How are your numbers looking this year? It’s probably not too early to tell where you’re going to end up at year’s end. Did you meet your projected revenue goals? Maybe you came close, but close is not the same as actually making your numbers.

How about profitability? Are you generating the kind of profit on your sales that you expected, and that your company needs to sustain overhead and operations?

Say you wanted to increase your sales next year by double digits. You can do that, and the way to pull it off is by planning and execution. It’s not about luck or even about that infamous abstraction, “the economy.” It’s about discipline.

By the Numbers

In the home improvement industry, there are two ways to get more business. The first is to get more leads. If you get more leads, you’ll get more sales, and if you get more sales — profitable sales — you’ll make more money.

Here’s how that works. Let’s say your company does $2.4 million in net good sales this year, with 300 jobs installed at an average job size of $8,000. That means to get to $3 million in 2013 you need to sell and install an additional 75 jobs at your average job cost. If you converted one out of every five leads—20% — to net good sales, that means you needed 1,500 leads to get those 300 jobs, and you will need an additional 375 leads to sell the 75 jobs that will get you to $3 million.

Another possible way to get to $3 million is to increase the percentage of your leads that convert to net good sales. If you closed 25% of the 1,500 leads instead of 20%, you’d have 375 jobs x $8,000 = $3,000,000. Bingo!

But can it really be that easy? Of course not. First, let me point out that these two methods of increasing your sales — upping the lead count, and increasing your close ratio on existing leads — are not mutually exclusive. It’s not an either/or. You can do some of both. That is, you can generate additional leads while at the same time raising your closing rate on appointments.

But … by trying to accomplish two formidable tasks at the same time, you may simply diffuse your energies and get nowhere. Also, increasing your closing percentage by 5% in a year’s time is a daunting proposition.

On the other hand, if you decide to increase your annual lead count by 25% you will not only do more volume, but you’ll also:

  • Have more prospects to rehash

  • Have more prior customers to sell

  • Have more referral opportunities

  • Have more yard signs planted

  • Have more trucks/visibility

  • Have more jobs to market around (via phone, mail, canvassing)

This activity would likely translate to even more sales, making increased lead generation the clear winner. Here’s the caveat: Increasing the lead flow by 25% has a substantial cost associated with it. Increasing closing does not. It simply requires a serious training regimen.

Where Do the Leads Come From?

The number of leads you need to get is determined by the sales level you want to reach and the profitability goals you set. Establish your volume goal — $3 million — divide by your company’s average sale — $8,000 — and work the numbers backward until you arrive at the number of raw leads you need to generate that amount of business. We’re at Step One. Because now you need to determine how you’re going to get those leads.

Start by asking the people in a position to know. That is, your marketing staff. The more collaborative you make this, the better it will work and the more likely you are to get staff buy-in.

Call an emergency marketing meeting and put it like this: If you owned this company, and you needed to generate another 375 leads, what would you do? If you were to choose, based on what you know, what choices would you make? What other lead sources would you go to? What lead sources are we not using that potentially could yield results? Your staff will have ideas. They know a lot more than you might think. Some of those ideas might be your ideas as well, but they’re likely to be more receptive if the ideas are their own.

The Old & the New

There are many ways to get the additional 375 leads you’re aiming for. Let’s say that your top three lead sources are direct mail, shows/events, and canvassing. You could schedule additional events, up the number of mailings, increase canvassing activity, and beef up your phone room to process the additional inquiries.

With some additional help, your current marketing staff should be able to handle the growth if the new leads are from a familiar source or one that mirrors something that you have had success with in the past. It makes sense to use the lead generation resources already in place.

If you’re looking for new sources, stick to those that mesh well with your existing culture. If your leads are mostly outbound, switching to an inbound strategy could be counterproductive unless you’re well prepared for it. The same holds true if your leads are now inbound and you’re looking to build lead flow from face-to-face sources.

Canvassing, shows/events, and retail require a lot of training. If you’ve never done any of them, carefully consider what you’d need to put in place and the investment required. Every lead source has a different metric for conversion of raw lead to issued lead, issued lead to demo, demo to sale. All those metrics need to be factored in when you’re planning how to get to $3 million in net good sales.

You can find additional lead sources by networking with other contractors. Also, look around and see what other contractors or businesses (home security, HVAC, plumbing, electrical, pest control, etc.) are doing to generate new business. Borrow liberally. And don’t be afraid to seek help from consultants.

The most rewarding and effective thing you can do is to get creative. Have brain-storming sessions about new ways to reach your target market. Some of these novel ideas can have a huge impact. Something as simple as advertising walk-in tubs on the placemats of a local restaurant with a predominantly elderly clientele is a unique and inexpensive way to maintain top-of-mind awareness among your ideal prospects.

Build a Budget

This will be entirely based on the lead sources that you choose. Some sources have a much greater cost of entry than others. You will first need to determine what kind of discretionary funds are available in your marketing budget and plan accordingly. Keep in mind: mass media outlets such as television, radio, and Internet (pay-per-click or banner ads) typically cost more and take longer to realize a return compared with more grassroots campaigns or guerilla marketing efforts.

This becomes another scenario where "working the math backward" becomes crucial to properly forecasting and budgeting. There are just so many variables in costs from one lead source to the next. Whatever sources you use, you need to know not only how many additional leads that source will bring in, but how many appointments will result, how many demos, and how many closes.

If, in the middle of the year, you’re well on your way to hitting the target, now you have another challenge: finding someone to run all those additional leads. Unless your salespeople are on idle most of the time, then you will most likely have to hire an additional salesperson or maybe even more than one. Salespeople should be conducting seven to 12 demonstrations per week depending on the product offered. It’s unlikely that your existing staff could accommodate the additional 25% lead flow unless they have been falling short — seeing far fewer than the seven to 12 benchmark.

So now comes your next challenge: you’re in hiring mode.

—Sales and marketing consultant Tony Hoty has been a home improvement company salesperson and owner. Visit his website or reach him at or 888.447.3969.