It's only recently that a distinction has been made between replacement contractors —purveyors of replacement windows, siding, and roofing; gutters and gutter protection systems; and decks and sunrooms — and full-service remodelers. It's an apt differentiation, according to Charlie Gindele, president and owner of Dial One Window Replacement Specialists in Santa Ana, Calif. “The businesses are totally different,” he says, noting the discrepancies in volume and number of jobs completed. But those differences shouldn't create an unbridgeable gap between two industries that are in many ways similar. In this, the third of a four-article series, REMODELING talked to replacement contractors about what they do best.
Smart Marketing The first thing that strikes you about good replacement contractors is how on top of their numbers they are. Their whole business, in fact, is an exercise in game theory. By studying data from several years back, they can determine — with a great degree of accuracy — what percentage of leads turn into appointments, and what percentage of appointments turn into sales. Factoring in their average job size, they can quickly calculate how many leads they need to reach their volume goals for the year.
Because leads are the lifeblood of any replacement contractor, marketing — the act of generating leads — is the most important task these companies undertake. It's so important that Dale Brenke, president of Schmidt Siding & Window Co. in Mankato, Minn., still oversees the company's marketing efforts, despite having delegated oversight of production and selling to his two vice presidents. “My job is to have leads for our salespeople,” Brenke says.
Schmidt's major marketing expense is television ads, and the company is fortunate to work in a market where airtime is relatively inexpensive. Brenke says the company ran 719 30-second spots last year, at a total cost of around $63,000. Marketing dollars don't stretch that far everywhere in the country, but you can take a lesson from Schmidt on how to make your time on the tube as productive as possible. Rather than serve as sole spokesman for the company, Brenke has his installers —the very people customers will see daily in their homes — appear on the commercials, saying who they are, what they do, and how long they've been doing it. Schmidt asks callers how they heard about the company, and Brenke says more than 20% respond with some variation of “I just know you.” The ads' impact on the bottom line is obvious: In an area of roughly 200,000 people and 44,000 homes, Schmidt installed $6.5 million worth of windows, siding, gutters, gutter protection systems, and sunrooms last year.
Most replacement contractors invest a higher percentage of their volume on marketing than full-service companies do. A survey conducted by REMODELING's sister publication, REPLACEMENT CONTRACTOR, found that the average marketing cost for the country's 100 largest specialty contractors was 10.4% in 2004. But Schmidt's marketing budget was a meager 3.5% of its total volume in 2005. The key is making the most of your marketing dollars.
That might mean taking a lesson from Swimme & Son, a window, siding, gutter, gutter protection, and sunroom company in Elizabeth City, N.C. Swimme & Son sends mailings to homeowners in neighborhoods adjoining their jobsites. There's nothing special about this; it's even standard practice for a fair number of full-service remodelers. But marketing director Theresa Swimme urges design/build companies to take better advantage of the time they spend in the neighborhood. “We're in and out of the house in a day,” she says. “We've got one shot to say we're coming, and one to say we're leaving.” Full-service remodelers, on the other hand, will spend weeks or months on a single jobsite. “They have the opportunity to mail neighbors [repeatedly] to tell them what's going on,” she says.
Keep Track One way to keep marketing costs from getting out of hand is to pay close attention to where your leads are coming from. What's the point of spending an extra few hundred bucks to ensure that yours is the biggest ad in the Yellow Pages if most of your leads are coming from radio ads, home shows, or some other source? In such a situation, your money is better spent elsewhere.
Savvier full-service remodelers have a lead sheet that includes a list of sources from which the person handling the call can select the most appropriate for that particular lead. But many replacement contractors go further, and get right down to which particular advertisement caught their attention, or which past clients referred them.
Gindele uses a service that establishes a different toll-free number for each of his marketing pieces. He can go online and pull reports that tell him not only where his leads come from, but how many from each source turn into measuring appointments, sales appointments, sales, etc.
Home improvement contractors generally use one of a variety of software packages commercially available to aid in their lead tracking, and some have developed their own custom computer programs. Because most full-service remodelers are dealing with a relatively small number of leads, these products have many superfluous features and probably aren't worth the investment. However, that doesn't mean that some of the principles behind the software wouldn't be useful to a design/build remodeler.
Leads are so valuable and so expensive — $220 each according to the REPLACEMENT CONTRACTOR survey — that many specialty contractors don't give up on leads that don't pan out. They “rehash” them; that is, they set them aside for later contact, often by a different salesperson. Checking up on homeowners who didn't buy from you should be routine, but Swimme says “to do that kind of follow-up, you need an automatic trigger.” Home improvement contractors generally use commercially available software to rehash leads, but it's easy enough to do it manually by marking your calendar with reminders.