Ryan Shutt knows what kills most remodeling businesses. It’s not whether they’re good at their craft or even how well they work with customers. No, the thing that puts many firms under is the very thing many remodelers don’t track — the cost of their marketing. More specifically, it’s the ratio of marketing dollars spent to actual sales.
“It’s a constant evaluation on a weekly basis of what’s working and what’s not and where do we move funds around to,” says Shutt, marketing director for Southwest Exteriors and Renewal by Anderson, a Remodeling 550 firm.
Shutt says marketing costs will differ by company and location, but he shoots for 13 percent — meaning that for every $100 in revenue $13 was allocated to marketing. Larger companies can absorb higher marketing costs, but he says for the average firm around 17 percent is the make-or-break threshold.
But if you’re like many remodelers, you may not even know your marketing costs, let alone how to convert marketing into sales. Fortunately, technology from unique phone numbers to CRMs has made tracking the cost and conversion of marketing to sales easier than ever before. Here are three steps to marry marketing with sales — and know your marketing ROI.
1. Focus on the initial call. “Marketing is all about making the phone ring and driving folks to the showroom,” says Eric Peabody, vice president of sales and brand management for Window World, Remodeling 550’s top seller. “So that initial interface with the customer is critical.”
Typically, the first interaction customers have with remodelers is over the phone. So marrying marketing with sales starts with having superior phone service. At the most basic level, that means actually having someone to answer the phone, Peabody says. “One of the biggest complaints customers have about remodelers is that they didn’t return my phone call,” he says. “So we hyper focus on that initial call to ensure the success we do.”
Peabody says remodelers who can’t fully staff phones should return all calls within five minutes. “The more you can eliminate any potential lag time from the time the consumer makes the call, you’re improving your opportunity overall,” he says. He also recommends staffing phone lines beyond the basic 9 to 5 hours to be available when customers have time to call.
But answering phones promptly is only the first part of turning calls into sales. Remodelers must have a superior call center with well-trained operators, says Shutt. “They have to have an exceptional experience with the frontline call,” Shutt says. To ensure that happens, Shutt and others thoroughly train operators on how to handle calls. Typically, operators follow a carefully worded script. Shutt says it’s essential to make sure operators are using a consistent message, not only for branding purposes, but also so that each operator’s success can be tracked. Phone technology lets remodelers listen in on calls to ensure quality and consistency.
How many calls should convert to appointments? Peabody says his standard is 70 to 80 percent. “We treat each lead as if it’s our last appointment because we understand the expense associated with it.
2. Use a CRM to track your marketing. It’s not enough to simply answer calls well. Remodelers also must know what’s working — and what’s not — to avoid drowning in marketing costs. Experts say that’s where a CRM comes in. “Every single lead or inquiry follows a lifecycle,” says Shutt.
That lifecycle looks like this:
--Conversion ratio: The number of leads that set an appointment.
--Set issue ratio: The number of set appointments that are issued to sales reps.
--Demo ratio: The number of appointments issued to sales reps that actually lead to an in-home demo.
--Close ratio: The number of in-home demos that lead to a sale.
This cycle starts with knowing where leads are coming from. Technology has made this process much easier, giving remodelers the ability to use special phone numbers on different ads. But codes can also be put on ads that serve the same purpose. “I think a lot of people are still in the old school of asking, ‘Where did you hear about us?’” says Mike Agugliaro, co-owner of Gold Medal Service and CEO Warrior. “The only way to be sure is have a tracking number or a tracking code.”
Once remodelers know where a sale is coming from they can also know how well their marketing is actually working — and make wise decisions. That’s where most remodelers are missing the boat right now. “There’s a pay and pray mentality out there,” Peabody says. “People think if I just run adds I’ll get the phone to ring and I’ll be able to get x amount of sales.”
In reality, it takes careful tracking and good information to truly turn marketing into sales. “We’re very very data driven,” Peabody says. “We go out of our way to educate our franchisees that metrics really matter and you need to be hyper focused on those metrics to make sure things are performing at the level you expect.”
3. Know your marketing ROI. Once your CRM is tracking this data, it’s easy to determine the true cost and effectiveness of marketing. “You have to know what’s generating your leads,” Shutt says. “The worst thing you can do is allocate marketing dollars into something that’s not working.” Some ROI data points to know include:
--Cost of each advertisement by source.
--Calls each advertisement generated by source.
--Demographics that responded to each ad by source.
Ultimately, remodelers should be able to determine the cost per lead — and how many of those leads turn into sales. Peabody says lead costs can range from $100 to $400 depending on the type of lead. But the true cost of marketing is determined by how well it’s married with sales.
“Every lead is so valuable that you want to make sure you have the opportunity to put that through the sales cycle and convert as many as possible,” he says. “By doing that you’re reducing your total advertising cost.”