Fewer leads in your market and less jobs to go around? What that means, industry experts say, is you’ll need to work harder to get the work. Industry consultant and REMODELING columnist Linda Case suggests that full-service remodeling companies that budgeted between 1% and 2% of revenue for marketing when consumer spending was at its peak, should now spend 4% to 5% of revenue on lead generation if they want to grow.
David Alpert, president of Continuum Marketing Group, with many remodeler clients, says several factors — job size, company size, economic climate — determine what a remodeling company needs to spend on marketing. “If you’re a reasonably sized company, a design/build company say, you’ll have to spend more than you’ve ever spent before,” he says.
Less Repeat/Referral Business
In many cases, companies are spending more as a percentage of revenue either because leads are fewer or sales less. Firms that previously relied on word-of-mouth to generate business, now find that less effective. Word-of-mouth, says Connecticut remodeler Alan Hanbury, is “the first thing that turns off in a recession. There’s no urgency. None of that stuff comes through word-of-mouth; it comes through creative action.”
His company, House of Hanbury Builders, where volume has dropped 60% since its peak, just invested $5,000 to overhaul its website to include a blog and video of customer testimonials. The marketing message — quality and longevity — positions Hanbury to compete with the one-truck operators whose numbers have multiplied in the recession, and who often price jobs at just enough to earn an hourly wage. Hanbury says marketing expense should be increasing “in real dollar terms,” to offset diminishing repeat/referral work and the fact that there are fewer large jobs to go around.
Freelance craftsmen are now Callier & Thompson’s biggest competition as well. The St. Louis remodeler, which specializes in kitchens and baths, will spend about $300,000 this year marketing to local homeowners. Owner Gary Callier says that’s “about 3.5% to 4% of sales,” with the emphasis on live radio — in drive time, using personality-driven broadcast — and events marketing. When the local builders council canceled its fall home show, Callier & Thompson organized a three-day event of its own that featured seminars on, for example, granite vs. quartz counters and custom vs. stock cabinets, presented by experts in its 13,500-square-foot showroom.
More Website Marketing
Christine Ramaekers, co-owner of MainStreet Design Build, in Birmingham, Mich., estimates that her company’s marketing budget will jump from about 3% in 2010 to 5% in 2011. With 2009 a revenue low-point for this and many remodeling companies, “we want to grow,” Ramaekers says. To do that the company plans to invest the bulk of additional marketing dollars in revamping its website, already the firm’s best lead source.
To grow: spend 4% to 5% on marketing
At more and more remodeling companies, there’s little debate about the need to spend more on marketing, and most direct those dollars to their websites, where potential clients are likely to start their search.
At Melton Construction, in Boulder, Colo., 21% of business came through the company’s website this year, owner Ty Melton says. “There are other quality remodeling companies in town that probably spend more money on marketing than I do,” Melton notes. What has enabled him to get more bang for his marketing buck is a graphic design overall. Overnight, he says, that made the company far more visible. One result? Yard and truck signs accounted for 25% of business since Jan. 1, with trucks alone accounting for 23%.
—Jim Cory is editor ofREPLACEMENT CONTRACTOR, a sister publication of REMODELING.