Last year, Maine Window & Sunroom made capital investments. Quite a few, actually. The Kennebunk company set up a full-scale branch in Bangor, opened a 10,000-square-foot distribution center, and purchased an Owens Corning basement finishing franchise.
Spending on that scale would worry some business owners. But president and owner Jim Lang seems more excited than concerned. Once Alside's regional manager for New England, Lang started Maine Window out of his basement in 1989 and has watched his business grow at a 20%-plus annual clip. Big jumps in volume always followed significant investment.
Take sunrooms. Company sales were less than $1 million when Maine Window & Siding installed its first patio room in April 1996. “Before then, we'd been a hardworking window and siding operation,” Lang says.
What people in the industry who knew him wondered was: Who'd want a glass-enclosed addition in a state where moderate temperatures last four or five months, tops?
Older, wealthier customers (50 to 65-plus) and out-of-staters with vacation homes, that's who. Within two years, the company, renamed Maine Window & Sunroom (MWS), was one of Better Living Patio Rooms' top 10 dealers. Sunrooms were clearly a hit with a certain demographic. Buyers wanted to spend time outdoors, even if they were indoors. “Cabin fever,” Lang explains.
Another major investment came in May 1998. That's when MWS opened its showroom on Route 1, the state's much-traveled coastal road. Built in what was once a popular restaurant, it was retrofitted and added to, with four separate sunroom models as well as windows, vinyl rails, and deck products.
“People still come in and ask if we're serving lunch,” Lang says. The year after, sales went from $1.3 million to $2.5 million.
Peaks and Troughs Last year, installed sales of all products at MWS were $5.3 million. That's double what they were four years ago.
But that kind of growth can bring its own difficulties. For instance, sunrooms (“our bread and butter”) are 70% of company revenue. And sunroom contracts tend to cancel at a higher rate — 50% — than general home improvement sales, where about 65% of what's contracted for is actually installed. MWS is aiming to install 70% of the sunrooms it sells, and rescinded sales of all types — cancellations and credit rejects — are down over last year, when the company actually sold $8 million worth of product.
A second difficulty is peaks and troughs. Sales manager Jim McCarthy points to a chart over his desk. Lines that plunge in winter months and rise in spring indicate “a tough cash-flow scenario.”
At one point in the year, more work rolls in than the company can build. Then, six months pass and there's not a lot to do. “I can't gear up to this,” says McCarthy, indicating the high point in the chart, “or gear down to this.”
Zigzagging cash flow must be addressed before the company gets much bigger. “We want to level it out,” says financial manager George Cheney.
The Diversity Strategy Lang sees taking on Owens Corning's basement finishing system as one way to do that. Basements, he says, are a great way to keep crews busy — and warm — during cold months. The product also appeals to a new demographic: 35- to 50-year-olds with kids.
To solve its other problem — turning more of those sales into net good business — the company's tinkered with sales and operations. MWS put a program in place last year to reduce this year's cancellations by 20% over 2003 through enhanced customer service. The best way to avoid a cancellation, McCarthy says, is to keep customer communication going throughout the eight to 10 weeks between contract and construction.
To do that, the company created the position of project coordinator. He or she makes a welcoming phone call, remeasures, pulls permits, orders materials, answers questions, and collects balances.
Creating the position — there are four — has eliminated much of the finger-pointing that once took place when delays, collection difficulties, and other problems developed.
Another thing the company did was talk about recision in the sales process. The recision paragraph was taken out of MWS' contract and made into a separate form. “Now, the salesperson will spend a few minutes in the warm-down going over it,” McCarthy says. “They'll say, ‘If you don't want the project, tell us now, and we'll part as friends.' The ones who cancel are the ones who would've anyway.”
Brand Recognition In a state that's like a small town spread out over 35,387 square miles, a reputation for peskiness or dishonesty would doom a company. So MWS employs a “soft lead” strategy. Media generate responses, and the phone room — using a call–mail–call technique — turns these into solid leads. “It's all about taking the intimidation out of the process,” says Sven Johnson, marketing manager.
The key to being a strong lead generator in a spread-out demographic, Johnson says, is to “take the universe and narrow it down.” So, in addition to traditional media outlets, the company carefully targets its mailings and uses product brand names (Owens Corning, Better Living Patio Rooms) to sell itself as an installer.
Last year, MWS spent about $750,000 — 12% of revenue — on marketing. Long term, the goal is to bump repeat/referral leads from 5% to 10%. “We're developing new programs and new incentives to push repeat/referral as high as we can,” Johnson says. Management envisions television, repeat/ referrals, and the showroom as the top lead generators of the future.
The Promised Land MWS wants to get to what its employees refer to as “The Promised Land.” Rather than milk and honey, this consists of a “steady sales curve, steady cash flow, and steady collections.” To get there, the company will narrow its business into sunrooms, finished basements, and replacement windows, each producing approximately one-third of revenue. The plan is to triple sales — to $16 million by 2009 —with three additional branch locations.
Pipe dream? Consider what this company took on last year. “In the short term, it was probably too much,” Lang says. “In the long term, we don't second-guess any of those decisions.”