Margin of Error

“This must have cost a fortune!” my boss barked. He was looking at the outline of our cable TV ads that I put on his desk. It was an aggressive schedule of spots promoting one of our cabinet lines.

I had already played the advertisement for him. Its professional production and polished look further fueled his assumptions.

“This bill is going to be outrageous!” he continued.

I paused for effect, and then quietly gave him the news: “It’s free.”

“What?” he asked.

“Free,” I whispered. “Totally, utterly, 100 percent free.”

The boss wasn’t entirely wrong. It was an expensive package. It just wasn’t our expense. We had nearly doubled our sales of that cabinet line, and as a reward our distributor had purchased the advertising for us.

For me, the gift meant more then just a nice perk. It was proof of the awesome power of volume!

Bear in mind, I have spent hours in staff meetings arguing against volume, instead favoring volume’s archenemy, margin.

But after the free ads, I changed my tune. If one cabinet distributor would buy us an advertising package for our sales increases, I could imagine what would be next: If we doubled our lumber purchases, our distributors would buy us a forklift. Increase our paint sales by a few hundred percent, we’ll receive a new POS computer. When we quadruple our millwork sales, somebody will build us a new loading dock. Soon, our suppliers will be sending us gold ingots instead of monthly statements…