Tance Hughes, the CEO of Southern Designs, grew his company’s revenue from $430,000 in 2014 to $3.3 million in 2017, a 664% increase, and to around $5 million in 2018.
Southern Designs is a home decor and accessories company.
In this interview with Eversprint‘s Malcolm Lui, Tance shares how he and his team accelerated their high value sales by:
- Entering an unsaturated market four years ago that still has not yet reached saturation.
- Understanding who their ideal customers are and what they want.
- Automating their production and processes so they can scale more easily.
Malcolm Lui: Welcome to the High Value Sales Show of Eversprint.com. I'm Malcolm Lui, the Managing Member of Eversprint, and today we're speaking with Tance Hughes, the CEO of Southern Designs, a home decor and accessories company. Welcome to the show Tance.
Tance Hughes: Yeah. Thanks for having me Malcolm.
Malcolm Lui: Tance, you grew your company's revenue from $430,000 in 2014 to $3.3 million in 2017, a 664% increase, and in 2018 you hit around $5 million. Before we talk about how you grew your company so fast, can you briefly share what your company does beyond my quick intro, and how your company differs from the competition?
Tance Hughes: Yeah. So our company manufactures home decor products primarily metal wall decor and these items can be personalized with the customer's name or home address or really any kind of text they want to put in the space. And so we manufacture these products here in our facility in Louisiana and we sell them generally direct to consumer and ship direct to them. So you know in many cases online companies are making these products and selling through other channels and things like that but we've tried to build really a large direct to consumer audience
Malcolm Lui: Now your products are personalized. Does that mean that your order sizes are on the low inside small size or do you have like a library of often order tax that you have ready to go
Tance Hughes: Share so the bulk of what we have are templates on our website. And so the customer can go there they can check out a design that they like and then personalize it with their name and then we will make it from that point. So we generally have you know anywhere from two to four week lead time to manufacture the product and actually get it to the customer.
Malcolm Lui: And how how how robust how sick How heavy are these items that people are buying
Tance Hughes: So the general thickness of the metal signs that we sell is 16 gauge so they're not they're not too heavy but they're strong enough for the decor you said you're not too heavy to hang on the wall but they handle you know and they're not easily banned or anything like that and they're all powder coated so they can be hung indoors or outdoors and you ought to worry about Rust or deterioration or anything like that
Malcolm Lui: Okay now. I'm not a metrics for 16 gauge how thick is that
Tance Hughes: That's around a 60 day vintage.
Malcolm Lui: Okay. So not that thick then.
Tance Hughes: No no they're not they're not they're not overly thick. You get too thick and it can be really heavy to hang on a wall. You have to look at a whole new set of material or tools to get it hung with anchors and all that kind of stuff. So we try to keep it pretty simple and lightweight for the customer.
Malcolm Lui: And what does it take two to four weeks to create a custom custom accessory. Are you. Yeah. Maybe explain a little bit about that process
Tance Hughes: Yeah. So you place your order on the website. Yeah. You think well something custom. Many times you're thinking about something that's printed so you go and order some business cards or some fliers or things of that nature and you pop them on a printer and they'll print them and then you send it to the customer. Oh it's our products. You know you personalize your decor piece. We have to put the personalized information on it. It has to be exported into specific file type. That then has to be mapped for a large laser cutter in the bag that we have one of those three machines that we have. Then you have to actually cut the steel. You have to treat the steel after it's cut. So we wash it with a specific kind of chemical and water combination that removes any oils or any dirty things that may be on the metals or we're trying to clean the metal. Then we have to shoot the powder and cure the powder of 400 degrees and then it has to cool off and package and be shipped. So there is a little bit more that goes into the production process of a product like this as opposed to just something that you know be printed or maybe embroidered with thread or something of that nature
Malcolm Lui: Right now is it an entirely automated process. And then just kind of what you said it gets set up it just runs by itself or do you have a craftsman that takes out the piece looks at that to burnish it by hand rub it on the sharp edges and so on
Tance Hughes: Right. So over time we have automated more and more of the process. It's not fully automated actually when it comes to the graphic design of our parts about 85 percent of these files are automated now with from the design process. And so then what we do is we mess them on a sheet. So it's a five by 10 foot sheet of metal. We nest as many parts as we can get on one sheet. The machine cuts them all at once and then once they come off they just go straight into powder coating which is still manually being done but we're in the process of installing an automated powder coating line as well to eliminate human error and things of that nature so we're constantly building more and more automation into the process.
Malcolm Lui: And the raw steel that you're using to create these these steel the core accessories. Is that like a big huge flat sheet metal that you're working with. It hasn't come out having a big role in your unrolling them and using that material as he need it
Tance Hughes: We buy sheets that are cut from that 10 foot when they arrive to us. Now you of course as a large user could you could buy a coal of steel and then share it yourself. We're not really set up to do that and I don't know that we use enough material yet to justify that but our suppliers that's what they do is they buy the coal they cut it down to the sheet size that we need and then they ship us truckloads of the sheet metal and find about 10 size
Malcolm Lui: Right now is a part of the the time it takes to create the product. Partly perhaps related to having enough orders he could fill up a sheet. You don't have that wasted sheet
Tance Hughes: Well I wouldn't generally say that we have enough volume coming through. So weird on a daily basis making these orders. But what happens is there's fluctuations and seasonality. Demand for the product. And so like right now we're actually shipping out within say about a one week timeframe which is really quick for us. But you know around the holidays our order volume will triple or quadruple pretty quickly. And it's just a matter of capacity at that point so many times we don't have the capacity to get as many orders out as are coming in. So we have to watch that and monitor it constantly ourselves. But that being said the cutting process it takes an hour to cut one sheet. There may be 30 pieces on a sheet but we may bring in 300 orders a day. So you're talking we may need to cut 10 sheets a day. Well there's 10 hours of production time. So just a lot of things that go into it. It's just not it's not overly fast process.
Malcolm Lui: Right.
Tance Hughes: Once you audit on the steps of cheating the model powder coating the metal carrying the metal letting it cool down all of those things kind of play a factor in it but the biggest thing would be the seasonality of the demand
Malcolm Lui: Yeah. Yeah. I mean what you do is totally foreign to me so apologies for some of these real basic questions and I've never worked in a metal fabrication shops. I don't really know exactly what goes into it. I know there's a lot more than just me. I'll get a story behind it.
Tance Hughes: Gotcha. Yeah yeah. And I would say that you know with your turnaround time too I mean when you have to look at you know have we don't have shelf in the door we don't really have much of anything set on shelf or we can just pull it off and turn on a box since it's made to order. There's just there's just a few steps in the process
Malcolm Lui: Yeah. Now your market is really interesting right. I mean he's made to order home decor products. How did you find this market.
Tance Hughes: So previous or the previous iteration of my business was our printing. I was actually in a printing business a printed apparel and other decorative items and I already had some experience in selling to our customer base which is generally women ages 25 to 54. That's kind of our core consumer profile. And so you know I was looking at other items and products that I could sell them. So it comes from a previous I guess and business iteration that I had. But as we marketed to the customers online we started seeing the data. Not a big data person so I'm looking at Google Analytics and my Facebook picks on all these different sources of data and they all align and paint the same picture that you know this is my my customer profile and so now I continue to follow trying to follow trends and things that that consumer is looking for if that answers your question.
Malcolm Lui: It does. But I mean it's interesting that you found this this market. My my wife has gone to the store. She fits their profile and she's bought premade letters all right for our kids names that hang on their doors and so on so I can see how someone like my wife might be really keen on maybe spelling out the entire name right in picking out the pattern and design. And I find it really interesting that you found that markets on that niche
Tance Hughes: Yeah. I mean I wouldn't just sit here and say that I'm this genius that knew that this market was here completely before I started it but you know I follow the trends I see what people are looking at and what they're buying. I mean I think there's a lot of other markets and trends that are easily identifiable and you just have to go after them. And since I was kind of already familiar it's selling to that specific profile figure why start over with something different. I can continue to attack what I know so much. That's why
Malcolm Lui: Right.
Tance Hughes: I went there
Malcolm Lui: So you saw that profile interested in doing custom design printed materials on on on textiles on fabrics and then you said well why don't I offer it on the metal side. Is that how it started out its own make that request repeatedly said hey maybe I should just dive into this deeper
Tance Hughes: No essentially I was looking to create another product brand a product line that I thought I could capitalize on that wasn't saturated and this is a market that just wasn't saturated. And I had the familiarity with manufacturing these products and marketing to that customer. So that's that's just kind of how piece it together wasn't necessarily do requests for.
Malcolm Lui: Huh. Very cool. So did you have metal work experience at one point or or you were selling pretty basic non customized stuff and then you decide to extend the product line
Tance Hughes: Yeah I didn't have experience in metalworking. I had experience in commercial signage. We manufacturers and commercial signage for our customers in our printing business and but my brother actually wanted to come and join the business and get involved. And he had a history with metal fabrication welding and cutting and things like that. So I kind of paired his manufacturing knowledge with my sales and marketing knowledge and created this brand from there. Now of course I've learned a ton about it since we started. But no I didn't really have any background in it per say that was really my brother
Malcolm Lui: Right. Very cool though because people in general prefer customized products as opposed
Tance Hughes: Of course
Malcolm Lui: To a generic one. So it's very cool how you're able to put it together. Now you agree a business a quite rapidly over the past four years. Four hundred thirty thousand in 2014 and then four years later you more than 10x your business you had around 5 million in 2018. What were the three biggest drivers of your sales growth during that period.
Tance Hughes: Well I would say that's number one a driver of sales growth was simply that I was in a market that was not saturated it had endless opportunity it has no clear cut leader so getting the pictures of the products and videos of the products in front of people alone drove sales because there weren't many places to get this kind of product. So I guess that would tie in to like social media just getting the products out of social media and people sharing and commenting. The second thing would be understanding our audience and how to market to them. So we would partner with various websites to sell our products on them. Just a quick rundown would include Wal-Mart Amazon Groupon zoo really sites that have a lot of customers already visiting there. And so when they see our products and there's not really another vendor selling them it was an easy sell for us. And then thirdly I guess a driver of sales growth. This isn't exactly maybe related to sales but automating a lot of our production processes and getting the correct equipment really helps us to increase our capacity to handle the growth and then continue to scale from there.
Malcolm Lui: Right now so the three drivers that allow you to grow your sales over the past four years so rapidly when you enter at least four years ago a market that wasn't that saturated and there's demand for it. And once people knew that you can provide it. People bought a number to your understanding your audience and you partnered up with. Other large retailers to have the audience so you put your product again in front of them and they were keen on buying it in the third one that you were automating your productions and processes to allow you to scale up. That's right
Tance Hughes: Yeah. And you know people may not connect that's I say and people may not connect the production component to sales growth but for us it would have completely hampered any further growth if we didn't address kind of the back end behind the scenes stuff. So it's just as vital to our success in having the correct production equipment and capacities.
Malcolm Lui: Right now let's dive deeper into each of the drivers he said at the beginning one of the keys for years ago was that the market wasn't that saturated. How is it today
Tance Hughes: There are definitely no competitors popping up here and there are a lot of people seeing what we do and saying Oh well I can do that too. And you know they're going and buying some equipment and manufacturing so there's definitely people popping up all over the place trying to get into this field. And a couple of companies that have had some success with it for sure but one of the components of this and this may go into the third back to the production component of sales growth but some of the equipment that we have is pretty expensive and takes a lot to run and maintain it that a lot of these start ups simply can't afford or get access to so fortunately for us that's helped us kind of keep our distance from a lot of the new start ups that are trying to do this.
Malcolm Lui: Now how do you assess that the market is saturated but what kind of things are you looking at beyond just simply look at how many players there are out there when you Google custom steel steal the core products. How do you assess the market saturation.
Tance Hughes: Well I would say when you in our case where we can't drive repeat sales from returning customers that's gonna be a bad sign for us
Malcolm Lui: Okay
Tance Hughes: Because you want them to continue to purchase from you or to continue to drive new purchases. So of course when I see my sales growth slowdown or my returning customer no percentage come down that's what I would I guess assume. Honestly I don't know that I fully have the answer to that but that's kind of what I'm looking at as well as if my costs for customer acquisition starts to rise a lot. That's going to tell me that there's a lot of competition fighting for that same customer profile
Malcolm Lui: Right. But just from the sales growth number doesn't sound like you've hit the saturation point yet.
Tance Hughes: I don't believe so I think we still have a ways to go. And because of the nature of our product we can do so much with it it's not limited to one or two designs we can do a lot that we haven't even scratched the surface with. So I'm pretty optimistic about the longevity of this product category
Malcolm Lui: Yeah. I mean if you're if you I'm just right off the top the back. I mean there's no reason why you can't make smaller custom made key chains right. If it came down
Tance Hughes: Of
Malcolm Lui: To
Tance Hughes: Course
Malcolm Lui: It. Right. So it's quite a big a big mark. I mean you could possibly get in make iPhone cases out of steel perhaps possibly assuming it doesn't interfere with the s the signal if the phone might
Tance Hughes: Yeah
Malcolm Lui: Be
Tance Hughes: You
Malcolm Lui: In
Tance Hughes: I'm
Malcolm Lui: The food
Tance Hughes: Sure
Malcolm Lui: Basket.
Tance Hughes: You could. Yeah
Malcolm Lui: And everyone always wants to stand out and be different. Having a cool steel
Tance Hughes: Right.
Malcolm Lui: Customized case would definitely stand out
Tance Hughes: Yeah.
Malcolm Lui: For number two understanding your audience and partnering with web let me ask you the easy question first. You said partnering with Web site you up having a storefront on Amazon as a third party seller or are you talking about just advertising on Amazon and Wal-Mart
Tance Hughes: We would partner with them and basically have some sort of storefront on those sites. So you know our own page on our site listing our products. You know they let we so we leveraging their audience they're purchasing the product taking their cut giving us our cut you know from there. So
Malcolm Lui: Right.
Tance Hughes: Generally having a store found they're not really doing paid ads per say.
Malcolm Lui: Okay. And have you looked into getting paid ads on the likes of Amazon and
Tance Hughes: A little bit. Amazon's been tricky with personalized products but it's something we're definitely working on right now. Actually we're studying some stuff. At first we were just selling stock items that couldn't be personalized and we did have some success with it. So now we're kind of regrouping because we really want to focus on the personalized end of things. We haven't actually gotten that one started yet on Amazon specifically. We mostly advertise through Facebook and Google
Malcolm Lui: Right now I never heard of Amazon being a bit difficult when it comes to personalized products. What's the what's the story behind that.
Tance Hughes: They actually required you to apply to be accepted into there would they. At first it was called the handmade Amazon handmade I guess was the category and they were all selective for some reason. And then at another point they didn't have the personalization features built in very well so do you on the page you want to buy this product but you type in your name. You type in Malcolm you want to pick and you want to pick this and that. It really struggled with that component. So they weren't essentially offering it initially and now they've made some strides in that area that we're hoping to capitalize on. But I guess really was they were they were limiting it themselves and I'm not sure why unless I just wanted to test the waters
Malcolm Lui: Right. Or maybe they have millions of products on there through there through their system. I mean there aren't that many
Tance Hughes: Yeah
Malcolm Lui: Body customized products out there for them to devote the resources to make it happen.
Tance Hughes: Exactly.
Malcolm Lui: Very interesting. Now you said you have Tesla on Google and Facebook and I actually ran some of my tools to check out your online ad presence and at least for your or your main web site I didn't see any paper click ads. So you're running the ads on a different domain.
Tance Hughes: So and our main brand that we actually sell our products under is called metal unlimited AECOM and I probably should have shirts with you ahead of time but we sell most of our products under the burning metal unlimited time and that's where you're going to sell the ads. Southern designs is our corporate name. We have another division that we operate a small amount of our business under. So that's probably what your Auntie
Malcolm Lui: Ok. Makes sense. So what's your thinking behind using meadow and limited as opposed to Southern designs for
Tance Hughes: When
Malcolm Lui: The free
Tance Hughes: We
Malcolm Lui: This
Tance Hughes: Were.
Malcolm Lui: Product
Tance Hughes: Yeah. So when we started the course we already had our company Southern designs and we just we were testing developing a brand independent of I guess that corporate name and we wanted to kind of focus and tell everybody hey you know we can do whatever whatever you would like in make it out of metal and so metal Unlimited is kind of how we came up with the name. And it just it took off from there so we never ran it back into the southern designs name similar to you know some kind of corporate umbrella that has multiple brands under it that's kind of how our structured
Malcolm Lui: Right. Well anyway I can see that makes sense right because your designs aren't necessarily Southern Regional
Tance Hughes: Exactly.
Malcolm Lui: Like right.
Tance Hughes: Exactly
Malcolm Lui: Okay got it. Now for your third driver you talked about automating automating your production processes. Can you give me an idea of how big your facilities are
Tance Hughes: Yeah. We have about 30000 square feet of space. We just expanded about a year and a half ago too don't we we started in 15000 now we have 30000 square foot and we're we're maxed out again. So we're currently thinking through the next phase of expansion space wise. So that's that's kind of the size that we are right now.
Malcolm Lui: Right. That's a pretty big. You said you have three lines right now that we shared earlier in our conversation.
Tance Hughes: We have you know we have three laser cutters so we can we can operate. We can essentially cut three seats at a time on our machines and then we have of course our powder cutting line for shipping department and in our offices and everything here as well. So they're all under the same roof.
Malcolm Lui: Right. And then your production facilities if if you're running in the middle of the day and they were fully utilized is it really loud in their hearts or is it the moderate
Tance Hughes: No
Malcolm Lui: Quiet
Tance Hughes: It's not. It's not loud. I mean there's noise but it's. The lasers don't make a lot of noise themselves. They're pretty quiet and they're kind of contained advocating around them. It can get hot in the summer times just because you know you've got a powder coating of it that's running at 400 degrees so it can't get a little bit warm but it's most of the facility is climate controlled. We only have a portion of the facility that is not. But we run fans and things like that to circulate the air and it's not too bad.
Malcolm Lui: Yep. Now what are your thoughts about owning your own facilities as opposed to finding some other company somewhere that has some huge production facility and excess capacity that you could outsource to.
Tance Hughes: Sure. Well I definitely prefer owning my own facility. So while I'm not a micromanager or a control freak I do love to have control over my business and in the sense that if I tell you I'm gonna do something for you I will only have myself to blame if if I fail I don't ever want to leave my business in the hands of somebody else and hope and pray that they do their job. So I love bringing all of the equipment under the same roof. Hiring on people being able to go out there if I need to check on things and understanding my capacity things of that nature. Some I'm all about having no control over the process as best as possible.
Malcolm Lui: Now a
Tance Hughes: I think
Malcolm Lui: Comment.
Tance Hughes: You use.
Malcolm Lui: Go
Tance Hughes: I
Malcolm Lui: Ahead
Tance Hughes: Was just going to say I think you lose you you lose quality and kind of some of that experience with the customer when you outsource to other people at least from a manufacturing perspective.
Malcolm Lui: Right now what are your thoughts about a common theme and maybe the media hypes it up more than really is that manufacturing is dying in the United States. Here you are you're a manufacturer and you're doing everything in the United States in-house and you're doing well with it. So to take on that what
Tance Hughes: You know in certain cases manufacturing is a very challenging environment to be in in the United States. You've got to look at certain areas of the country where it's very expensive to do business. Luckily for us we're in an area of the country where it's fairly low cost of living low cost of operation in Louisiana. So land is fairly cheap. Buildings are not too expensive and labor costs are lower here. So I think in areas like ours you can manufacture and be competitive in certain industries. Now you go to areas like New York California that might be more challenging there. So depends on the interest the specific I guess kind of industry or product line that you're in. But what I will say is that manufacturing is definitely not dead in the United States. And if anything the cost of shipping and transit times from you know if you're importing from China or somewhere else like that those are actually challenges as well because in today's world we're instant gratification kind of is what we all look forward to. We want it we want it now Well if it takes 60 to 90 days to get a product from China or something about a tree that's that's too long. And on the personalization end of things you can't do competitive in most cases coming from another country because the cost is just is just too prohibitive. And the fact that we can manufacture and ship it straight to is is too is too convenient. So because I have a lot of work to see you know somebody from a different country you're gonna try to import this type of business model and ship it from overseas and I just don't see how they can do it and be competitive.
Malcolm Lui: Yep and plus would you say that a lot of your purchases are maybe impulse purchases.
Tance Hughes: Definitely this is not a niche product. You know we need food and water we need housing we need transportation generally and things like that. This is not a product that we need this is a product that we want. This is a product. I wouldn't say it's a luxury product but it is a luxury it's it's it's extra. And so people see it. Oh yeah. You know I want to buy this real quick because it's kind of neat I haven't seen this I'm gonna get it for you know a gift for a birthday or an anniversary or something of that nature. And so it's not something that people necessarily planned around I would say
Malcolm Lui: Yeah I mean that awesome lends it to you need a way of creating and shipping it quickly right. Because it's more of an impulse
Tance Hughes: Yes
Malcolm Lui: To when needed for a holiday party or whatnot. If you're overseas the other way two months for it. I'm not sure everyone's gonna buy that. I buy
Tance Hughes: A
Malcolm Lui: The letters and make it by hand.
Tance Hughes: Exact thing.
Malcolm Lui: Yeah. So now you're still as you're still locally made as well. Or do you buy steel from
Tance Hughes: Yes
Malcolm Lui: Outside
Tance Hughes: No. So all of our you know our style is us still at least to my knowledge it is we always check and ask.
Malcolm Lui: All right.
Tance Hughes: But we do we do source it from the US we've never sourced steel internationally. The only the only parts are components that we've ever sourced internationally would be our clock mechanisms that we we we manufacture many custom clock with your name on it and we have bought the quite mechanisms from overseas before but now we are actually sourcing those from the United States as well or at least a supplier in the United States. And we do of course want to buy American made as as often as possible and try to support the economy here in our country. So yeah all of our steel our powder for powder coating et cetera comes comes here from here in the U.S..
Malcolm Lui: Right now is there a steel or the steal that you use is it pretty much a commodity product and you could potentially buy it from overseas if it made sense.
Tance Hughes: Most definitely. Yeah I mean I could easily buy from pretty much anywhere it's definitely a commodity. But once again having it a few hours down the road from us as opposed to waiting 90 days on a tanker or whatever that ship the ships are
Malcolm Lui: Yep
Tance Hughes: Bringing it from over there. That's not convenient for us. I don't need that on hundreds of thousands of dollars of steel just so that I can have it in time whereas I can call my supplier here in the US and literally the next day I have a truckload of 400 sheets of steel. So it just doesn't really make sense for our business model. And then I have priced it out. It's not really competitive at all.
Malcolm Lui: Yep. And then you have to worry about more supply chain issues deliverability issues import
Tance Hughes: We
Malcolm Lui: Duties
Tance Hughes: Aren't
Malcolm Lui: That might be slapped on it. You know out of nowhere that can change everything. Right
Tance Hughes: Yeah. And the fact that we can promote hey these products are made in America with American materials. I mean that's a good selling point too. So
Malcolm Lui: Yeah definitely. All right. Interesting. Now for two thousand nineteen. Where would you like to see your business a year from now. Say we are having this conversation a year later. Where would you like to see your business one year from now. And what challenges do you need to overcome to get you there.
Tance Hughes: So I would love to see continued progress in automation. Growth internally. That's a big big way that we can continue this keep our costs down keep our prices competitive as the as the category does continue to mature and I would say get more saturated it's not saturated yet but as it continues to get more players in the field we want to stay competitive and keep our prices down so that the more that we can automate I think we'll continue to grow our business further. As far as what you say my plans are for the coming year
Malcolm Lui: Yeah. What are your objectives really want to be. You say we see you and I are having this conversation a year from now literally. Where would you want your revenue to be for example
Tance Hughes: Yeah. So we are our goal and our and our projections have aligned and we're projecting about six and a half million in revenue this year. And that was a goal that we set as well. And so as we've annualized out these first three months here. That's right where we're in line at. So what we would love to see is a lower cost of acquisition from our marketing efforts that we're actively really starting to get granular with our Facebook and Google ads and trying to identify different audiences and find those next customer profiles and areas of growth that we maybe haven't tapped into yet. And then of course the continued automation on our Web site. We are actually working on installing a preview tour and as you get a live preview of what your product would look like we think that will help conversions. We think that will help sell the product quicker without them buying something and guessing and hoping that it looks the way they want it to look. So those are the areas that we are working on. And then if so for us we are very heavily heavily dependent on sales from the fourth quarter. So October through December we're hoping to have our capacity increased for that period of the year where we can really continue to get products out quicker around the holidays because people get it kind of worked out. It's not gonna be here before Christmas. I've got a Christmas party this weekend. Excited chatter and so what we're really trying to do is ramp up earlier in the year to hopefully meet that demand because man and in November. I mean it just gets crazy around
Malcolm Lui: Yeah
Tance Hughes: And people are buying gifts left and right are really trying to manage that time of the year better we get better and better every year. But we still have so far that we can go.
Malcolm Lui: Yeah. So are your plants at 100 percent or 80 percent utilization throughout the year and the fourth quarter you're at 100 percent.
Tance Hughes: So generally you know we may be running realistically at about 60 65 percent utilization and then yeah the fourth quarter we're maxed out we're running 24 hours a day six days a week. We are hiring on temporary workers extra staff for that time of the year everybody's working you know 60 hour work weeks at least if not more. I'm just trying to pump the product out. And so for us we've invested into new equipment such as the automated power line and another laser that you know year round they may not be utilized fully but in the fourth quarter what we get out of that more than pays for having that machine around year round. So I'm all about efficiencies and keeping stuff going as fast as we can and not letting machines sit around because they cost you money.
Malcolm Lui: Yep
Tance Hughes: But the fourth quarter it just it blows it away so we can justify it
Malcolm Lui: Right. Any thoughts about finding some other product line that's not as seasonal so can keep the utilization up over the first
Tance Hughes: Yeah.
Malcolm Lui: Three
Tance Hughes: So
Malcolm Lui: Quarters.
Tance Hughes: Of course we've gone through so much growth that we haven't really had too much open capacity over the past few years. But as our business gets more mature and efficient you know we do see that arising. But you know this time of the year. So right now we're going to have extra capacity that we'd like to fill. So I've talked with a few people we're working on looking at offering our machines up to subcontract laser cut parts for if it's a machine manufacturer or some some other product manufacturer that maybe needs access to lasers but their business isn't large enough to afford a laser yet or if they just need some extra backup production capacity that we can offer them. We've also looked at some different product lines and I'm not really at liberty to speak about just yet. But something that would be seasonal towards this time of the year and maybe the cyber time of the year. So we're definitely looking at ways to fill some of those gaps
Malcolm Lui: Yeah definitely. Right. Because that's kind of the the Amazon server model right. They have their service set up to handle Black Friday and selling rain in the rest of the year. They just outsource. They sell that excess capacity other businesses can use.
Tance Hughes: Exactly
Malcolm Lui: Yes you carry out the same way to do with your plant. That could be a nice revenue boost.
Tance Hughes: Right.
Malcolm Lui: How about in terms of you talk a little bit about your customer acquisition costs and keeping it as low as possible. What are your plans and efforts there over next year
Tance Hughes: I'm hoping to reduce my customer acquisition costs by about 20 25 percent this year. That's been a kind of the biggest I guess challenge that I think we're facing with our marketing efforts this year is just simply getting our CPA down and whether. Well I mean we can focus on upselling and pushing more product on them. That's all great too. But really if I if I can I am confident my product My product sells itself. It's very it's a very good product that doesn't have trouble converting but they call us on Facebook and Google or costly drives. And so we're trying to figure out how to combat that. So that's I'm trying to reduce my CPA by about 20 25 percent this year
Malcolm Lui: Right. How much. When you say reduce by 20 25 percent how big an impact will that have on your your bottom line.
Tance Hughes: You know I mean I I don't
Malcolm Lui: When
Tance Hughes: Have
Malcolm Lui: You
Tance Hughes: The
Malcolm Lui: Get
Tance Hughes: Exact
Malcolm Lui: Into
Tance Hughes: Numbers as
Malcolm Lui: A
Tance Hughes: You
Malcolm Lui: Numbers
Tance Hughes: Say
Malcolm Lui: That
Tance Hughes: But
Malcolm Lui: You know
Tance Hughes: Yeah I mean it would be it would be huge because we're in a good spot. So we're kind of in our sweet spot right now when we're profitable we're making good money. We're not just rolling around everything cash flow bears catching like that. But I think it would really allow us to if we could become you know like every cut those costs down a little bit more we could really actually ramp up our spend to try to grow sales more
Malcolm Lui: Yet
Tance Hughes: And or pay down some debts on equipment and we've gone through so much so many growing pains over the last few years that you know we go down machines we finance down them and we expand our facility and we're have to expand it again. So we really need it. We would like to pay down some debts and to keep our company healthy and not grow too fast. So that would be our focus with the money as opposed to what it would do for the bottom line. I guess you
Malcolm Lui: Right.
Tance Hughes: Would say
Malcolm Lui: Yes it does open up reallocation of your capital right. You're seeing this much less on acquiring your customers like you say pay down debt. You can acquire a line you can lease out or build acquire a new building or it gives you other opportunities of using your capital.
Tance Hughes: Exactly
Malcolm Lui: Now what about repeat business. Think about that as being one of your key indicators. How often do people buy again by yet another custom designed home decor
Tance Hughes: Yes
Malcolm Lui: Product.
Tance Hughes: Our repeat customers are generally buying from us three times a year. So our products are our most often given as Christmas gifts housewarming gifts and anniversary gifts. So you know if you know of if you've got one anniversary somebody that you know one friend that moved your family member that's moved and then a Christmas gift it's pretty easy to do that three times a year so that's what we've seen so far. We have about a twenty two percent on repeat customer rate right now. Course we're always trying to get that out to be. We're seeing about three times a year that they purchase from us.
Malcolm Lui: Nice. So how do you do customers come in and twenty two of them will buy again. And when they do buy again typically it's around three times a year.
Tance Hughes: That's correct
Malcolm Lui: It's pretty good. So do you have campaigns in place to reach out to people hand off me.
Tance Hughes: Yeah we do.
Malcolm Lui: We
Tance Hughes: And you know we do send some campaigns on Facebook where you know they haven't purchased in the past 90 days. We reach out with some DPA is a re marketing campaigns of course with email segmentation. You can easily say mature less to say they haven't purchased a 90 or 180 days to send out an email reminding them hey you know come back check out check this out again see what's new here is a special offer for you. So we're definitely proactive in trying to re nurture those relationships and let them know what's new with us since they last visited
Malcolm Lui: Now what you describe to me is is a fairly technical nature to execute. Are you doing this all in-house or do you have partners who will help you with that.
Tance Hughes: We have a marketing agency that helps us with our Facebook and Google ads but we still manage all of the email work ourselves and in-house.
Malcolm Lui: Nice. Have you thought about given how you control your facilities production facilities. You could potentially mount cameras throughout the process and you can actually ask for a waiting two weeks to get the product. You could potentially send him an email every day or every other day and show showing the snapshots of you and videos of their product being made in person. Have you thought about trying that
Tance Hughes: Sounds like a daunting task. I'm sure it can
Malcolm Lui: Yet.
Tance Hughes: Be done as far as cameras. No but we have been working internally on a tool that will send them updates on where their product is in the production process similar to like the Domino's Pizza Tracker or anything like that. We have a system in place that can using a tool like Zappia which kind of helps programs talk to each other and an internal database it can take the order number and then every time a status changes is made on that from our internal systems that could cheat on an email. You know your order has been cut it's headed to powder or something like that. So that's one of those efficiencies and customer experience things that we definitely believe we can improve upon to help with customer retention going forward
Malcolm Lui: Yeah. Yeah I do recall some other companies doing what I describe kind of showing someone's custom product being made more than just a text update that actually showed pictures of it being made being packed and so on and some of the viewers just love getting that and they just share that hey look what's being made for you and of course if it's a gift. I gonna want to share it. Right but it
Tance Hughes: Right.
Malcolm Lui: Might be interesting way of getting some social media presence. Doing
Tance Hughes: Sure.
Malcolm Lui: That perhaps.
Tance Hughes: Yeah. No it's a good idea
Malcolm Lui: So yeah there's the easy way of testing and that kind of I guess you could test that pretty easily. I just shoot a video with your iPhone and distended in one particular customer and see what happens.
Tance Hughes: Yeah definitely.
Malcolm Lui: All right now three last questions for you. For metals unlimited or Southern designs if you were to have a billboard along a fast moving freeway in Louisiana what would it say and remind you only have about six seconds or that people only have six seconds to see a billboard before they drive by
Tance Hughes: Yeah yeah. So I would just say you know personalized for you unique metal decor gifts. You know something of that nature. We we try to point out the unique personal aspect of the product so it'll definitely be something of that nature
Malcolm Lui: Right OK. And who are your ideal customers or perhaps you can recap again. I know you mentioned it early on in our conversation but who are your ideal customers and what's the best way for them to find and buy your product
Tance Hughes: Yeah. So our ideal customers of course are generally women ages 25 to 54. They generally have some family component in their lives. They're middle generally just middle class. You know regular people that are buying our products and the best way of course for them to fund our products is to visit our website and medal and limit income and and check out the entire selection that we have there because as I said earlier we sell with other partners at times and have different products on their sites. But we have we never have our entire collection of products on any other site except for our own. So of course the best place to go
Malcolm Lui: Right now. If I were to find your site on Amazon do you have the full customization available or those are just your standard stock items and if you want customization you have to go to your Web site
Tance Hughes: Yeah. On Amazon system stock items we're hoping to get the customization up on there hopefully within the next three to six months. But right now the full customization is only on our site.
Malcolm Lui: Right. All right. Very cool. And can you share briefly maybe the range of how much your products cost
Tance Hughes: Generally you can get one of our products in the 40 to 100 dollar range there. They're pretty affordable. They're not a very high ticket
Malcolm Lui: Yeah. Definitely affordable. And how many letters might that possibly be. For one hundred. All right.
Tance Hughes: Generally the Max will be up to 16 characters. Now we have other products have multiple lines of text and you can start squeeze in 25 30 characters. But generally what you're focused on with our products are. It's a name or home address something of that nature not a ton of information on.
Malcolm Lui: Right. I got it. It's an awesome having you on my show today. I've really enjoyed hearing how you grew your company so fast.
Tance Hughes: No I appreciate you having me on I was always glad to talk to you it's always fun to talk about your business and take a break from from working on it and just kind of share the story so I appreciate it.
Malcolm Lui: Now you're welcome and I really enjoyed hearing about your business on the metal fabrication side. It's something that I've never really dive deep into before so it's very interesting how you put it all together.
Tance Hughes: Thanks.
Malcolm Lui: We've been speaking with Tance Hughes, the CEO of SOUTHERN DESIGNS, about his company's rapid growth. For interviews with other fast growing, high value sales companies, or to learn how we can accelerate your firm's high value sales through automation, visit Eversprint.com.
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