14722 Thu, 06/19/2008 - 3:12pm
By Nancy Meyer
Like many other industries, the lighting industry is going through a downsizing.
Companies have to justify every single expenditure and are finding ways to take costs out of many of their processes, from sourcing and shipping to warehousing and providing customer service. Companies are cutting back on product introductions, advertising and marketing, trade show attendance, sales commissions, and travel and entertainment.
But there’s one sacred cow that has not yet been touched: the lavish customer loyalty trips to exotic locales. All the major vendors offer them.
You may have heard the joke about sacred cows—they make great steak. Now’s the time to rethink the concept of spending between $4,000 and $7,000 per customer on all-expenses-paid cruises, African safaris, bus tours through Italy and France, and the like.
Sure, these trips are based on a certain dollar amount spent with the lighting vendor—$50,000, $100,000 or whatever. But what customers may not realize, or refuse to acknowledge, is that the cost of the trip was built into the price of the merchandise from the start.
The trip idea was conceived in the 1980s and 1990s, when lighting companies were actively wooing the seeming endless number of lighting showrooms that dominated the retail landscape. Companies competed against one another to see whose trip could be bigger, more exotic, more fun. Some overlapped their dates with competitors’ trips and lighting industry conventions.
With the rise of the big-box retailers, the showroom market share shrank and their whole business model changed. There are fewer showroom retailers left, and those who are left are mostly fighting for their lives. What they need is not a vacation to Fantasy Island, but a reality check from their vendors, where the price of the goods is not padded with money to cover trips and parties and personal gifts.
“You can’t keep doing something just because you’ve always done it in the past,” said an executive at a lighting company who recently returned from a trip with customers and did not announce its next vacation deal.
Which of the big guys is going to be the first to put an end to these high-flying trips? The answer may just lie with the owners of the companies that are increasingly private-equity firms that are keenly focused on the bottom line.