shows you have a 0.41 turn. A turn of 0.41 means this store has more inventory than needed for two years.

So, what’s the secret to having money?

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The long and short of it is, if you’ll keep your inventory levels approximately equal to the gross profit dollars you’ll make over a year, you’ll both make money and have money.

The lower the profit margin, keep inventory lower, or if you must have a higher inventory level at lower margins, then turn it faster. Instead of taking 12 months to sell it, sell within nine.

It takes all three for The Magic Triangle to work magic in your store!

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David Geller

What You Can Learn About Turn from Clothing and Furniture Stores

Hint: Turn more, earn more.

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THERE ARE REALLY only three important numbers in a retail store: gross profit dollars, inventory on hand, and inventory turn. So who’s better at managing money among these three retailers?

Store                         Gross Profit %
Jewelry                      42.6%
Furniture                  45.0%
Clothing                    46.5%

Darn close, aren’t they? The grass isn’t so green on the other side after all. Or is it?

Let’s look at inventory turn, which means how many times a year an item sells. (These numbers are from stores doing “pretty well.”)

Store                            Turn            Days in the Store
Jewelry                   1.4                       260
Furniture               3.5                       104
Clothing                 4.3                       84

A clothing store won’t keep a shirt/suit/jacket/blouse in the store more than three to four months. They will heavily discount it at that point to get it out the door; they don’t just “squash” merchandise closer together to show more like jewelers do.

Furniture stores work the same way. They have a natural problem: available floor space. The biggest reason for high turn in a furniture store was told to me by a furniture store owner: “Where am I going to store an extra 100 mattresses?”

Clothing stores get rid of their merchandise every quarter. Furniture stores get rid of their inventory every four months, and a good jeweler turns their merchandise a little over once a year. But most jewelers I meet have had their total merchandise for two-and-a-half to four years! This causes terrible cash flow and piles of debt.

If you buy jewelry in January, it should sell at least once by Christmas; that would be a turn of 1.0. If it stays until after Christmas, discount it or give a spiff to the sales staff to unload it, or even return it to your vendor and exchange it.

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If it is still there in 18 months, scrap it. That’s what clothing and furniture stores do.

Let me show you the money-making power of turn. All three stores are going to buy an item for $200. For a jeweler, this might be earrings; for a clothing store, a nice jacket; and for a furniture store, it might be a chair. In the table below you can see the cost, profit margin in dollars, and what that brings in for total product dollars in a year.

Keeping an item long-term is a detriment. Even if someone buys it three years from now, you should have had that $207 in profit for each of the three years, totaling $621 brought into the store (not the measly $163.35 you would make by holding it three years).

When it’s over a year old, most things need to be disposed of and replaced. Maybe your customers just aren’t buying what you have in stock. Change that!

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David Geller

Here Are a Few Tips You Haven’t Seen to Make the Most of Your Bridal Custom Designs

They’re simple yet brilliant.

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IT’S 2019, AND it’s not your daddy’s jewelry store anymore. No more high margins on diamonds. Where’s the money now? The mounting.

Keystone is the goal, and many get it on the mounting, but comparison shopping can make it difficult. That said, the really big problem with selling from the showcase is the amount of inventory you must carry.

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On the other hand, custom designing an engagement ring has many advantages:

  • Higher profit margins
  • You pay for the item after you’ve collected money from the customer.
  • The customer feels like they are directing the process rather than being “sold.”
  • If you share the process of designing their ring with the customer, they will likely share with their friends and family. It’ll be on social media, texts and emails.
  • You can adjust which components go into the ring to more fit their budget.
  • Selling from the showcase has a closing ratio of 30 percent in most stores, but custom design has a closing ratio of 70-80 percent.

The downside? Someone must know how to design the ring, how it comes together and pricing. Training is essential, or having someone specific to sell the ring and lead the customer through the process. Figuring out how to price the item requires particular skills.

Here are some additional tips to make the most of your custom design process:

  • While designing the ring, if you use CAD/CAM, take a snapshot of the model on the screen and send it to the customer, saying something like, “Well, Jim has gotten started on your beautiful design.” If you hand-carve the wax or mill it, take a picture and send by text or email. Same goes for the casting process and another of the jeweler finishing up the ring.
  • When appropriate, send out a handwritten thank-you note.
  • Go to Office Depot and buy a pack of 100 sheets of do-it-yourself business cards. Make yourself a master blank company business card with no logo, just everything else about your store. Take a good picture of their new ring and paste it on the card, then print a sheet of 10 and have it in the envelope when you deliver the ring.

After they “ooh and aah” over the ring, tell them, “I’m glad you love it. You know, we have more customers come in from referrals than anything else and would love for you to refer family and friends. Here are some of our cards.”

Then plop them down on the showcase face up.

They will be so excited that they will not only place one on their refrigerator door, they’ll give them out to friends and show everyone how their ring is on “my jeweler’s business card.”

Isn’t this a fun business?

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