Where to put a window? At New Pro, in Woburn, Mass., the answer is anywhere you can. Windows are propped against desks. Windows are stacked in the company parking lot. Windows lean against walls. And then there's the storage area, overflowing with even more windows.
At most companies, such obvious excess inventory could signal any number of problems ranging from cash-flow tie-ups to an out-of-control backlog. Here, it's the by-product of ambition. All these windows await shipment to jobsites. New Pro's sales, which rose 60% to $18 million in 2003, were up another 20% through the first quarter of this year, double the expectations of senior management. The company's now looking for an additional 6,000 to 8,000 square feet of warehouse space somewhere near its headquarters. Presuming that's found, it will provide only temporary relief as New Pro moves forward with plans to open one branch each year for the next six years, all outside its home base in New England.
Make it Yourself New Pro has expanded in the past, only to exit from Seattle and St. Louis in the early 1990s. Today it seems better prepared to grow, partly because the company has refined its sales training regimen to the point where its chairman, Nick Cogliani, believes New Pro can duplicate its operations — and its success — wherever it plants the flag.
A former sales rep for the company, who requested anonymity for competitive reasons, refers to 58-year-old Cogliani as “one of the grandfathers of this business. He really knows what he's doing.” But New Pro hit its share of bumps as it grew from the small window shop Cogliani's father, Anthony, started in the basement of their house in 1945 into one of the dominant regional replacement window dealers in the United States. New Pro's greatest challenge had always been finding reliable suppliers who could keep up with its sales velocity. That's why, in the mid 1990s, the company's top managers “took control of our own destiny,” says David Normandin, the company's 51-year-old executive vice president, and began manufacturing the high-end windows New Pro sells today.
Sales Drive New Pro, which has sales offices in Shrewsbury, Mass., and Warwick, R.I., expects to open its first branch outside New England next year. Company executives haven't decided (or won't yet say) where, except to note that the location will be east of the Mississippi and north of the Mason-Dixon line. (Detroit is one market that they're considering.)
Cogliani explains that he's once again ready to take a shot at expanding outside the region so that he can offer employees, including son Anthony, career advancement opportunities. One of those key associates is Jeff Caron, New Pro's 40-year-old sales manager, who joined the company in 1985 and who Cogliani and Normandin credit with much of the company's success since. Caron has been instrumental in building and motivating New Pro's 34-person sales team, where average tenure is 10 years and turnover, negligible. “It all starts with Jeff, who is phenomenal,” says the former sales rep. “He's what makes this tick. He's probably the best sales manager I've ever met.”
Step by Step Neither Caron nor Michael Coughlin, New Pro's 28-year-old training manager, reveal too many of the ingredients in their company's vaunted formula for getting salespeople trained and into the field within 10 days. Coughlin says that the training “teaches salespeople to be professionals” and “is more about presentation than anything technical.”
New Pro's training has been effective because it convinces salespeople to read from the same script and resist the urge to ad lib during the pitch. “This was the first formalized training that I was exposed to, and to this day I still use it,” says Shane Brandt, the top salesman at Ambassador Home Improvement in Harrisburg, Pa. He adds that New Pro's training is a variation on the 10-step selling system that was devised by industry consultant David Yoho, “where each step is its own little sale.”
Brandt received training from New Pro officials as a result of a joint venture New Pro struck in 1993 with two suppliers, Bird and Kensington, to develop a marketing arm for Kensington's Quantum II window. At the time, New Pro operated a separate company called New Generation Marketing and agreed to sell the window that Bird extruded and Kensington made. One of the first dealers New Pro brought into that network was Ambassador.
The venture didn't last long, though. Bird ran into financial problems that, in turn, stymied Kensington's manufacturing capability. Dealers had placed more than $3 million in orders these suppliers couldn't fill. “We had to tell the dealers to go someplace else for the windows we were marketing,” Normandin says.
That failure, though, turned out to be a blessing in disguise for New Pro, because it forced the company to consider manufacturing.
Going Vertical By 1994, New Pro needed 25,000 windows per year and was desperate for product after its supply agreement went south. Normandin met with two partners from St. Louis–based window maker Delsan Industries, Mendel Rosenberg and his son-in-law Sam Silverstein, who agreed to fill its orders and help New Pro set up its own factory. Finding a reliable extruder, though, was another matter. “We looked all over North America — and felt like salmon swimming upstream,” Normandin says. The company finally settled on Oakland, N.J.–based Vinyl Building Products, after that supplier's owner, Nick Cangelosi, showed them a patented composite material called Celuca, which he'd discovered in France. Celuca is designed to provide maximum thermal efficiency and overall strength so that it withstands extremes of heat and cold as well as exposure to the elements.
New Pro set up a 50,000-square-foot factory in Millis, Mass., with an annual production capacity of 50,000 units. Before going to market, Cogliani and a team of designers spent a year developing a product that, he says, “was a significant upgrade in quality” from windows New Pro had sold previously, without significantly increasing retail price.
“We wanted something with the thermal integrity of wood and the strength of aluminum or vinyl,” Cogliani says. New Pro's salespeople got their first glimpse in late 1995 and were soon selling 1,000 units per month. Manufacturing, though, “was tenuous” for the first four months, admits Cogliani. But by June 1996 “we were making the product we wanted.”
New Pro guarantees that this maintenance-free window will reduce a homeowner's heating bill by 40% or the company will refund the difference. New Pro relocated its manufacturing to a facility in Bellingham, Mass., in February 2003, for lease and manpower reasons.
Marketing Shift As New Pro was gaining a greater measure of control over its production, sales, and installation (it employs most of its own installers), executives discovered that their marketing had some glitches. In 1998, the company generated most sales through cold-call leads made by its 36 telemarketers. Revenue was around $10 million, but the demo rate for salespeople, who numbered between 50 and 60, was only 55%, and the company's retention rate was 65%, average for the industry.
That fall, Normandin and Cogliani were on a golf outing in the Dominican Republic. While waiting in the rental car line, they met a Rhode Island resident who, on learning they worked for New Pro, bluntly asked, “Will you guys stop calling me?”
Cogliani says this encounter prompted him to rethink New Pro's entire marketing strategy. By December 1998, he had shut down the telemarketing department — on which New Pro was spending $75,000 to $80,000 per month — and switched to media. “The days of ‘one call, one lead' are over,” Normandin says. “At that point we became driven by marketing.” Tracking software now monitors the effectiveness of every medium New Pro uses, including direct and marriage mailings (which reach 2.5 million households each month), newspapers, television, billboards, and the Internet, where leads are producing $100,000 and $150,000 in sales per month.
This shift substantially reduced New Pro's marketing expenses. In 2003, a lead cost New Pro $118. That fell to $100 in the first quarter of 2004, when marketing costs were 8.2% of sales, or about half of what they were when the company relied on cold calling. In March alone, New Pro generated nearly $1.9 million in net sales and its marketing expense was $157,000.
New Pro's salespeople have benefited too, as their demo rates are up to 75% and annual compensation averages $88,000 vs. $40,000 in the cold-call era.
Cogliani is confident that New Pro can sustain its 20% growth in sales throughout 2004. And he expects New Pro's investment in any new branch — $200,000 to $300,000 per office — to pay dividends to the tune of $5 million in annual sales in relatively short order.
He also hopes that, regardless of how large it becomes, New Pro can maintain a family-like work environment. His 87-year-old mother, Mary, still handles every customer service call.
And Cogliani knows that New Pro's fortunes depend on all 150 of its employees pulling in the same direction, wherever expansion takes it. “We need to get the right people on the bus in the right seats,” he says.