Marketing Savvy

Kitchen and bath dealers frequently ask about the best way to market themselves effectively. The answer is rarely black and white; rather, it depends on a number of factors.

When operating a kitchen and bath design firm, there are certain "givens" to running the business: telephone service, bank accounts, electricity, computers, insurance, Internet access and assorted other "musts." What some dealers fail to realize is that a marketing plan should absolutely be considered part of that "must" list. It should be as integral to the business as telephone service, since, without the marketing plan, a dealer may soon end up not needing the telephone.

The days of relying solely upon referrals and the Yellow Pages to bring in business are over. The competition is too strong, the buyers are too savvy and today's kitchen and bath dealers are too busy. Anyone undecided about the need to make marketing a priority should look at marketing as a parallel to what their business requires them to do every day.

When they begin a new project, most kitchen and bath dealers start out by meeting with the clients to learn about them. In this meeting, they want to discover what their goals are and why, what their budget is, what their expectations are, and how they can help to make the clients' dreams come true.

But while this seems obvious when dealing with clients, many times, kitchen and bath dealers and designers fail to follow the same plan when dealing with their own business. Being successful takes planning, and dealers should always start any kind of growth plan by asking themselves: "What are the goals for my firm, and why? What is my budget to meet those goals? What are my expectations? And, how will I make those dreams come true?"

When working with clients, dealers require them to develop a realistic budget to do the job properly. The design is then created, staying within the confines of that budget. The design is committed to a blueprint, or plan. The blueprint then becomes a guide for the project. It may be adjusted or fine-tuned along the way, but it is still bare bones for how the clients' goals will be met.

Kitchen and bath dealers can apply this same concept to marketing their firms. They need to develop a realistic budget; design a marketing program within the confines of that budget; commit the program to a marketing plan, and use that plan as a blueprint, making adjustments as necessary, but following the plan to meet the goals set at the beginning of the project.

Developing a Budget
There are two ways to determine a marketing budget: as a percentage of sales, or as a fixed cost. Those who employ the third way (decide what seems wise when an opportunity presents itself and cash happens to be available) don't have a marketing budget and may find themselves wasting a lot of potential marketing dollars.

Mark Ergmann, of Coastal Kitchen and Bath Design in York, ME, makes his marketing and advertising budget a fixed cost. He explains, "I treat my marketing and advertising like I do the rent or my electric bill. I cannot afford to put it on a sliding percentage scale. If I don't market, clients won't come. So, I have to be consistent regardless of the prevailing economy."

Most of the industry, however, tends to spend a percentage of gross sales, with that percentage ranging from 3% to 8%, and sometimes even higher. A successful marketing program keeps the percentages down. Sales that exceed estimates lower the percentage spent on marketing in relative terms. For example, a $50,000 marketing budget (that was determined as 5% of estimated sales of $1,000,000) that is successful and helps to bring in sales of $1,500,000 is in actuality a 3.3% marketing budget, not the original 5% as estimated.

Larry Lowenthal, president of Gilman Screens and Kitchens, in San Francisco, CA, determines his budget as a percentage of sales. However, he first pulls out the Yellow Pages (about 1.5%), then looks at co-op opportunities before making his final calculations. "If I decide to spend 5% of my estimated gross sales, it typically is closer to 8 or 9 percent once you add back the Yellow Pages and co-op," he notes.

Gary Lichtlyter, president of Lemont Kitchen & Bath in Lemont, IL, takes a hybrid approach. "We do a combination [of percentage of gross sales and a fixed budget], beginning with a percentage approach. We then look at what we have done in the past and we shift those priorities while adding new ones," he explains.

Dan Luck, president of the Madison, WI-based Bella Domicile, Inc., says he "develops a marketing budget each year with a specific goal or series of goals that the company wants to achieve for that year. Once that is determined, a wish list of opportunities is drawn up with cost assigned to each opportunity. The list is pared down based on forecasted revenues and actual priorities for that year. We try to stay within the 3-6% range."

Although most dealers want to market their businesses, they rarely find the cash to make it happen. Every firm should include marketing expenses when costing out a project. Or, as Steve Whitsitt, an industry photographer puts it, "every hamburger you buy at McDonalds includes the cost of all those TV commercials. Kitchen dealers need to do the same thing - include their marketing [and photography] expenses in each kitchen they sell."

Spending the Budget
When deciding where to spend marketing dollars, it's important to consider who the firm's intended audience is. Dealers are most effective in their marketing programs when they've already determined their target audience.

Luck ensures all Bella Domicile employees know their target customer. He explains, "We have a written description of who our ideal client is and most marketing/advertising decisions are based on pursuing that ideal client."

For example, a high-end dealership looking at the luxury market within a specific geographic location will market itself quite differently than a dealership more focused on taking care of the lower-end remodeling jobs.

Likewise, a dealer in Manhattan would need a much larger budget to get the same exposure as one in Kansas City, simply due to the cost of media.
Several key media choices are particularly well suited for marketing. Each opportunity listed below offers its own unique benefits and shortcomings.

Television
Television may include local television stations, cable and satellite systems. It should be noted that advertising on television or cable requires an understanding of how the system works. For example, running ads on HGTV or TLC is only possible on a cable system. Satellite dish owners watching HGTV or TLC will not see that ad. This is why it's important to find out the cable penetration in your community and the percentage of satellite dish owners.

The only way kitchen and bath dealers can potentially reach everyone with a television (cable, satellite dish, or even an antenna) is by advertising on the local affiliate stations. However, considering the extensive range of many local affiliates, this may not be the best use of money, as many people seeing the ad may be out of range, geographically speaking.

There are benefits to advertising on television, most notably the ability to reach a lot of people quickly. Television can also provide dealers with an immediate response - to the right message, such as a specific sale. Remodeling your showroom and selling old displays? Television is a great way to sell them.

Dealers cannot, however, expect that after one day or even one week, a television commercial will fill the showroom with buyers or even potential buyers. Television advertising helps disseminate the brand being advertised, and begins to make the advertiser an option in the minds of consumers. But a consistent message disseminated over a longer period of time is essential to bringing customers in.

Television also tends to be costly. However, it has proven very effective for a number of kitchen and bath dealers.

Mark Ergmann is a firm believer in the benefits of television advertising. He states, "Living on the coast of Maine offers few options to reach my potential market, so I turned to TV, more specifically cable, a few years ago. I appear in my own commercials, not because I have an ego, but because I believe if a client is going to spend $50,000 or more on a new kitchen, they should get to know the designer/owner." He continues, "I do get extraneous inquiries because of the reach of the commercials, but some of those have turned out to be great clients."

Radio
Radio, as with television, brings a high reach audience, and makes it easier to reach a more carefully targeted audience. To be successful here, however, it's important to consider the personal characteristics of listeners of various kinds of music and radio programs. The thing to remember is to find the station that reaches your intended audience - not your personal taste.

Radio also provides the opportunity to reach an audience at a specific time. For instance, you can target potential customers when they are driving to or from work. A less expensive option might be to target those who work during the overnight hours, since it's easier to get low-cost or no-cost spots during these "off hours."

Producing a simple radio spot is typically much cheaper than a television commercial. Always ask for free production; many stations will provide it as part of the advertising package.

One of the down sides of radio is the nature of the business itself: Radio is not visual. So, although radio gives users 60 seconds to make a case, this medium doesn't lend itself to showing examples of one's work.

However, it is a great vehicle for sending listeners to a memorable Web site. Listeners are typically doing something else, like driving, cleaning or working and are in no position to write down a phone number, but a Web address that is memorable can stay with them long after the ad is finished.

"Clutter" is another problem on radio - it can be challenging to stand out among so many other ads. And, like television, over-reaching one's geographic region is a potential problem with radio advertising.

That said, radio can be a good option, depending on what is being sold, how it's being sold and to whom.

Bill Camp, CKD, owner of Triangle Design Kitchens, in Raleigh, NC, began advertising on his local Public Radio Station almost five years ago. He says, "I followed the advice of a marketing professional, expecting little or no return on what I thought would be a short-lived experiment. The response I received was overwhelming - 'I heard you on the radio, which led me to your Web site, which led me here,' seems to the mantra from my customers. Using public radio as a part of my overall marketing plan has been a great success."

Newspapers
Newspapers offer some great opportunities because they tend to cater to the industry with special remodeling and home improvement sections. And, they reach a large number of people.

Dealers have the opportunity to showcase their work with photo-graphy in this medium, however, newspapers typically only include black and white images, and, when compared to magazines, offer poor quality reproduction. Full-color ads in newspapers (when available) tend to add 50%-100% to the cost of the black-and-white version.

The way newspapers are printed can also cause problems with color photography as the color plates can shift during printing, causing a ghost-like effect on
the image.

Newspapers allow advertisers to target to an extent by allowing advertisers to choose the section in which they advertise. In addition, many metropolitan areas have geographic sections within the daily newspapers, as well as special neighborhood weeklies or monthlies.

Ads are generally affordable, which tends to add to the clutter in the newspaper. Like radio, newspapers place their ads in close proximity to one another, adding to the confusion of the messages. They will also, as a rule, offer free ad design. This means your ad and your competitor's ad are being created by the same designer. Is that something you are comfortable with?

Matt Grundy, owner of Builder Specialties in Montpelier, VT, advertises in two places in the daily paper, as well as five other publications. He states, "I believe newspapers are a great advertising vehicle for Builder Specialties. We are not just a high-end kitchen design firm, we also provide full remodeling services. The newspaper keeps me in the face of the community day in and day out. It is also a great way to reach the second homeowners who live here only part of the year. It's all part of our branding in the community. When someone is ready to build, our advertising makes them come to us. Then it's up to us to close the deal."

Magazines
Since magazines are a more high-end form of advertising, they are a good fit for luxury and high-end dealers. Most large metropolitan areas have a number of lifestyle magazines, including some that are specific to the kitchen and bath industry. In addition, there are a host of national magazines that can provide high-visibility advertising.

One of the greatest strengths of magazine advertising is the audience, which is generally a more affluent segment of the population. Additionally, advertising can be presented in full color.

Magazines allow dealers to directly target types of readers based on their interests. By choosing to advertise in the local lifestyle magazine, a dealer can reach the affluent segment of the population. The practice of "recycling" magazines - that is, taking them from the home to the office - also gives ads a longer shelf-life and an extended readership.

On the other hand, magazine ads don't generally have an immediate impact on business. Therefore, running a sale on a certain cabinet line is not the kind of advertising that's best suited for magazines. Rather, magazine advertising should be used for image and branding a firm.

The cost is higher than newspaper ads, and there are typically additional costs associated with ad development and production. Magazines should be used as a supplement to other marketing, in branding a firm.

Lowenthal has found that magazine ads work well for him. "We have seen some customers actually bring the [magazine] ads in with them," he notes. "We can do color, which is a huge plus when you're selling design, and there is a feeling of consistency with magazines - our ads maintain our look and feel, and our brand, and they are 'out there' for a long time."

Direct Mail
Direct mail has been a mainstay of the industry, and whether sending postcards, letters or newsletters, dealers using this form of advertising have the ability to directly target their communication. Homeowners can be targeted based on income level or gender, or by the age of the actual home. Allied industries such as interior designers or architects can also be targeted through this medium.

However, in this medium, the message and packaging are very important. Bev Adams, CMKBD, president of Interior Intuitions, Inc., in Denver, CO, believes "Direct mail is great, as long as it is personalized. We send professionally written letters, along with professionally reproduced [pages from] publications where Interior Intuitions has been featured. These are mailed unfolded in 9"x12" white envelopes to our list of past and potential clients, along with other allied professionals on our list, including the press."

Bear in mind that a direct mail campaign is only as good as the list it's being sent to. Direct mail traditionally elicits only a .5% to 3% response rate, and a poor list drives down that number.

Another marketing outlet is the Yellow Pages. Lichlyter is not a fan of the Yellow Pages, while Michael Teipen, CMKBD, Allied Member, ASID, president of Kitchens by Teipen, in Greenwood, IN, sees the Yellow Pages as "the only place to find a number." However, he adds, "we have only been able to trace a few leads [back to it]. We even put a new phone number in the [Yellow Pages] ad to help us trace calls."

And Lowenthal says "we [advertise in] this every year. I believe it is the best advertisement."

Kitchen and bath dealers may also find varying levels of success marketing themselves by using the Internet, home shows, seminars, public relations programs, local cultural arts programs, as well as through printed media such as brochures, pocket folders, business cards, etc.

Dealers also must monitor their media and track their leads. It's essential to keep an eye on where ads are placed, where they run and how they look. Just as clients demand quality and value in their kitchens, they expect to see the same in marketing materials, since this forms their first impression of a business.

Perhaps the best way to constantly re-evaluate and refine your marketing plan is to get in the habit of asking everyone who walks in your door how they found you. Remember, there is no reason to continue with any given marketing channel if it isn't bringing in customers. KBDN

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