Three years ago, Ben Morey, president of Morey Construction, in Signal, Calif., wrote a guest column for the October issue of REMODELING about participating in a CNN show called The Turnaround, which pairs small-business owners with a mentor.
The host, Ali Velshi, paired Morey with Bruce Karatz, then chief executive of Los Angeles–based KB Home, a large national new-home builder. During the three days of filming and conversations, Morey says one piece of advice made a significant impression on him. Karatz said that Morey should be making a 50% gross profit. “My mouth dropped. He felt there was enough money and enough demand for remodeling for that markup. A markup of 100% would generate that 50% gross profit,” Morey says. “He did acknowledge that it would take quite a bit of advertising — beyond our standard promotion.”
At that time, Morey spent less than 0.5% of his volume on marketing and advertising. He immediately upped this to 2%, and last year spent 5% of his volume on bringing in leads during the economic downturn. “With the slowdown, we need more exposure,” he says.
In 2008 60% of Morey Construction’s business was for previous clients. To contact these customers, Morey spent some of his marketing budget on a monthly electronic newsletter. He also began advertising in a high-end local magazine and sending postcards featuring the company’s award-winning projects to homeowners with incomes above $250,000.
He wants the marketing to generate immediate business, but his ultimate goal is to create stronger relationships with clients. “It’s with the hope that, as we develop confidence in each other, we establish this base-level relationship, and as the economic tide changes, they will remember that,” Morey says.