Power Up
This year, a look at Replacement 100 companies shows an average number of jobs installed at just over 4,000 and an average sale of $8,404, which compares with $10,179 two years ago. Some 38% of those responding to a survey of Replacement 100 companies report seeing a smaller average ticket for the year; 30% with an average sale of about the same as it was a year ago; and 32% with their average sale up (see chart on page 38). Average marketing cost (page 40) is about even with the year before ? falling between 11% and 12% in both years ? and cost of a confirmed sales appointment slightly lower. Many companies have looked for ways to get more bang for their marketing buck, stepping back from traditionally expensive media advertising to focus on tried-and-true methods of customer contact such as canvassing.
And some companies have combined media and direct marketing to powerful effect. Take Power Windows & Siding, for example. Canvassing has played no small role in propelling this window, siding, and (now) roofing company into the top five U.S. home improvement operations. Cousins and co-founders Jeff and Adam Kaliner started 18 years ago as canvassers and have steadily built their operation into one of the fastest-growing home improvement companies. (See the interview with CEO Jeff Kaliner.) With four branches and sales of nearly $80 million last year ? at least triple its 2007 revenue ? the company has developed a winning marketing formula that combines canvassing with TV and radio advertising at a time when home improvement companies willing to do it are finding such advertising competitively priced. Ads make Power Windows’ name known so canvassers are not flying blind when knocking on doors in new neighborhoods.
Kaliner attributes the company’s rapid growth to its strategy of sticking to core products and expanding geographically into contiguous markets such as Maryland, New Jersey, and Connecticut with low-overhead branch operations. Four factors, he says, have helped to compound his company’s growth: a slower housing market that has made people less likely to move and more likely to spend money on their existing home; energy awareness and green marketing; the opportunity to hire good people who might not have been available when unemployment was lower; and a tax credit that “certainly hasn’t hurt.”
New Rules and No Room for Error
Hiring the right people has never been more important. Whether in marketing, selling, selecting new products and managing their launch, planning geographic expansion, or just servicing customers in the course of day-to-day transactions, there is, executives agree, little room for error in a market ever more restless and competitive.
The recession has been a stern teacher. Add to that a blogosphere ? unbidden consumer feedback via the Internet ? that will batter the reputations of companies that fail to respond promptly, civilly, and effectively to customer complaints or to those who simply disagree with policies and procedures. “There’s nowhere to hide anymore,” notes Canadian marketing and management authority Sam Geist about the pervasiveness of blogs, bulletin boards, chat rooms, and other forums, which have thrown up a challenge to many large home improvement companies.
And there’s also this: While it’s true that many home improvement companies have fared remarkably well in the slump that started in 2008 “when the world ended,” as Kaliner says, and certainly better than many remodelers who specialize in high-ticket custom design projects, it remains the case that today’s market is not the boom market of a few years ago. Even with banks and financial markets stable and some slight uptick in GDP, credit remains tight and the uncertain direction of the economy continues to make many consumers wary. If average ticket sales are down, it is, say company owners, because people are now often paying with cash rather than financing purchases through installment loans. “We’re still in an economic situation,” Grove says. “Everybody has a relative or a friend who has some issue with money.”
Attention to Detail
Between paring back overhead and shifting marketing resources into different, more productive areas, many company owners have used the recession as a time-out to look at what they do and how they do it, creating new systems or fine-tuning existing ones. “We’re using the recession to improve our infrastructure and the efficiency of our operations,” says Ross Marzarella, vice president of operations at All County Exteriors, in Lakewood, N.J.
“This year,” Percario says, “the biggest problem was knowing what we could sell.” Lately Percario, whose third-generation company is celebrating its 56th year in business, is focused on one thing in particular: getting the right price for the jobs his company sells and installs, which, he says, means “you have to truly know what that job will potentially cost.” No wide swings, no big drops, all components built into a computerized pricing list and the proposal costed out so that the company isn’t giving jobs away just to get them. Like many other companies, Percario is running fewer and more-productive salespeople.
Many Replacement 100 companies have updated their websites to include video links or social media, anticipating an ever larger proportion of business coming from Internet marketing’s many, and swiftly-evolving, forms. Speed is the key. Alure Home Improvements, in East Meadow, N.Y., which has drawn widespread attention over the years for its participation in the Extreme Home Makeover TV show, updated contacts on its latest televised project with on-going photos posted to its Facebook fan page and used an appeal on that page as its main recruiting tool for volunteers, says director of marketing Seth Selesnow. But “we’re still dipping our toe in the water,” he adds.
At the Power Windows & Siding website, visitors can engage in live chat with someone at the company’s office. Window Nation’s site offers the same feature, and Magden says the company is looking to make greater use of e-mail marketing, including e-mail blasts that send prospects videos or links to videos prior to the sales appointment. This year the company opened its fourth branch, in North Carolina. And Cleveland, where it’s now also operating, is Window Nation’s best market. The Magden brothers have benefited from their years working at Regency Windows ? in effect an apprenticeship in home improvement ? and have also learned from going off on their own. Their goal is to stay focused on one product and continue to open new branches. But “don’t get me wrong,” Harley Magden says. “I’d love to own Window World.”
