From the Remodeling Magazine Blog

I was talking with the owners and staff of a remodeling business who told me they felt they didn’t have an effective marketing message or marketing materials that identified the company’s business. Holy mistaken identity, Batman. I asked them to specify the three elements that separate their company from its competitors. Their answer: quality, products and service. Sound familiar? I reviewed other local remodelers, and saw that 11 of 13 sang the same tune of quality, products and service. With this repetitive message, your potential clients cannot tell you apart from your competitors. Maybe if you spent hundreds of thousands of dollars in advertising, potential clients might be able to differentiate your company. But what remodeling company has that kind of marketing budget?

I have mentioned this before, but it is worth repeating, , A favorite Quote if mine from John Jantsch, “if a potential client cannot tell you apart from your competitors, they will use price as a differentiator.” That is not a good way to compete, because someone else is always willing to go out of business before you are. You must identify your target clients and what makes your business unique and base your core marketing message on those two things. Let me give you an example of a company that did this successfully.

Pinnacle Renovations has grown over the years. In the last year, owner Paul Klassen says his business revenue from renovation projects has increased almost 50%. He has an extremely talented business staff, creates a great customers experience, and receives excellent feedback. He is harnessing his passion for success by working with a team of business coaches. As Pinnacle’s business has grown, however, his ideal client has changed. Though the company continues to grow, instead of using its original marketing message, the remodeling firm is in the process of updating its marketing and materials to appeal more to its new ideal client and a more targeted demographic.

Pinnacle is adapting to its success by narrowing its focus to a specific type of client. The company had a reputation for being able to engage in larger projects and accomplish custom renovations with a true focus on enhancing their client’s experience. The company’s ability to create an experience has caught the attention of many affluent residents. The company enhanced it’s tagline to “Creating Homes for Life, Making Home Your Favorite Place to be.” Knowing that the company’s ideal client appreciates the customer experience, Pinnacle creates an exciting welcome on the move-in date–similar to those on home makeover television shows—and showcasing the new renovation project by hosting events at the house which ultimately target the next set of potential clients in the ideal demographic.

Lets not forget that what Pinnacle has isn’t easy to duplicate; This is something that is made possible, due to Pinnacle’s unparalleled client focus and attention to detail that makes them stand out in their community. Pinnacle’s referral ratio is extremely high and this definitely the best marketing advantage of all.

I suggest an annual evaluation of your ideal client. Make it part of your yearly business forecasting so you don’t forget. Start by interviewing your existing ideal customers. These are the projects that you wish you could clone. Make sure you speak to the customers that have recommended your company. Find out how these customers found you, why they chose your business, and how they would explain their experience to their friends and family. Ask them what makes you unique and what your company did that sets it apart from past remodeling experiences. Connecting with your ideal clients and understanding how they view your business will help you appeal more of the right clients.

Be sure to read next week’s blog on how to create marketing materials that appeal to you

I have had the pleasure of talking with Mark Buckshon, author of “Construction Marketing Ideas,” about his new book. I have a few friends in the industry that have read it and have told me it is  full of great & useful information. I am in the process of reading this myself, but I am not finished with it. I have asked Mark to discuss this book and give us some insight. If you have read this please feel free to comment on it and let me know your thoughts.

Author Mark Buckshon's Book

From Mark Buckshon:

Tim has invited me to contribute an entry for this blog related to my new book: Construction Marketing Ideas: Practical strategies and resources to attract and retain clients for your architectural, engineering or construction business. Boiling a 192-page book (and the years of research behind it) down to a brief posting here is a challenge. However, I’ll practice what I preach in keeping things simple. If you are relying on repeat and referral business to succeed, you are three-quarters of the way to success in marketing and building a profitable contracting business.

You simply need to think beyond passive reliance on repeat and referral business to active processes to encourage and develop more satisfied clients. This is the untypical marketing-guru advice and may seem to be heretical since my business earns 95 per cent of its revenue by selling advertising primarily to contractors and sub-trades.

However, if you have been successful enough to satisfy enough clients that they call you for repeat and referral work, you have the first part of the marketing equation right: You are delivering a service that your clients find valuable and worthy of respect. So small investments to encourage, enhance and expand the referral and repeat business process will disproportionately help your business grow in good times and survive in hard times. The challenge is you must be organized, not passive, in your marketing for this business – and you should expect to spend about five per cent of your overall sales volume to achieve the results you are seeking. You can use these funds in a variety of manners: Enhancing your client ex

perience, developing organized follow-up service call processes, engaging with community groups and associations, improving your website and responsiveness to inbound inquriies and so on. I outline several practical ideas in the book. The book has been suc

cessful since its publication in April. You can read the enthusiastic reviews at Amazon.com and elsewhere. I’m preparing a special Webinar on Construction Marketing Ideas for Renovators/Remodellerss on Sept. 23 and if you register with this special promo code (not available outside of Remodelbuddy.com) you can save 10 per cent on the registration investment and receive a free copy of the book (value $39.95). http://renovators.eventbrite.com/?discount=remodelbuddy.

Here is a recent article Posted on Remodeling Magazine that I wanted to share.

The Story
I see many remodeling businesses searching for the magic solution on how to generate more leads, more revenue, and higher profits. What is the solution? One remodeling company chose to focus on increasing profitability before planning to grow. Magically, when this happened, the growth came along with the targeted profit increase. 
This company has provided bath and kitchen remodels, additions, windows, roofing, siding and sunroom services in the western Pennsylvania area for 31 years and had a solid reputation. The company was profitable and the owner was earning an income, but he knew he needed to improve profitability to sustain the long-term business that he needed for his retirement. He began by establishing a more accurate financial statement in Quick Books to give him better information to assess his profitability on the range of remodeling projects, as well as provide a snapshot of overhead and expenses.

Breakdown of Profit
I worked with him to review the profit margins from the financial statement. We discovered that the larger remodeling projects were time consuming and had a minimal profit that ranged from zero to 5%. The project’s original sale looked great on paper. A $30,000 sale is exciting, but true test of success is the profit margin at the end of the project—a margin that should be set at the beginning. Dedicating a month to a large project with zero or minimal profit is not worth those 30 days.
The revenue from home improvement projects such as windows, siding, roofing and sunrooms, were more profitable and easier to accomplish, but they were not the focus of the business. The company’s employees spent the majority of their time on the large projects.

The Dilemma
The owner knew he had to make a decision about the future direction of the business and place profitability before growth. Could he survive without the revenue from the larger projects? Removing the unprofitable projects and focusing on the ideal projects, or sweet spot of the businesses target projects instead, may mean loosing revenue, but removing the projects that are causing lost time, energy and profit dollars, means more time focusing on the ideal projects and what makes the most profit. The answer may have seemed clearer in the financial statement because it provided more accurate information. If 70% of your projects have a net profit of 15% to 25%, and the other 30% revenue is at 0-5% profit, losing or dropping the unprofitable 30% will result in lost revenue or a decrease in sales. Is that a bad situation? No! Now, the personnel can be more focused, maybe overhead will lower and your business will be more productive to produce the profitable projects.

The Decision
The owner decided to narrow the company’s focus to its most profitable projects—the home improvement work. Not only were the projects more profitable, the staff was better able to create a positive experience for customers, which is another positive outcome. The team updated the pricing on these projects to increase the profit margin by 3%. With this focus on home improvements, the company’s marketing message also became clearer and it was able to target ideal clients and enhance the experience of these ideal clients.

The Future
The owner discovered that he could increase profitability without initially increasing sales. However, in the six months since the change, the company has seen an increase in both sales revenue and profit. The business now accepts smaller and more selective remodeling projects. With the increase in profit percentages and a clearer approach, the company does not waste time on sales that don’t lead to profit.

Open Your Books to Profit, continued…

I wanted to post this here on my personal blog to see if anyone had any questions they wanted to submit. Here is the link to the article

In last week’s bIog, I talked about the importance of open book management (OBM) and solicited questions from readers. I received two questions from a window replacement company that I’ve answered below.

Q: How do you recommend a business owner share with employees the urgency of a financial situation, without scaring employees or hurting morale? On the other hand, we do want them to feel secure in the future of the company.

A: To me, the purpose of open book management is threefold: I want to have accurate information to make decisions, I want to hold my employees accountable and maximize production, and I want to build a team effort that empowers employees to make decisions for the benefit of the team, business and our future. OBM, in order to be effective, isn’t about just showing numbers, it’s about involving employees to be part of the management and part of the team by empowering them to help make decisions that affect the future of the company. One reason many employees leave a business is because they don’t feel they are involved or their voices heard. They can feel insignificant.

If your business is losing money, as an employee, they would want to know why? They would also want to know what the plan is moving forward. I am sure you have a history of profitable years that can build confidence. Mapping out your plan and showing how you are dedicated to increasing profits can be your morale boost. Another way confidence booster is when an owner invests their own savings into the business to increase cash flow. It shows commitment.

Is there panic when they see a significant loss? If the situation is handled properly and you have a plan in place, then the team should be onboard and as committed as an owner. Keep the dedicated employees that thrive from OBM and replace the ones that aren’t the right fit. Build a culture of success and surround yourself with good people!

Q: We also want them to realize the importance of efficiency and the significance of every mis-ordered or lost dollar, yet at the same time we want to continue to make sure they spend “what it takes” to do a job right make our customers happy. What’s the happy medium?

A: If you have a history of financials on your business or have the financial set up to show a comparative from this year to last year, you should set some goals and benchmarks. For example, if the labor rate needs to be at 25% and material rate at 25%, which is a gross profit of 50%, then your pricing should be set accordingly. If the financial for the previous month comes in at 27% labor and 30% material, then its time to analyze it. I analyze the good times and the bad times to keep a good pulse on the scenario, but in this scenario, where do we start?

The labor and material rate is higher than expected. Is the pricing accurate to keep you at a 50% gross profit? Were there a few projects for the month that were undersold with a lower revenue number, thus making the labor and material percentage appear higher or were there numerous errors in the labor pay sheets due to lack of production managing the jobs improperly causing extra work?

Employees need to be held accountable to their benchmarks and this can only be done by reviewing the financials and maximizing the potential of OBM. The three elements to make OBM thrive are as follows for business owners- Monitor, motivate and hold them accountable.

When the company is profitable and the numbers are being managed right reward your employees with a bonus system. The goal should be “let’s do what we can to get back to the profitable days.”

Do you have questions about open book management? Submit your questions to me at tim@remodelbuddy.com.

Open Your Books to Profit

I wanted to post this here on my personal blog to see if anyone had any questions they wanted to submit. Here is the link to the article

Open Book Management

I hear people discuss open book management (OBM) and feel that business owners are absolutely too hesitant to dive into this. What is the fear of using OBM? Some reasons include not wanting employees to know their income, or not knowing how to use the information to build a team spirit, or that the owners don’t understand a financial statement.

In addressing the last point, I feel it is imperative that business owners understand their financials. You cannot earn a consistent profit without understanding how every movement affects the bottom line. Financials provide a strategic map that outlines where you have been, where you are, and where you are headed. In turn, OBM provides a way to use financial information to get your team focused on being profitable. This isn’t a “buy-in” per se’, it’s a necessity to developing a team that is focused on becoming a well-oiled machine.

I can review any financial information and in a matter of minutes know both what is functioning very well and what problems a business might experience. Financials, when set up properly, with the right chart of accounts, following a percentage of completion philosophy, and using an annual comparative, enable business owners to have the right information to make the right decisions.

Understanding the numbers will let you know what areas of your business need improvement. You might have a high sales volume, but if you don’t understand your profit margins, you might be under-selling projects without realizing it. Your company might be most efficient at building additions, but often accept bath and kitchen projects that may not obtain your required profit margins. Your financial statements might reveal that your overhead is too high.

By itemizing the entire general and administrative accounts, you will have a more systematic and analytical look at the proper numbers, which gives you the opportunity to streamline your operations. If you see each line item on a monthly basis, you’ll quickly see where you are  spending your money and be able to make decisions on what expenses are increasing or decreasing and why. You can ask yourself, “can I save money on my phone service?” or “can I afford another vehicle?’ or “what can I do to reduce my insurance?” When you look at the numbers systematically, every month, you become more analytical and savvy in how you spend money.

Once you understand your financials, you can share them with your employees and help them understand what the numbers on a report mean. Open book management can build a culture of success. Having an accurate financial can help the team analyze a situation more thoroughly and present the decision makers with accurate information to make an educated and better decision. If an employee requests a raise, you can use the time to share information with him including material rates on his projects, labor rates, and profit goals. That very same employee might not ask for a raise if they knew the business missed profit goals by 10% or that the projects the employee was responsible for didn’t meet the desired profit margins.

There are so many ways to involve the team and team build. In my upcoming blogs, I’m going to take an in-depth look at OBM and will include a series of many true life examples and scenarios and answer questions to ensure that OBM is part of your growth. Submit your questions about open book management to me at tim@remodelbuddy.com.

As the ” Man in the Middle,” or person in the middle or being the owner, you are your company’s biggest asset and the best representative of your business.

Many business owners are more focused than ever on their marketing efforts. I have mentioned before that the definition of marketing that should be adopted today is about getting someone who has a need, to “know, like and trust” you. There is no better marketing plan than having the owner of a business visit his or her clients at their home and being involved in the project. So get out from behind your desk and be your biggest marketing asset.

When a customer hires you they expect that there will be consistent progress and quality workmanship to complete the project. These are their basic expectations and not anything they consider astonishing. What is astonishing? Astonishing is doing something no one else can do. When the owner of the company visits the homeowners and makes a concentrated effort to talk with them about the project and focuses on making their personal experience remarkable, then you are on your way to creating an astonishing experience.

If you want to learn something about your customers and the pulse of your business, visit one of your projects. Talk to your customers. Not only will you earn that “know, like and trust,” but you will learn more about your business, get to know neighbors, and develop relationships with your tradesman and employees. When your workers know you may be around the corner or on your way to their project, their efficiency and craftsmanship will reach their highest levels.

When I was operating my business, I would make daily visits to projects. I would review jobsite cleanliness and quality control, observe our workmanship and talk with the customers. When I visited the project and the customer was not home, I would leave a note that I was there and make written observations and leave them on the communications board. My clients knew from our first meeting that I would be very involved in their project. This was also part of my sales process. I wanted them to feel they had our team’s personal attention. I knew if I put forth this kind of effort that everyone on my team would and could be expected to do the same.

With regular visits to projects, I found that the quality of work, job staging and cleanliness of tradesmen improved. The most beneficial aspect of getting out from behind the desk was that our business was more “refer-able,” a key to success in today’s economy.

From time to time I like to look a different advertising pieces. This will be a review we do once a month, advertising pieces. The benefit of Establishing a Advertising Campaign that is effective is a business saver sometimes.

Having the ability to step on the gas to create revenue or ease off the gas when needed for your remodeling business can be a valuable vehicle, if the strategy is,…. and tactics are… done right. I do highly recommend using an experienced marketing agent to strategize, develop and implement your campaign, as trial and error can be costly.

Not only can trail and error be costly, but the money and time lost can stop you from venturing down this road again and ultimately prevent you from advertising, which can be the loss of a great vehicle for the right company to take advantage of to grow their business, when your budget allows. Also, the experience of negotiating for the proper rates can be a savings in itself and get the greatest value for your money, dollars and budget. The professional experience is negotiating is priceless.

Direct Mail Pieces

Val Pak

I would just like to give you general information and a description of Valpak, so you can understand how it is used. Personally, I have had extensive experience with Valpak in numerous metro markets throughout the U.S. For customized advice, please contact Remodel Buddy to arrange a plan for you business. Valpak’s PDF media-kit can be downloaded here;

What is Val Pak?

The Valpak sealed envelope contains a mix of ads from national, regional and local advertisers, delivered via mail in a sealed blue envelope. Remodel Buddy’s take: Valpak’s business advertisers the majority of the time, advertise with discounts on their ads or use coupons, as the Valpak audience likes to open and review the blue envelope looking for local specials. Depending on the marketplace, this can be a vehicle that will have more than one competitor in each Remodeling/Home Improvement field.

Val Pak describes itself as the following;

From savings alerts, special discounts and offers, to menus and more, consumers look to Valpak each month to deliver rewarding, relevant and reliable ads from neighborhood businesses and national brands. Advertisers can select from a full range of professional marketing services including campaign concept, design, printing, list acquisition and in-home distribution.

How Valpak is traditionally distributed.

The distribution of Valpak is through the mail, directly to the homeowners and or commercial businesses. When mailing your ad to the local area, here a a couple options.

Saturated List-

Each Valpak distributor is a franchise and will have a certain geographic area it targets for the mailing of the blue envelope with all the ads & coupons. For example, if someone is operating a remodeling business in Washington, DC., and wants to do a saturated mailing, the mailing will go out to everyone that is located in the zip codes that the Valpak franchise mails to. If you are in DC, the ad will go to everyone in the DC metro area and the list of zip codes they distribute to 100% coverage. Saturated lists are less expensive on a cost of per thousand mailed, per thousand reached( which is a common evaluating term for pricing -cost per thousand -cpm)

Targeted List-

this is exactly as it sounds, a specific demographic, income range, home owners, occupation, targeted zip codes only and can be used to focus on more of an ideal client. It is important to know your ideal client and their demographics anyway, when advertising as if you are reaching your targeted customer, you are more apt to achieve better results. Targeted mailings with Valpak have higher response rates, leads, inquiries etc, but also cost more per thousand.

Remodel Buddy’s take:

When choosing a direct mail piece there are quite a few things to consider when trying to capitalizing on the vehicles potential. First, consider the reason for the advertising purpose. Is this for generating leads for an event? The event could be an open house, a sale or special offer. Is this for branding? Some Remodeling organizations set aside a certain amount of their advertising for brand awareness, to get the name out and reach people they may not otherwise reach by, by using saturated mailings to a wider audience- everyone. A more focused approach for ideal clients and a better opportunity to earn business on each customer contacting you would be the targeted mailing. Even though the cost per thousand mailed is higher, the overall cost will be less on the budget, since less will be mailed.

Remodel Buddy’s Summary

We analyze the marketplace and review all the possible vehicles for direct mail advertising. Direct mail pieces more than likely come with a few or more competitors advertising in the same mailing on group pieces. Valpak is no exception. A good sales approach will be necessary to close these leads and make the cost effective. This is always a consideration when choosing what ads to run, when and gauging the response expected. Knowing your ideal client and their demographics etc,etc is a process Remodel Buddy can go through with you and will be necessary to maximizing success & making an effective advertising campaign. The message and content in the ad along with the creative artwork itself is just as important as every other step.