The #Takeoff series is about crowdsourcing issues important to Canadian small businesses. They tell us about their defining moments and we write about their stories, the issues, and strategies for success or how to overcome obstacles.
When Doug and Kelly Niessen wanted to install outdoor flooring on the balcony of their B.C. condo, they had to go far afield to find what they liked – and what their strata council would approve. Condo boards of directors in general do not allow permanent alterations to outer structures, which meant anything requiring glue, grout or nails was out of the question.
Realizing that conventional building supply retailers were unable to offer the kind of service, quality and choice they were looking for, the couple decided to start their own business. They have been importing floating, interlocking outdoor flooring systems since 2011.
The Niessens' initial impulse with Kandy Outdoor Flooring, however, was to appeal to a broad market. "They talked about being a solution for everyone," said Boni Wagner-Stafford, who started in January as the six-person company's vice-president. "Walkways, driveways, basement, backyards – you name it."
But after a year in business, sales were not exactly stellar. They realized, said Ms. Wagner-Stafford, that the company needed to focus on a much smaller component of that market. "All of those other applications have other options," she pointed out. "Condo balconies do not have other options."
The company now sells and installs interlocking floating condo balcony floor systems made of a range of materials, including hardwood, composites, granite and bamboo.
And now, she said, the question the company asks itself, is, "Does this help condo dwellers expand their home experiences? If it's 'yes,' then we talk about it further, and if it's 'no,' we don't waste any more time on it. That was really big," she added. "Revenue and sales told us we were on to something there."
Kandy did the right thing, said Kelly Askew, managing director of retail for Accenture Strategy, "by changing from being product-centric to being customer-centric," and designing the brand around what their customers want. "When they focused on the smaller set of customers, which may sound a little counterintuitive, rather than doing a thin job on many customers, they are doing a deep job on fewer customers," he said. "So the rate of conversion is going to be significantly higher."
According to Ms. Wagner-Stafford, homing in on the kind of client they wanted also implies understanding other lifestyle dynamics of condo living. For example, she said, "people who live in condos have often chosen a lifestyle which is not one of DIY home renovation projects."
This is another important aspect of making the most out of their niche, Mr. Askew said. "They know that the do-it-yourself people are not their customer set. They want the people who are all about convenience and speedy solutions in a box."
What's more, as the company looks at expansion, possibly through franchising, a niche market offers them an approach to sharing their way of doing business more easily with franchisees, said Moren Lévesque, professor of operations management and information systems at the Schulich School of Business at York University.
"I think they are smart on focusing," she said, "because if they want then to be able to put in place this structure they can share with a franchisee, that is much harder to do if they are all over the place. Whereas, if they are focused … they will know very well who their customers are, and can set up these routines. That can be a very smart strategy to enable them to expand relatively fast."
Mr. Askew, however, suggested alternatives to franchising, such as finding channel partners, not necessarily just franchisees, with which to align themselves, "people who can resell their product, and are also serving those customers. So, condo-focused furniture stores, all sorts of services that are advertising in condos to provide everything from dog walking and apartment sitting to property management and cleaning services, people who are already in the lives of the condo dwellers."
They should also think about expanding their presence, he added, "in those digital places where condo dwellers hang out. Nowadays, most tend to have some subset of digital neighbourhood where they live, be it a Facebook page or a Twitter group that people in different areas use. So, being present in there, sharing information about their products, and then finding those influential condo-dwelling evangelists for their product. Having relationships with some of those digital influencers will likely pay dividends for them," he said.
The company is currently based in the Vancouver and Toronto markets, and opening new branches in a couple of other cities would also help Kandy strengthen its business practice, Ms. Lévesque said. "Sometimes it is easier to grow within yourself because you have the employees who already know what to do," she said, "so you are more easily able to control what's going on, rather than totally giving it away to someone else. You keep it in the family, if you will, so you're the one who builds this unit."
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