Probe Deeply To budget for marketing, you need to understand more than just what your leads cost. What did the leads produce? How many demos were set? What were the closing ratios? Which leads had more bank rejects?
For instance, television advertising is among the more expensive lead sources. (See “Can I Afford TV?” on page 66.) By scrutinizing your marketing budget in October and the leads and sales it produced, you can take advantage, in December, of prime media buys for the following year, particularly network TV spots.
Home Town Restyling commits around $100,000 to TV ads appearing weekly on the three-minute midday news segment of the local CBS affiliate. The segment helps produce a 50% closing ratio on TV leads. “TV lends so much credibility,” Winn explains.
When you’re looking at lead sources, examine which ones were efficiently handled. If a lead source failed to perform to expectations, was the failure internal or in the message? Did your marketing staff fail to convert those leads to issued appointments? Or did salespeople fail to convert the lead to a sale in the home?
Questions like these are the reason Leader insists that you can’t budget for marketing based on NSLI. Before chucking a lead source because of low conversion ratios, Leader suggests asking if the fault lies in training. “[NSLI] is good to manage a salesperson but not relevant in determining marketing cost or return,” he says.
Butterfield not only doesn’t agree with that, he benchmarks NSLI.
“If NSLI is $2,500 at a cost of 5% of revenues, that’s a phenomenal lead source,” he says. He looks for $1,200 to $1,800 NSLI in windows, $1,800 to $2,500 in siding.
Butterfield’s NSLI for canvassing is $2,500. “The cost is miniscule, less than 1% on a radiation around a jobsite,” he says. “That’s why I love it. All the money you save goes to the bottom line.” But NSLI is just one metric he examines in determining the usefulness of a lead source. How did marketing handle the call? How quickly did sales get into a home? How experienced was the salesperson? Butterfield not only looks at who handled the leads, but also the methods used to convert them.
Butterfield also tracks trends and adjusts marketing accordingly. For instance, if a show that did great last year flopped for want of attendance this year, was weather a factor? Is the country at war? Are people going to TV or the Web for their news? “It’s a mistake to just look at the numbers,” he says.
Herb Gross, of Charlotte, N.C., author of How to Win the Ad War and a 30-year advertising specialist, says a consistent network TV campaign will always outdo any scattershot approach. “Focus on one medium,” he advises. “The thing that drives results is frequency. When people come up with a plan, let it run. If advertising isn’t producing desired results, don’t change the plan, change the message.”
Schulz and others advise against investing in just one lead source. In 1996, Schulz dropped home show and events marketing to focus solely on marketing at Sam’s Club. Then, Sam’s Club moved to a large regional SFI firm and dropped his company. That happened at around the same time that Weather Tight got out of cold calling. “We lost hundreds of thousands of dollars that year,” Schulz says. “We can’t afford to put all our eggs in one basket.”
Winn loves TV’s impact, but he also believes consumers are susceptible to various types of advertising and marketing. Consequently, he spreads his ad dollars among 26 lead sources.
Whatever strategy you choose, look ahead, look back, tweak as you go, scrub your database, and always market smart. Sales success has no choice but to follow. —Joseph F. Schuler Jr., a former senior editor at REMODELING, is a freelance writer in Gaithersburg, Md.