Marketing: By the Numbers

Marketing can literally make, or break, a remodeling company. As many remodelers have learned, quality work followed by strong referrals and repeat business gets you only so far. But not all marketing is good marketing. The next step is gauging your marketing effectiveness. Are you spending wisely? And, how well are you doing vs. your peers. One way to know is to join a peer group program.

At least twice a year, the remodelers who comprise the 10-member “Excel” group — like all peer groups within the Remodelers’ Advantage organization — gather to jointly review and critique their respective businesses. For those unfamiliar with the business peer-group process, the purpose is to spur, coach and cajole fellow members to achieve their respective goals as remodelers, as business owners and as individuals.

Preparation for a meeting is time-consuming. Every imaginable company metric — from gross profit percentage to profit per employee — is calculated and formated for review well in advance. These numbers form the basis of conversation and critique during the semiannual, three-day meetings.

That is why this story is unique. The members of the Excel Group, individually, agreed to share with Qualified Remodeler, the results of a quick comparison of their respective marketing numbers. Usually this information is not released beyond their meetings, but given its specific limits, an exception was made in this case.

The analysis was prepared by Bob Sturgeon, a remodeler from Westlake Village, Calif., who is a member of the Excel Group. The results, while not prepared by a professional researcher, seem to indicate one unequivocal conclusion: marketing works.

Sturgeon compared the data of his colleagues and in doing so, created a telling relationship between Marketing Budget Dollars vs. Overall Revenue vs. Gross Profit Dollars. And because there is such a variety of company types represented within the Excel group — firms that are full service with a smaller average job size all the way up to firms that only do very large jobs — there is a wide range of numbers involved. To Sturgeon, the numbers show that even the most production-oriented companies — companies that tend to focus very hard on super-high-quality finished jobs — need to move beyond simply satisfying their customers. You have to keep your name out in front of your target customers.

“Lately it has become clearer that when it comes to marketing, you have to do as much, or more, than just focus on satisfying your customers,” says Sturgeon. “If you have a really effective sales guy and you market your company to enough of the right people, you can keep your production team busy.

“So, my take-away from this analysis, is that all remodelers should be doing consistent marketing. We all should be focused on bringing in qualified leads. I’ve always heard that 2 percent of your revenue should be spent on marketing in high-end, full-line, remodeling firms, and after doing this analysis, I am sure that is about right.”

Budget vs. Jobs

The companies represented within the Excel Group, are, for the most part, established firms with owners who have been in the business awhile and understand it. But, due to different interests, different geographic and demographic markets, these successful companies operate very differently. When marketing budgets are compared with the number of remodeling jobs, the disparity within the group is quite stark.

At one end of the spectrum, Jerry Levine of The Levine Group Architects and Builders in Silver Spring, Md. is focused on big, high-end projects. It is what he and his team do best. His firm produces very polished marketing pieces that appear in local, luxury lifestyle magazines and some are used for direct mail. The company also spends significant amounts to reach the wider Washington, D.C. market through advertising on the local National Public Radio affiliate. The reason: It helps brand the company to a well-heeled customer base.