Moving away from "me too." - how Sashco Sealants Inc., a Commerce, CO sealant company decided to develop unique products and to avoid distribution through discount home building materials outlets - Column

Nation's Business, August, 1994 by Les Burch

We introduced a new product to our line in 1987, and before long we knew we had a winner. Sales of the new item, a clear sealant that comes in a clear cartridge, took off. During the next three years, our company, Sashco Sealants Inc., located near Denver, watched revenues triple, reaching $6 million. The product lines that had previously driven the company, meanwhile, accounted for less than 10 percent of those sales.

We had bet the firm on the new product, buying $600,000 in equipment and more than tripling our production and warehouse space. The clear sealant, called Lexel, succeeded because it was different, almost in a category of its own. It doesn't mar the appearance of the gutters, windows, and doors being treated. And unlike silicone sealants, Lexel can be painted.

When I compared it with the rest of the product line, it was obvious that most of our other goods were "me-too" items--made because the competition had them first, not because we had something better.

Only two of our products--Lexel and a sealant called Big Stretch--were "really us." We eventually developed another product--an adhesive called Glue Buddy--and jettisoned eight longtime products.

At first, members of our sales and management teams were not eager to do this. They feared that big customers the ones buying all our products--would leave if Sashco eliminated 80 percent of its line. To be honest, we had no idea how those accounts would react. But fear usually means you are focusing on what you have to lose, not on what you stand to gain. In our case, we lost nothing. While a few customers complained about the loss of our other products, no one left us. In fact, revenues and profits grew the year the product line was cut.

Narrowing our focus didn't stop with products. Lexel's success drew the attention of discount stores like Kmart and Home Depot. Up to that point, Sashco's customers included only independent dealers and smaller home center chains and co-ops, like Ace and Tru-Value.

Some sales team members were excited about selling to discounters, if only because five chains--Kmart, Home Depot, Wal-Mart, Builders Square, and Home Base--account for 20 to 25 percent of the hardware market. At the same time, we feared that by selling to discounters, our reputation for quality would suffer and our products would take on the "me-too" image we had worked so hard to avoid.

While a lot of companies like the exposure of building traffic for a national chain, we feared having products sold at or below cost. It is no great honor to be a loss leader when you sell a specialty item--especially when it endangers the enthusiasm of long-standing customers.

One morning, in 1991, our management team discussed Sascho's identity and how we were inclined to introduce more-expensive specialty items for people who are truly concerned about how the products work. Our head engineer, Dan Lewis, was at the table that day. He is the quiet type who soaks up information without much comment, but he has a knack for boiling an hour's conversation down to a single, clear-cut principle. After much discussion, he had this credo for our products: "You can't buy them at Kmart."

That summarized the entire meeting and became the cornerstone of the company's next strategic move. We not only decided not to sell to discounters but also announced our policy to the industry, with full-page ads pledging to independent dealers that our products cannot be purchased at the Big Five chains.

While it took us three years to decide to jettison the old products, it took just two months to make this decision. And though we were, in effect, cutting the company off from a quarter of the market, sales continued to grow. Today, Sashco employs 45 people; revenues last year were more than $7 million.

Entrepreneurs are constantly tempted to expand into markets and products in which their company has no uniqueness. It is a siren song that rarely works.

By reducing our product line and clarifying our distribution policy, we became more important to our customers, and I learned that there is more growth potential in focusing yourself than in answering every call.

Les Burch is president of Sashco Sealants Inc. of Commerce City, Cola He prepared this account with Nation's Business Contributing Editor Charles A. Jaffe.

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