Marketing Mindset Taylor is in a peer group with a number of remodelers from various parts of the country, all but one of whom are strictly full-line remodelers. When he told them that his marketing budget is about 10% of volume, “they looked at me like I had three heads,” he says. “They think it’s ridiculous.”
Of course, it is absurd for a full-line company to allocate that much for marketing; one that did would have to so inflate its prices to keep a healthy margin that it would never land any work. But most full-service remodelers spend too few resources trying to bring in new business, if they spend any at all. And apart from everything else, this may be the biggest difference between the two types of home improvement companies: Single-line remodelers are marketing machines.
Doing the actual marketing may even be the easy part. There are all sorts of tried-and-true methods, and any number of resources available to help you. That’s not to say that marketing effectively is easy; it’s not. But the highest hurdle a full-line remodeler may have to clear is the psychological one that makes him shudder at the thought of spending all of that money.
“You have to overcome your fear of spending that much,” Taylor says. There’s no easy way to do it, but a good first step is to understand that single-line remodelers operate on much larger profit margins than full-line remodelers.
“You can’t live off less than a 45% gross profit,” Ferro says, and note that that’s a minimum; many specialty companies have higher GP. Of course, you’ll need to bump your prices up to reflect your overhead. “At the end of the day, your clients pay for your marketing,” Taylor says. The numbers don’t lie, so try not to worry that substantially higher marketing costs will put you in the red. Do, however, keep a close eye on what you spend, and what the return on that money is. “You need to manage your marketing dollars closely, because it’s such a great expense,” Taylor says. Most single-line contractors use lead-tracking software that is impractical for most full-service remodelers because they have comparatively few leads. If you do start a speciality company, it would be wise to invest in one of these programs. At the very least, you’ll want to keep tabs on how much you spend on each marketing medium, and how many leads your money buys.
The good news is that if you can get past all of these challenges, you’re in a strong position to succeed, and make good money in the process. Remodelers used to the headaches that come with long, drawn-out design/build projects full of change orders and other inconveniences will be pleasantly surprised at the relative ease of fulfillment in the single-line industry. Product options are limited, installation techniques are uniform, and the length and scope of the job leave less to go wrong. “You can perfect it,” Waller says. “You can become a dominant force.”