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."