Canvassing leads are also on the rise at Power Windows & Siding, in Brookhaven, Pa. “Historically, we’ve been fairly strong in canvassing, but this year it’s going to be far and away our No. 1 source,” CEO Jeffrey Kaliner says.
PRESS YOUR MARKETING Invariably, reduced sales and/or swelling marketing costs present company owners with the choice of reducing the amount of money they are willing to spend to produce more business. Some chose to spend more. Kaliner, for example, put more resources into marketing, rather than retrench. Faced with ever-escalating lead costs, company management decided that reining in those costs was secondary to generating more leads and sales.
“On a per-lead basis, or per home demo or issued lead or sale — however you want to measure it — the cost is increasing and increasing,” Kaliner says. “We made a decision to say, that’s fine, let’s spend the money. Let’s spend more money because in the long run, as long as you are still profitable at the end of the day, it’s the dollars that matter.”
With that philosophy, the company is “probably spending 50% more on marketing, overall, in terms of a percentage of sales in the last three years,” Kaliner says. “If we were a 10% to 12% marketing company in the past, now we are at 15% to 17% of sales.” On the other hand, revenue is also up sharply. This year Kaliner expects sales growth of 85% over last year, which grew by a similar amount versus 2006. Have margins been affected? Certainly. “We make less per deal, but there are so many more deals, we are making it up in sheer volume,” Kaliner adds.
You have to invest in marketing people, too, these contractors advise. Johnson hired a new trade show and canvassing manager. Schutzman brought on a new marketing manager. Dillon hired a canvassing manager. All agree that these were critical personnel changes.
Kaliner is reinforcing his canvassing program by moving away from the high school and college students who traditionally make up most canvass crews. “We’re spending the money to hire people full-time with benefits, and in the long run, it pays,” he says.
NEW PRODUCTS LEVERAGE CONTACTS Many companies have responded to the current recessionary climate by adding products, which, among other things, spreads the lead cost. The Carolina Building Group added new products to maintain the SFI leads that the company depends on — some 50% of its lead total.
“Our relationship with Sam’s Club was strictly for sunrooms,” Schutzman explains. “We just got approved for our window products, and now we are applying to get acrylic bath systems approved.” In the Kmart stores where the company operates its other SFI program, the company took a different tack, but with an identical goal: leveraging customer contacts.
“In the past, we pushed windows and sunrooms. Now we are going more for gutter systems, pergolas, and patio covers instead of sunrooms,” he says. “We are trying to come up with something that is a little bit more affordable but is still something people will want.”
Dillon effectively added new products by cross-branding among his five divisions. “We used to advertise all of them separately,” he says. But now his TV commercials show brands for all his product lines. “Cross-branding does work and it helps to hold down your overall costs.”
Low consumer confidence and tight credit create more day-today stress for contractors, but many remain optimistic and see the long-term reward. “Sometimes these tough periods end up being good for us in the long run,” Schutzman says. Stronger companies survive to face less competition when the economy improves, he adds. “It is going to turn around, and I still feel good about the fact that people are going to spend money on their homes more than on other things.” —Jay Holtzman is a freelance writer based in Jamestown, R.I.