Todd Colbert and partner Todd Schulz, co-owners of Weather Tight Corp., Franklin, Wis., were struggling. It had taken 12 years for their home improvement business to reach $1 million in net annual sales and now they were stalled. “We were working really hard and putting in a lot of hours, and the business was running our lives,” Schulz recalls.
Then something happened. In the past five years Weather Tight's sales expanded at a double-digit rate to more than $9.7 million last year, with the end of growth nowhere in sight.
Around the same time, in Columbus, Ohio, Ohio Energy Corp. (since renamed Improveit Home Remodeling) was experiencing a near-identical stalemate. “We couldn't grow any more,” says co-CEO Brian Leader. “We were crippled, no longer efficient,” he adds. Then he and partner Seth Cammeyer crafted a solution that increased the company's annual sales volume to some $15 million last year.
What did these companies do? They began to mine their databases to make use of all the information they had about inquiries, leads, and past customers.
The concept of data mining isn't complicated. “It's nothing more than mass personalization of your prospect universe,” says industry consultant David Yoho Jr. of Dave Yoho Associates. But, he points out, you first have to get the information, then employ a systematic approach. “There are many opportunities to learn about the prospect,” Yoho adds, “but few companies in this industry capture that data.”
Industry Changes Today any contractor with a desktop computer has all the computing power he or she needs to start mining data. Where not too many years ago they would have had to develop their own programming, today there are several packaged software solutions developed specifically for home improvement contractors. These can sell for just a few thousand dollars. It's a good thing, because never before have home improvement contractors had so many reasons for data mining.
Competition is getting tougher, with more contractors and more sophisticated contractors, observes David Sonner, president of Illinois Energy Windows & Siding, Lombard, Ill. Lead and product costs are rising, and refinancing has slowed. “It is crucial to both the survival and prosperity of any serious home improvement company to plan and execute a strategy to mine the data at the company's disposal,” Sonner says.
The prevailing business model within the home improvement industry is also changing, moving from the single-product, multi-location operation to a diversified model that's more complex to manage, Leader points out.
“Now you have to run multiple salesforces and you must have a better handle on your leads,” he says. To run efficiently, a contractor must be able to control his leads and the supply of products required to fulfill sales. “If you have a diversified product mix, data mining gives you the flexibility to get at and to work with the data you need versus playing darts blindfolded and getting things by chance.”