Replacement Contractor: Is the crash in the sunroom market over or will the recovery have to wait for easy credit to come back?
Shaun Kennedy: The sunroom market, I believe, has come back. It hasn't come back to pre-recession levels but it is certainly coming back.
RC: What evidence do you see for that?
SK: We measure that through inquiries. Our inquiries have increased massively in the last two years. This year there are 10,000 more than last year. The financing is still choppy and I don't think it's coming back quickly. But there is a sense of demand, and I think what is driving that is "Don't move, improve."
RC: Are you seeing a different demographic buying the product? SK: We have seen our demographic [become] a little younger. Historically, the sunroom customer was an empty nester, 45-plus [years old] with equity in the home and an average home price of about $300,000. Now we're seeing people add a sunroom to create a little space for their children. So the buyer is 35-plus, same home price, with less equity in the home but a need for space.
RC: What kind of marketing works best for you right now?
SK: We do a lot of print, but we've reduced our print budget by 25% over the last three years. We've also quadrupled our Internet budget. Four years ago we were spending $1 million a year on Internet marketing. This year it will be $3.5 million. We want to ensure that our dealers come up at the top of organic search rankings. We get about 70,000 search inquiries a year.
RC: How are sales?
SK: In 2007 our sales started to fall. In 2010 they began to turn around because of steps we took. Meanwhile, we reduced our cost base and began to obtain a lot more leads. We've invested in company stores and in sales training for the franchise network. We've also invested heavily in marketing. That's why we're here and our competition is struggling. Our sales were up $5 million in 2011, and we expect them to be up an additional $5 million this year.
RC: Which do better, franchises or company stores?
SK: The franchise is still the most profitable part of our business. Those 275 dealers contribute the biggest volume. But if you look at our eight company stores as a standalone business, that's a much more efficient marketing and sales operation. Our company store in New York turns three times the sales of our largest franchise.
RC: What would you tell a new franchise owner are the three best ways to produce leads?
SK: First, the leads that we develop at corporate headquarters represent 50% of Four Seasons' business today. That said, I don't want the franchises to be dependent on us for leads. Our intention is to dominate and build on a local basis. And every market is different. Some are digitally driven, some not.
Second, you can't succeed with vanilla marketing. You have to tailor that mix of lead sources and have a consistent marketing plan. Shows and events work. Second to those, you could have a mix of TV, print, and radio. But the mix could be different in every state.
[And third,] it's imperative to have a good monitoring system, whether you're a one-man band or a big company with multiple operations and many salespeople.
RC: You're encouraging dealers to sell windows. Won't that distract them from selling sunrooms?
SK: I think they should do that only if they can invest in separate salespeople. That said, we make a smashing window, and we use the best glass. And our retail stores are selling $5 million a year in windows. We intend to grow that business through the company stores and build a $25 million window business in the next four or five years. We also look to provide those windows to the network, without distracting from core business.
RC: What's different or better about the design of the sunrooms you're making today?
SK: The biggest change to the product is improved glass technology for better performance. Energy saving is a big issue on people's minds. So we've added more coatings to the glass. The glass is self-cleaning. Beyond that we continue to improve the product by reducing exposed fasteners. So it's a lot of little things.
And for the last 12 months we've worked extensively on a new product, which is an addition we'll be showing at the Builder Show in January. It will feature European design but American innovation.
RC: What are future plans?
SK: We'll be recruiting new franchisees as well as opening additional company stores. We believe we can double both dealer sales volume and store sales volume in the next five years.