Make a mistake on a job, and you know pretty quickly what it costs. But if you make a mistake in the way you’re promoting your company and generating new business, it’s not so obvious — until there’s a problem. Here are three key mistakes remodelers often make.
1. Going Too Low
Dennis Schaefer, who owned a $3.5 million deck and outdoor living company before he sold it to his employees a few years ago, remembers when he decided he could expand his business fast by appealing to a whole new kind of deck customer. Creative Wood, the Flint, Mich., company he started as one guy building decks, flourished as a result of its reputation as a high-end builder, featured in publications such as Better Homes & Gardens. “We were the place to go if you were looking for an unbelievable product,” Schaefer says.
Two years of extreme growth slowed soon after Sept. 11, 2001. Schaefer says that to get back on a growth track, he decided to go for a new kind of customer. “Instead of accepting a leveling off of sales while maintaining good profit,” he says, “we decided to grow at a lesser profit.”
To do that, the company promoted pre-designed decks and deck-building packages in print and television advertising. “My idea was that we’d get bigger sales out of it,” Schaefer says, “so that even if we made less money, we’d be OK on profit.” What he came to realize, was that he was damaging the brand it had taken years to build. “You’ve got to recognize what your brand is,” Schaefer points out, and find a way to reach the buyers for that brand.
2. Failing to Adapt
Legacy Remodeling, a Pittsburgh company that builds full-service jobs such as additions, kitchens, and baths and also has a substantial window, siding, and roof replacement business, at one time drove sales with TV and direct-mail campaigns that made the company a well-known name in the market, but which came with a big monthly price tag.
So when response to that marketing faltered in the first months of the recession, company president Jeff Moeslein found out that he had to move fast to get the phone ringing. “If you want to know the effect of your marketing, you have to look at real data rather than relying on your gut,” he says — and look often.
The company’s system for tracking 22 specific types of leads set, issued, and demo’d soon alerted Moeslein that his company’s rate of return was “much, much worse” on pricey advertising campaigns.
Legacy changed direction, moving toward face-to-face types of marketing such as canvassing and shows/events. Moeslein says that not only is it crucial to use “actual data,” but you have to believe what that data says and then take action. “Don’t just keep doing what you’re doing when you’re not sure if it’s working,” he warns.
3. Not Doing Anything
Many remodelers rely on the future business of satisfied customers or the people those customers might send to them as referrals. They spend money to provide great service, assuming that will come back in the form of new jobs. Those past clients are easy to sell and are price-receptive.
“Referral-based marketing is really good because if you’re already providing clients with good service in your business practice, it doesn’t cost you any more,” says David Alpert, president of Continuum Marketing, a Virginia company that works with many remodelers. The downside: “There’s a finite number of people you’ve worked with,” Alpert says.
That’s why it’s important to have an established channel for driving new business, depending on the level of sales coming in. Alpert suggests a well-optimized website and pay-per-click advertisements that reach locations where you want to work but where that optimized site might not break through to.
You can do that, as well, Alpert says, with an effective direct-mail campaign — targeted by homeowner, age, and income level. Either way, he adds, “you’ve got something you can scale up or down as you need it. The first mistake in marketing is not doing any.”
—Jim Cory, editor, REPLACEMENT CONTRACTOR.