KEEP ON MARKETING Wheatley Associates’ new division requires a new marketing effort. The company recently placed ads in the local paper touting the small-projects service, and informed more than 5,000 people — the company’s list of past customers and prospects — via direct mail.
Instinctively, many remodelers would shake their heads at the idea of increasing spending on marketing during lean times. Indeed, Toker’s first piece of advice to remodelers facing lean times is to “avoid overhead like the plague.” But Toker, like many others, makes an exception for marketing. In fact, as counterintuitive as it seems in a time when you’re looking to cut as much from your overhead as possible, most say that you should actually increase your marketing expenses when business is slow, otherwise you have no chance of getting the work your company needs to survive. “Once you quit advertising, you might as well close the doors,” says Joe Ritchie, president of Sunnyside Designs, a Four Seasons sunroom dealer in Louisville, Ky. “It takes guts, but if a lead now costs you $300 instead of $200, you have to do it.”
So Gary Porter, owner of G.A. Porter Construction, in Dayton, Ohio, recently attended a home show for the first time in five years, “to keep my name out there.” He’s also committed to making his company’s newsletter a more regular fixture in his clients’ mailboxes. A remodeler who wishes to remain anonymous started advertising in local magazines once the market in her area slowed down, and is turning to television as it falls further. Jim Manley, president of Manley Enterprise, in Bethesda, Md., has survived a large chunk of his 30-plus years in business without doing any advertising, but he recently hired a marketing consultant and added several thousand dollars to a marketing budget that for many years totaled exactly zero.
TRIM THE FAT While now is not the time to cut back on marketing — though it’s a good idea to examine your return on investment in various media to ensure that you’re spending that money wisely — you should be looking to make your company as lean as possible. Toker says that companies doing larger-scale remodeling work can fairly easily reduce expenses by 2% to 5% without sacrificing quality, by tightening systems and operations. “It’s very easy to take on overhead, and once you do, it seems like you can’t work without it,” he says. “That’s absolutely not true.”
When Porter scaled back the size of his company during the mid-1990s (for reasons other than a market slowdown), he found the key to successfully doing so while increasing profitability was in the answer to this question: “When is my overhead serving my customer and when is it serving me?”
Answers will vary from company to company. Porter runs a small design/build firm that does a handful of projects per year, so he needs relatively few leads to earn the number of jobs necessary to hit his volume goals. Because of this, the four-color brochures and flashy design packages that larger companies say they can’t do without aren’t vital to him. He saves expenses there, keeping his cost to the customer down, helping him earn the referrals that are basically his sole source of business.
Larger companies, or lead-driven outfits such as replacement contractors who rely on a large volume of inquiries to reach their revenue targets, may want to think twice about giving up their “wow!” factor, but should still look for areas they can cut back without sacrificing revenue or service to the customer.
Porter also found that he wasn’t always the person in his company who was best equipped to suggest ways to scale back. His office manager used to spend a lot of time creating detailed reports, that, Porter says, “I didn’t use much.” So he decided to cut back on them. But rather than choosing which ones got the axe himself, he asked his office manager which ones she saw him using and which got ignored. “I had a tendency to say, ‘I might need it next week,’” Porter says. “Well, I had been saying that for five years.” Porter also recommends talking to your customers: “Go back and ask them, ‘I did all this to impress you; what was the difference for you to hire me?’”