The 2016 Remodeling 550’s top moneymaker has a message for contractors: If you want to grow in the new economy, the name of the game is diversification.
For replacement contractors who make a living specializing in one particular job and often a particular product, that may sound like strange advice. But it worked for Window World, which landed at the top of the heap with a whopping $579.4 million in 2015 gross sales.
Window World is reportedly the nation’s largest replacement window and exterior remodeling company with more than 200 locations nationwide. Historically, revenue growth has been tied to one thing: topline unit sales based on its $189 replacement window model, says company president Steve Kamody. But with a cooling economy — and election year jitters — those sales have plateaued.
“What’s changed in the last couple years is that the replacement window industry has been stagnating in year to year unit growth,” Kamody said. “So we had to go in a different direction to grow.”
For Window World, that new direction entailed offering products for the entire home exterior. Then Window World went to its product suppliers to see where it could expand sales. Rather than just selling windows the company is now pushing entry doors, garage doors and stone siding. It’s even considering roofing.
“Our ultimate goal is to offer the homeowner the entire exterior envelope product lineup,” Kamody says.
Turns out, other window replacement contractors have found success with that model, too. In fact, many companies started diversifying in response to the economic downturn, says John Gorman, president of Save Energy Company.
“We had 30-plus years of happy clients — many asking, ‘What else do you do?’ So we figured let’s add services and market to our prior clients first to see how they respond.”
It took awhile to see some results, but Gorman said that adding solar and siding to the product mix three years ago has paid off. That’s because diversifying product mix doesn’t just give you more ways to sell, it also provides another way to tap contractors’ most valuable resource — existing clients.
“Many contractors are asking, ‘How can we maximize our marketing and installation crew dollars?’” Gorman said.
For contractors ready to try diversification, don’t expect an immediate ROI, Gorman warned. He suggested starting small and testing the waters with a something simple such as an email blast to past customers to gauge their interest in the product you’d like to diversify into. Use that interest to determine how much to invest.
But whether you choose to diversify or continue selling the same product mix as before, Kamody said a commitment to customer service will ultimately determine success.
“A lot of competitors are very aggressive on the front end, and once they have the sale they move on,” he said. “We want to build long term relationships with our customers so they call us back when they’re ready for another remodel and refer to us others. That type of good will grows exponentially.”