Operating a sell-furnish-install (SFI) program in Charlotte-area stores puts The Carolina Building Group in daily touch with the mood of the market. And the mood, even here — in a market where the value of homes has remained stable — is cautious, if not anxious.
“Our salespeople hear more about the economy now,” says company president Greg Schutzman. “Consumers are saying they'd love to do the project but that they aren't doing anything at the moment. They say they have to see what happens, or that they're cutting back.”
Home improvement company owners in other parts of the country report hearing similar comments from customers. Homeowners are not as apt to pick up the phone when a telemarketer calls, even though they may have a need and recognize the company name on their caller ID box, says Joe Johnson, president of U.S. Home Exteriors, in Burlington, N.C. “I think people are just kind of sour now,” he adds.
CONFIDENCE PLUNGE Small wonder. According to the Index of Consumer Sentiment, from Reuters/University of Michigan Surveys of Consumers, consumer confidence in June was, at 56.4, near its lowest level in 50 years. The Index of Consumer Expectations (from the same researchers) — considered a leading indicator of economic activity — was 49.2 in June, down from 51.1 in May, and down more than 23 points from June 2007.
Worried consumers inevitably make sales leads harder to come by. Oil on its way to $150 a barrel drives up the price of nearly everything. The credit crunch has made it more difficult for some homeowners to finance home improvement projects. As a result, lead costs are rising at the same time that market demand weakens.
“We're working harder to get the sale, our cost per sale is going up, and when we do get the sales, we are getting fewer of those through than we used to,” Schutzman says. “The financing situation has hurt us more than anything.”
But rather than allow conditions to halt or reverse their company's growth, owners such as Schutzman and Johnson have looked for creative ways to generate business by finding new lead sources and diversifying their mix to leverage the higher costs of leads from traditional venues, such as media. Objective? Slow the pace of escalating lead costs.
ACTIVELY MANAGE LEADS You can't put a marketing plan in place and just watch it. You have to manage it monthly, weekly, even daily, explains Charles Gorse, general manager for Southern Industries, in Augusta, Ga.
Every morning Gorse has current lead and sales data “at his fingertips.” Weekly, the management team reviews how much business is produced by each lead source and how much approved business comes from those sources. Monthly, the company accountant prepares a marketing department balance sheet with a complete breakdown by expense category and lead source, right down to individual shows and events. Lead costs are “fully loaded, so we can accurately track what is working and what is producing and how much it is costing us,” Gorse says.
Gorse uses this information to make constant small adjustments to his marketing mix. For example, if an ad broadcast on the Jerry Springer Show pulls a lot of leads but also a high number of credit turndowns, Gorse can quickly move his advertising to another show.