Remodeling and Home Design

Stairways to the Stars

Reprint of article from "Marketplace Magazine" March 25, 2003

Written by Rick Berg

Stairway to the Stars

At a time when many companies in the residential building industry have seen sales flatten or decline, Neenah-based Arcways is still seeing 18 to 20 percent revenue growth. And the best part, say owners Tom Stilp and Sharon Stilp-Kressin, who bought the stair-making company from their father a decade ago, is that the growth comes mainly as a result of increased per-installation revenue, rather than from ratcheting up the number of stairways they can pump out. The fact is, Arcways has made itself into a recognizable and respected name nationally by focusing on quality, rather than quantity, and the owners are unabashed in their belief that not everyone can afford their products, and that the high-end market is where they want to keep their company positioned.

“The key is never to allow this to become a commodity product,” says Stilp. “For us to be successful, we need to continue to increase the quality options available to our customers and give them the opportunity to create something that is unique to them. So all of a sudden, what was a $10,000 stairway is now a $30,000 stairway. In a $2 million home, that’s not unusual. So, we’re growing our dollar volume by 18 to 20 percent, with about the same number of deliveries.”

In fact, says Stilp-Kressin, Arcways is producing fewer stairways today than it was five years ago, when she and Stilp decided to take an already high-end, respected product up a notch and focus on the upper end of the high-end housing market.

“We used to do standard curved stairways that ranged from “$5,000 to $10,000”, says Stilp-Kressin, “and we’d deliver 12 plus stairways a week. Now we’re delivering 6 plus stairways a week, but the average is $25,000 to $35,000 each, and a few times a year we’ll have a job that’s over $100,000.”

As a closely held, private company, Arcways does not reveal its financial data. However, a little math will suggest that the company has doubled its revenue while reducing its production and many of the associated costs.

Arcways got its start in 1965, when Don Stilp, then a homebuilder, created a custom-built curved stairway for John Boehme’s new home on Lake Winnebago. In the process, Stilp and Boehme discovered that there were few companies capable of producing curved and spiral stairs, so they formed Arcways and began marketing their custom stairs nationally. Stilp and Stilp-Kressin grew up with the business and worked in it with their father until he retired and sold them the business in 1993.

Arcways already had a quality reputation in the stair-making industry, so their primary challenge has been to discover ways to translate that reputation into continued growth.

Their most recent discovery is the mega-yacht industry, dominated by companies like Racine’s Palmer Johnson Yachts and Manitowoc’s Burger Boats. Arcways has already created several staircases for Burger Boats (including one for NBA star Scottie Pippen) and recently completed one for Palmer Johnson. The luxury yacht market being what it is, Arcways' exposure there will likely lead to more sales there.

Stilp and Stilp-Kressin also made two moves about five years ago that have positioned them for growth and increased profitability.

One, they moved away from traditional two-step distribution and began focusing on direct sales to homeowners, architects and builders. That accomplished two things: It eliminated the 30 percent markup most distributors and lumberyards expect on the products they carry, and it improved the products’ marketing, because distributors are often somewhat passive marketers for the products they carry.

“Unless you have salespeople who are really interested in your product, they don’t learn enough about it to sell it properly, “ says Stilp-Kressin. “When we started selling direct, we were able to begin working with the home owner and builders, and now we have builders who put Arcways stairways in every home they build”.

The second move, which tied in well with the first, was to market their products via the Internet. Today, Arcways has an interactive Web site that draws approximately 1,400 visitors per day, with an average visit length of more than seven minutes – compared to an Internet average of less than a minute per visit, according to Virtualtech, which maintains Arcways' site.

Many visitors to the site request a copy of the company’s CD, which contains photos and videos. Arcways has its own robotic CD burner, so it is able to mass produce CDs as needed and update the “virtual catalog” as often as they need to.

In addition, the CDs are password-protected, so when the customer wants to view the CD, he or she has to log onto the Arcways Web site to get the password. That lets Arcways know that the customer is serious. Those who request a CD, but don’t log on to use it, get one reminder e-mail. If they still don’t use it, Arcways deletes them from the prospect file to avoid wasting marketing time on them.

Arcways has now added three-dimensional CAD capabilities to its arsenal and will soon be able to load the CDs with “virtual tours” that allow a customer to see what their stairways will look like in the house and even switch out wood species and design elements to see what they like best.

Arcways has worked with Art Inc. of Coeur D’Alene, Idaho, the developers of Chief Architect CAD software, to add the stairways component to the application, which is already used by approximately 36,000 builders and 12,000 architects. Arcways is the only stairway manufacturer incorporated in Chief Architect.

Next up: a planned partnership with Kinko’s, which would allow users of Arcways CDs to automatically link to their nearest Kinko’s to print out photos and drawing files – “for those people who have to have paper,” says Stilp, who clearly sees the need for paper catalogs vanishing.

“We used to have $40,000 worth of printed literature in inventory. Now we have 2,000 blank CDs at $600, and we can update our catalog every month with new photos and videos.”

For all the technological development, Arcways remains the family-run, quality-focused company their father created, say Stilp and Stilp-Kressin.

“We feel indebted to our father, because he created this great business and now we have to opportunity to make it go further,” says Stilp-Kressin.

“He did all the hard work,” says Stilp. “At the beginning, he worked two jobs, so he didn’t have to take any money out of the business. He’s an awesome guy”.

Copyrighted material, reprinted with permission of Marketplace Magazine, (920) 735-5969.