The Time Is now
Many replacement contractors now incorporate tax credits into their marketing. But is that enough to prompt homeowners to call? And if they call, why shouldn’t they offer objections to stall the sale? That’s when tax credits become not just a way to prompt inquiries but yet another means to help close.
“The real tool is in the hands of the astute sales rep,” contends Vaughn McCourt, general manager for Penguin Windows, in Mukilteo, Wash. In the minds of some customers, McCourt says, “the difference between a $4,500 job and a $6,000 job is huge. People didn’t think windows were affordable, and now they become affordable.” So big are the savings, relative to the size of the job, that they feel they can afford more windows. Since the tax credits came into play, Penguin Windows’ average sale is up by $2,000 and its close ratio by half a point, not small change if you’re running 150 to 160 appointments a day.
The tax credit message lends urgency both to lead generation and closing by reminding prospects that there’s no time like the present to take advantage of a situation that benefits them, is good for a limited time, and won’t be repeated. The message in brief: If you’re thinking about windows, need a new roof, or would like the house properly insulated, the federal government is giving you an excellent reason to get it done now, since that reason won’t exist in two years.
Don’t expect homeowners to know any of this on their own. Think they do? Try asking. An April survey by Opinion Research Corp., sponsored by building products manufacturer Johns Manville, has 68% of homeowner respondents saying that they know about energy tax credits. But 72% of respondents were unaware of how to apply for them, and 53% said that they didn’t intend to make a purchase that would qualify.
In other words, most understand or have heard about the concept, but they know little or nothing about the particulars, such as the time frame, the products covered, or how the credits work. They may not know the difference between a tax credit and a tax deduction.
Earlier this year, for instance, demonstrators working a local event for Larmco Windows and Siding, in Ohio, asked visitors if they were familiar with how energy tax credits could save money on a home improvement purchase. Almost uniformly, according to vice president Joe Talmon, the answer was No. Talmon points out that this provides an opportunity to get the conversation started, especially in face-to-face marketing.
“If you’re going to wait for people to know before they respond, it’s not going to happen,” he says. Larmco Windows and Siding put tax credits front and center in TV and radio ads, as well as on its website, which not only notes that just 20% of replacement windows currently qualify for tax credits, but also explains the company’s discount offer and features an energy savings calculator that visitors can use.
One other thing that Larmco found out was that tax credits alone usually don’t get the phone to ring. “We had a few commercials where tax credits were the thrust of the message, and they underperformed,” Talmon says. Instead, talking about tax credits lets you talk about the value of your company’s product and service and how those distinguish you from competitors.
Dollar For Dollar
The more aggressive home improvement companies didn’t stop at simply calling attention to tax credits. They sweetened the pot with a discount. The most popular promotions offer customers who buy qualifying windows or insulation a dollar-for-dollar match on their tax credit. Say, for instance, you bought $10,000 worth of windows from Weather Tight Corp., a Milwaukee company. Even minus the 20% installation cost ($2,000) you, the customer, qualify for the full $1,500 tax credit as applied to the $8,000 materials cost of that purchase. But while the tax credit shows up next year, Weather Tight will discount your cost today by exactly the amount you qualify for in tax credits. Not only do all the company’s windows qualify, but that easily comprehensible discount provides a strong incentive to buy.
Weather Tight’s discount offer, and a strategy for marketing around the ARRA tax credits, was in place within days of the legislation being signed into law. Before the company crafted its offer, says director of marketing Michelle Vincent, canvassers and demonstrators were given an information packet and were coached in a new script explaining how homeowners could use the tax credits to buy energy-efficient windows. Sales reps “practiced and practiced” incorporating tax credits and the dollar-for-dollar discount into their presentation, sales manager Eric Folsom says.
Weather Tight, Penguin Windows, Larmco Windows and Siding, Cardinal Builders in Columbus, Ohio, and Power Windows & Siding in the Philadelphia area are five of many home improvement companies now offering a dollar-for-dollar discount on windows or other products such as insulation.
But mostly windows. It’s been a while since anything stirred the window replacement industry like the 2009 ARRA. Even the low-price dealer network Window World scrambled to get qualified product into place.
All this is leaving some people wondering if we’re not suffering from a case of “stim fatigue.” “Everybody’s talking about tax credits,” says Ken Moeslein, CEO of Legacy Remodeling, in Pittsburgh. “We quickly make it known that we have windows that qualify, then we move on.”
Rather than run the risk of getting lost in the shuffle, Legacy Remodeling decided to steer clear of tax credits in its marketing. On their laptops, the company’s salespeople take prospects to the National Fenestration Rating Council website to show them which of the windows they’re considering from various manufacturers qualify. Since Legacy Remodeling counts about 20 products in the Pittsburgh market that do qualify, Moeslein says he prefers to market and sell around other strengths.
