Joe Zago is president of The Carpet Guys, based in Metro Detroit. He’s a definite industry success story if ever there was one. Starting in the most modest of situations and becoming a sizable player in the Michigan market, Zago has successfully expanded his shop-at-home business from just carpet to hardwood, vinyl, laminate and waterproof vinyl plank. The following are excerpts of that exchange, which you can listen to in its entirety here.
TF: Your retail operation is shop-at-home. Talk about the business and what this year has been like for you.
Zago: It has been a rollercoaster. We are shop-at-home. We started off with doing just carpet and now we also do hardwood, vinyl, laminate, waterproof vinyl plank. We are similar to Empire Today or 50 Floors and some of the others out there. We do have a showroom, but most of our businesses is done right there in the customer's living room.
The customer calls us and says they would like a free estimate. We take their information and then send a salesperson with a few samples. Of course, their cars are full of samples, but they bring in just a few of the things that are most likely to fit for what customer's needs, and we go from there. Using a laser that interacts with our software, the salesperson takes measurements using a laser, the customer selects the product they want and agrees on a price. Then the order is placed electronically. A staff member reviews each floor plan and the details, and then makes any needed adjustments. The order is then sent to the installation department, the warehouse pulls the product and it’s loaded on the AccuCut cutters and goes on a staging rack. When the installer comes in the morning, the order is double-checked and loaded. We are doing 40 jobs a day, so we have to be efficient.
TalkFloor: You told me earlier that you started the business in a friend's basement. How much have you grown since then?
Zago: We started the company 11 years ago. I had some experience when I was in my late teens, early twenties in door-to-door sales. I sold Kirby vacuums, knocking on people’s doors. Typically, the wife was the one answering the door with the baby. The husband was at work, and the family had just bought a vacuum cleaner for Christmas. I had to talk my way into the customer's house by giving her a big package of Charmin toilet paper, Bounty paper towels, or some Joy soap, and say, "You get to keep these if I can spend a few minutes showing you some cleaning products.” and they say, "Well, I'm not buying anything.”
After vacuums, I tried selling cars. I also got into the mortgage business. I sold refrigerators at Sears. Then, I saw an Empire Today commercial on TV and thought the company was awesome. I applied; I had no floor covering experience, so they wouldn't take me. So, I became really persistent. By the third attempt I was invited to come in for a formal interview. I didn't know how to calculate yardage, nor did I have any of the floor covering information they preferred, so they said they couldn't take me, but in the last 10 minutes of the interview, I offered a pretty strong case, so they gave me a shot. They said anybody that can successfully sell Kirby vacuums for so many years could probably learn how to sell carpet. I still wear the Rolex watch I won at Empire.
Then, I started working at Express Flooring and became their top salesperson in no time. A little later after some ups and downs, I decided to start the business. I had lost my driver’s license, so I went door-to-door. I made up a little flyer and would knock on the door and say, “My name is Joe, I used to work for Empire Today for several years. I was a great salesperson and decided to start my own business. If you, or anyone you know, needs new carpet or flooring, I can give you a price, which is good for a year.” Of course, nine out of 10 doors would slam in my face, but I was used to that because I had sold Kirby for several years. I just kept going, figuring that if I knocked on 100 doors per day, I would be able to give a quote to three people per day, I'll sell two out of three, so the magic number for me was knock on 100 doors a day and I'd wind up with two sales a day. I didn't have a warehouse or a showroom. And that's how it started.
Basically, if I had a sale for $3,000, $1,000 of that went to me, $1,000, went to the installer, $1,000, went toward the product. I figured that if I sold $300,000 worth of product from that point, which was April, until the end of the year, I could be a six-figure income earner. And that was my goal. And I really didn't think it was possible, but I put the sticky notes with my goals on them everywhere. I started advertising on Google and on MySpace at the time.
I then started selling in a better area, selling for higher prices, so by the beginning of December, I was at $327,000 with a month to go before year end. I realized the whole goal thing really works.
Then, I decided to go with a completely unrealistic goal of one million dollars, which would mean nine leads a day. I brought in two more salespeople that used to work with me. We wound up doing $1,600,000 that year. In the second year, we did a little over $1,500,000, and the third year, we did $3,500,000. We have never been below $20,000,000 or so for the last four or five years. I've got 28 salespeople and 50 contracted installers.
TF: With those numbers you must have a pretty healthy ad budget.
Zago: Without getting into dollars, I would say on a percentage basis, we’re looking at around 10% of sales and it has been able to really help our volume. I have to say, however, it has been trial and error. There have been ads I thought were going to be a knockout and they had just the opposite effect.
I tend to push the envelope a little bit because some of our ads are a little on the edgy side. My goal is to get people’s attention. I don't want to be the wallpaper that blends in. I want to stand out.
TF: Where do you see yourself and your business 10 to 15 years down the road?
Zago: You know my challenges; I don't have a business or an accounting background. I was a door-to-door sales guy. We had people like Jim Buckles work with us for a couple of years and he was a godsend.
I would like to expand and be in multiple markets, but I have never been able to hire effectively. I have a problem hiring somebody who is more qualified than I am. I can't teach someone to do a job that I don't understand myself or that I do not have extensive knowledge of.
I would like to bring in somebody, even at a CEO level, possibly, that can take my one store operation that services Southeastern Michigan and expand to cover the remainder of the state and then go nationally, but do it without losing our culture. That's the trick. I’ve seen it happen with a lot of companies, especially when there's mergers and acquisitions where the culture changes and when that culture is damaged, then it's just another job.