Are your marketing costs rising while your number of leads is falling? If so, you are not alone. Some of the biggest, most successful companies in the industry are struggling with this issue.

I sit on the GE Money advisory board with 15 or so leaders of remodeling and specialty companies that average between $50 million and $100 million in annual sales, and the No. 1 issue on the minds of these industry leaders is client acquisition and its cost. Many of the predictable lead-generation recipes of the past are either illegal or too expensive — Do-Not-Call legislation alone has raised the cost of client acquisition as much as 200% to 300% over the last few years.

Although smaller remodelers may not be quite as focused on cost-per-lead, many are trying to figure out which marketing activities still make sense.

As with any business, getting prospective clients to call or show up at your door is of paramount importance, particularly in the current sluggish business environment. But the state of the general economy and the real estate market are not solely to blame. Other factors responsible for the marketing difficulties we are all experiencing include an increasing volume of junk mail, the growth of the Internet as a virtual Yellow Pages, and even the advent of TiVo, which allows people to skip commercials.

ADAPT AND THRIVE The good news is that clients and projects — and the revenue they bring with them — are still out there. The difference is, clients these days aren't as visible or as active, and they certainly aren't standing in line waiting for an opening in your schedule. They have work that needs doing, but to win it you need to seek them out.

Here are five critical steps to take to corral more of that potential work for your company.

  • Know your marketing numbers. You should know not only the cost per lead but the difference in cost per lead for different types of marketing activities. At the same time, keep track of your close rate for different lead sources, different types of projects, and different geographic locations. Together this data will help you determine which marketing program is working most cost-effectively.
  • Listen. That means listen to everybody — your clients, your team, your subs, and your gut. It is more dangerous than ever to assume that the old ways still work. The best way to make good decisions is to ask lots of questions and receive input from diverse sources.
  • Deputize your team. Your employees (especially your production crew) may be your best solution to generating new client opportunities. But this is not a traditional role for field personnel, so you need to impress upon them that marketing is a team sport these days and that they are important players. Then equip them with leave-behind marketing tools (brochures, project photos — more than just a business card) and give them some sales training.
  • Stick to what you know. If you know that 70% of your business comes from past clients, then invest more energy and resources into your client base. If, on the other hand, direct mail is not bringing in the returns you need, then spend less or use more targeted lists.
  • Act now. Failure to act soon enough has put many companies out of business. Just because a particular marketing strategy has worked in the past doesn't mean it will work now or in the future. If something is not working, drop it and try something else. Act quickly or your level of pain will be greater tomorrow.

In a tough business environment, some companies hunker down and ride it out; others get invigorated and see an opportunity to gain market share. Either way, today's economy is different from yesterday's, and you need to adapt.
—Mark Richardson is president of Case Design/Remodeling, which has four offices in the D.C. metro area, and Case Handyman and Remodeling, which has more than 180 franchise territories nationwide.