Power Windows & Siding, in Chester, Pa., changed its name at the beginning of the year. The new name: Power Home Remodeling Group. The “group” designation no doubt has to do with the fact that what was once a canvassing-driving window and siding company in Pennsylvania and New Jersey is, today, prepared to go far beyond that. More products, more locations, new geography. For instance, a few years ago Power Windows successfully entered the roofing business, always a stiff challenge for window and siding companies that have to figure out how to manage a labor-intense, low-margin job with considerably more liability risk and swarms of competitors. The key is finding installers and people good at managing them. Power's foray into roofing was “years and years in the works,” says its president Jeff Kaliner, “making sure that the back end was on lockdown. You can't start selling it before you learn how to install it and install it well.”
Roofing is one part of what's driving Power Home Remodeling's growth, propelling it to sales of $124 million in 2010, with projected sales of $200 million for 2011. The company's expansion model includes opening new branch operations, the most recent in Boston, Atlanta, and Long Island, N.Y. The name change, says Kaliner, who founded the company with his cousin Adam Kaliner, allows for Power Home Remodeling to offer any kind of home improvement product or service in those new markets where it has no brand presence and yet remain a well-known name in its core market of Pennsylvania, New Jersey, and Delaware. “It's the bigger picture and sticking to what you know and doing it the right way,” is how Kaliner explains his company's rapid growth. “There is no secret sauce.”
HOLDING THEIR OWN IN A TEPID MARKET
Growth in the home renovation industry has stalled ever since the onset of the 2008 recession. But while the industry's tepid growth may be the rule, there are any number of exceptions among companies that specialize in replacing roofing, siding, windows, or other parts and pieces of the house. Power Home Remodeling Group, number 4 on the Replacement 100 list, is among the standouts on an annual list of top companies ranked by volume. As in years past, the two largest companies on the list — Window World and Champion Windows — are fairly far out in front, with Window World posting sales of $372 million in 2010, and several Window World regional affiliates, in Minneapolis and New Orleans, showing up elsewhere on the list as well. Average sales for all 100 companies on the list are $22,810,317, but minus Window World that comes down to $19,389,554, and when both Champion Windows and Window World are factored out, the average among the 98 companies listed below them is $16,443,212.
The tens of thousands of jobs done by Window World and Champion Windows also skew the average number of jobs done in a year by an average company on the Replacement 100 list: 4,137 among all companies on the list, dropping to 2,486 when you factor in the number of jobs done by Window World and Champion. Average job size — $8,186 — for all 100.
LEADS COMPNIES These companies are mostly sophisticated marketers — spending an average of 11.9% of revenue to acquire, from dozens and dozens of sources, leads (defined for our purposes as a confirmed appointment) averaging $235 per lead, though that individual lead cost can run to $300, $400, $500, or more at many of the companies on the Replacement 100 list. While the recession and the slow economy that has followed may have slowed sales at some companies, it has brought no reduction in overall marketing costs for this type of contractor. Almost every company on the list is constantly searching for the Holy Grail of a low-cost, quality lead. In the absence of that, six out of 10 of the companies on this list now field canvassing operations, including, most recently, Window Nation, a replacement contractor with branches in four states and corporate offices in Maryland. Lead costs at Window Nation (number 20 on the list) “are up considerably, so we are looking at canvassing” says Harley Magden, vice president of marketing for the company. With sales flat — or up one month and down the next, as they are at most companies — Window Nation recently hired a canvassing consultant and fielded its first crews.
At many companies, what's generally understood to be door-to-door telemarketing is now the No.1 lead source, with Internet marketing in all its forms — pay per click, leads purchased from online suppliers such as ServiceMagic, display ads on advertising websites, and the cost of a highly optimized company website — holding similar priority, or, ideally, working in tandem.
“We've invested more and more in the Internet,” says John Kalian, president of Appleby Systems (number 38 on the list), a window, siding, sunroom, and basemen basement finishing company in York, Pa. “We used d to look for people who were further along in the buying cycle,” that is, homeowners who were looking to buy windows today, or at least this month. Now companies such as Appleby Systems ms are likely to be in touch with the homeowner who may, at some point, be thinking about windows or siding or some other product, and through ongoing electronic marketing efforts, come immediately to mind as the first company to call. Much of Appleby's Internet investment goes toward optimization, and the goal is to bring Appleby Systems to the awareness of anyone seeking information about the products it sells.
TAX CREDITS OVER, NOW WHAT? For Appleby Systems, one of those products — sunrooms — was once a bigger seller than it is now. Today the company's focus is on the windows it manufactures in its own plant. Windows remain the product carried by the largest number of companies (92%) on the Replacement 100 list. Some — such as Window World, Champion Windows, and Window Nation — sell mostly windows or doors, with everything else being ancillary.
Many companies saw solid growth in sales of window products last year, and most would explain it the same way Magden does: “The tax credits pulled in quite a bit of business.” In fact, many companies had booked so much business from customers trying to beat the clock under the American Recovery and Reinvestment Act that they simply stopped accepting new jobs after October 2010, since there was no guarantee that they could install the windows before the Dec. 31 deadline for tax-credit eligibility.
Replacement windows remain an industry staple, but in light of the recent recession and ongoing soft economy, a lot of companies on the Replacement 100 have looked at the products they install and considered new ways to approach the market. Big-ticket items such as sunrooms were a big seller before home values began declining because owners could finance them through second mortgages or other forms of secured lending. With a far leaner credit market, the sunroom industry — estimated at its peak to be generating between $2 billion and $3 billion in sales — has shrunk. As that happened, many home improvement companies have downplayed sunrooms and other high-end discretionary projects such as basement finishing in favor of bread-and-butter categories like windows and siding.