Lumber Liquidators 2007 Annual Report Download - page 11

value proposition to the customer, and believe we offer superior service and hardwood flooring expertise. Based
on our market research, we believe that Bellawood, which accounted for approximately one-third of our 2007 net
sales, is among the most-recognized brands in our industry. We are committed to supporting our brands and
products through diverse national marketing campaigns that reach a wide variety of potential customers. Our
objective is to sell high-quality products at an attractive value.
Our Integrated Multi-Channel Sales Model
We have an integrated multi-channel sales model that enables our national store network, call center,
website and catalog to work together in a coordinated manner. We believe that due to the average size of the sale,
many of our customers conduct extensive research before making a purchase decision. Our average sale was
approximately $1,800 in 2007. We define “average sale” as the average invoiced sale per customer, measured on
a monthly basis and excluding transactions of less than $250 (which are generally sample orders, or add-ons or
fill-ins to previous orders) and of more than $30,000 (which are usually contractor orders).
Our sales strategy emphasizes customer service by providing superior convenience and education tools for
our customers to learn about our products and the installation process. Customers can view our complete
assortment of products through each channel. We believe that potential new customers generally first come to
know about us through our national advertising and other marketing efforts. For many of them, the next stop is
our website, which provides an informational tool where they can start to learn about our wide variety of
products. Our website also allows new customers to see “before and after” examples from previous customers,
explains the installation process and provides product reviews and endorsements. Some customers contact our
call center, which is staffed by more than 50 flooring experts who are also available for online chat and email.
Customers can order samples or a catalog through any of our sales channels. We hire store associates who often
have relevant industry experience, are able to guide customers through the purchasing process and can provide
advice on installation, the selection of a contractor and maintenance. Once an order is placed, customers can
either have purchases delivered or can pick them up at a nearby store location. We strive to use our various sales
channels to make our customers’ transactions easy and efficient.
Our approach is based on our belief that customers prefer to shop for flooring using multiple channels.
Because hardwood flooring is an infrequent purchase for many of our customers, we believe that we increase our
chances of making a sale if we are the consumer’s choice for expert service at each step of their purchasing
decision, from initial education about hardwood flooring to guidance on best maintenance practices for their
installed flooring. Our national advertising strategy is designed to raise awareness of our brand and to establish
Lumber Liquidators as the first destination for customers who are in the early stages of a purchase decision. Our
other marketing efforts, our website and our catalog are similarly designed both to sell products and to provide
customers with information throughout the purchasing process. Our research indicates that by the time a
customer enters one of our stores, he or she has generally researched our offerings on our website or in our
catalog and is ready to make a purchase.
Customers can purchase our products in our stores, or through our call center or website. The prices
available on our website and from our call center are the same as the prices in our stores.
Our Marketing and Advertising
Our marketing strategy emphasizes product credibility, value, brand awareness, customer education and
direct selling. We have structured our marketing and advertising strategy to correspond with our understanding of
the hardwood flooring purchase/cycle. We increase brand awareness in a variety of ways, including advertising
and demonstration of our value proposition to customers. We have invested significantly to build awareness and
demand for all of our proprietary brands.
We believe that our Lumber Liquidators brand is positioned based on selection, price and service, while our
Bellawood brand is known as a premium flooring brand within the industry. We believe that we establish product
5