Archive for the 'Articles and Interviews' Category

Home Improvement Companies

Published on March 11, 2010 in Articles and Interviews. Closed

Home Improvement Companies: 10 Hints on How to Get New Leads Using Direct Mail

 

Home improvement companies can include home remodelers, kitchen remodelers, roofers, painters, siding and window contractors, interior designers, landscapers, lawn services, tree services, closet remodelers, heating and air conditioning contractors, carpet cleaners and more; anyone that sells a service directly to homeowners to improve their home. Direct mail for these companies is a proven marketing strategy that works. These 10 hints can help you get the best return for your marketing dollars spent.

 

The Economics

 

Hint #1: It Takes Money to Make Money. Direct mail takes great planning and deep pockets to do successfully. A typical direct mail program for a landscaper works like this: The landscaper mails 5,000 cards for approximately $2,200. The response rate is .25% or 10 to 15 calls. Out of those calls, maybe 3 or 4 new jobs are booked. That means that, on average, the landscaper pays $629 for a new piece of business. Hopefully, for the $629, he can get an $8,000 or more project. If the gross margin on the project is 40%, then there is a gross profit of $3,200. At 3-4 jobs, that’s over $10,000 in profit! So, the landscaper in this situation paid $2,200 to get $10,000. Of course results can vary wildly and the business owner needs to do at least 5,000 cards at a time to get any results.

 

Hint #2: Response Rate and Price are Correlated. In other words, the higher the price for your service, the lower your response rate is going to be. So if the landscaper above is selling $8,000 projects and getting a .25% response, then a home remodeler selling $50,000 projects should expect .1% (5 calls on a 5,000 piece mailing), or a lawn service selling a $1,000 per season service should expect .5% (25 calls on a 5,000 piece mailing). The examples above are good benchmarks or goals; your results will vary. A great insight though, is that the more you can mange the homeowner’s price expectations, the more you can drive up the response rate. So, if you’re a landscaper and you can show that your projects typically costs $5,000 or less, you can drive your response rate up!

 

The List

 

Hint #3: Work A Trade Area. The list in direct mail wisdom is always the biggest driver of response. The more you can target, the higher the response rate is going to be. Targeting by demographics if fairly simple: people with higher incomes spend more on home improvement projects and do less of the work themselves. Typically a list is going to be all homeowners that live in the more affluent neighborhoods. Those neighborhoods can be easily defined and mapped. The trap that some fall into is that once they mail an area, they move on to another areas. The opposite is true. The more a homeowner sees your mailing, the more likely they are to respond. Also there is a synergy in targeting the same trade area. A homeowner sees your trucks more, sees lawn signs and sees mailings. All work to increase overall response rates. Rarely do we see home improvement companies over-saturate an area.

 

Hint #4: Deliver Your Lawn Sign into Neighbors Homes.  People want to work with trusted vendors, and typically they trust vendors that are currently working with their neighbors.  “In Your Neighborhood” mailings target the closest 100-200 homes in a radius around a job site. The idea is to deliver your lawn sign information into homes. The response rate to these mailings can easily be double the response rate from mailings that saturate larger areas. The downside is volume. To get to 5,000 pieces mailed and see a significant impact on your business, you need to mail 25 to 50 job sites. “In Your Neighborhood” mailings takes time and patience, but the effort should pay off.

 

Timing

 

Hint #5: Sell Snowmobiles when the First Snow Flies. This is terribly obvious, but overlooked. I’ve heard many home improvement business owners say, “I’m booked through the spring, but I need to mail later in the summer to fill my slow months.” I understand the rational, but the strategy can be improved.  Homeowners buy during certain seasons: Spring to get their outside ready for Summer, Fall to get their homes ready for the Holidays, etc. Mail when people are buying. If you need to even out your workload, work with the homeowner for scheduling. If needed, offer a discount or other incentive to put off the work.

 

Hint #6: Homeowners Meet on Weekends. The busiest day for any call center such as travel, credit cards, cell phones, etc, is always Monday. That’s because on average more couples get together and make purchase decisions over the weekend. The rule of thumb in targeting homeowners is to reach them towards the end of the week when the mailing can have the biggest impact on weekend decision making. Conversely, if you’re targeting businesses, the opposite is true. The business decision maker makes decisions earlier in the week; they’re checked out mentally by Friday.

 

 

The Offer

 

Hint #7: FREE Is The Most Important Word in Direct Mail.  “Free” has been proven over and over again to be the most powerful word in direct mail. It gets people’s attention and everyone is looking for something free – even when they say that their not. In the home improvement world it gets difficult. How to you offer something free when you’re selling a $50,000 remodel? As a result many home improvement business owners shy away from the word. There are some creative solutions: “Free In Home Estimates,” “Free Book on 10 Easy Ways to Increase Home Value,” “Buy 4 Windows and Get the 5th Window Free,” “Free Carbon Monoxide Safety Check.” When you can give your core product away, you can always give away knowledge and information.

 

Hint #8: People Want the Price.  As mentioned above, price is correlated with response. So if you can set lower price expectation, or at least manage people’s price expectations, then you can increase your response rate. This is easy and obvious for the carpet cleaner and lawn services, but more difficult to grasp for the home remodeler or landscaper.  The instinct is to show a lovely photo of an award-winning project, then say, “call me, we’ll talk.” This can work, but I always feel it’s better to show a project with the heading, “Complete Kitchen Remodel for Under $10,000,” or “Family Room Additions the Start as $50,000.” Sooner or later you’re going to talk price. The better you can set up those expectations, the higher your initial response rate is going to be. Once you get in the door for a consultation and quote, both your and the homeowner will understand the actual scope of the project and costs.

 

The Graphics and Text

 

Hint #9: Relevant Eye Candy. Be wary of direct mail companies pushing templates with corny mailers such as “Make You Neighbor Turn Green with Envy” with the photo of a guy with a green face. Homeowners envision a beautiful room, a flower garden, a lush green lawn, and new clean and energy efficient window. You are selling a lifestyle as much as a service. Show people photos of your work. The more photos, the more likely you are to strike a nerve and elicit a smile. Typically you should have one dramatic photo, then 4 to 6 smaller photos. 

 

Hint #10: Frequency Matters.  There are studies that have shown that the more a person sees your brand, the more favorable that person becomes towards your brand. It’s the secret behind Coke and Pepsi. This goes back to Hint #3, “Work a Trade Area.” Choose a trade area that you can afford to market to at lease 4 times per year. It doesn’t always need to be direct mail; it can be local newspapers, billboards, or bus signs. Just as long as the media hits the trade area at least 4 times per year. Keep in mind that you don’t know when the homeowner is going to make that purchase decision. With ongoing marketing, your brand will be at the top of their mind when they decide to call for more information.

 

Kurt Johnson

PostcardBuilder Profile – Star Tribune Article

Published on February 9, 2008 in Articles and Interviews. Closed

Promotional postcards prove profitable, popular

A three-partner firm found a successful niche in offering ad and mailing expertise to small businesses.

by DICK YOUNGBLOOD, Star Tribune

Kurt Johnson had this promising idea for a new business: a generic website where smaller corporate clients could design their own promotional postcards, then have his company print and mail them at an affordable cost.

The only trouble was, given his background in sales and marketing, Johnson didn’t know much about building a website or handling a bulk-mailing business.

Not to worry: For the website, he wrote a business plan that detailed the strategy and features he figured were required, then thumbed through the yellow pages and selected website designers at random. Despite the casual approach, he found a designer who gave him pretty much everything he was looking for.Phlayne and Kurt

As for the challenge of managing the business, he had a secret weapon named Phlayne Anderson with a long background in business administration and operations.

In mid-2002, they founded Minneapolis-based PostcardBuilder, a company that has accumulated more than 2,000 clients in virtually every state and has grown to nearly $4 million in annual revenue. And with sales in the first three months of 2008 running well ahead of projections, the partners expect the 2008 gross to significantly exceed their initial estimate of $4.8 million.

Included in the PostcardBuilder numbers since 2005 is revenue generated by a sister company, dubbed Printz, that offers online design and offsite printing and mailing of a broader array of direct mail and other materials — business cards, posters and brochures.

That operation, which grossed more than $300,000 last year, is run by Johnson’s wife, Stephanie Hansen, who is also a partner in the PostcardBuilder/Printz business.

When Johnson came up with the PostcardBuilder concept, he and Anderson were colleagues at Edina-based BI, a consulting firm that designs sales and marketing incentive programs for companies worldwide. The idea was triggered by a company he encountered that custom-designed individual websites for large corporate clients to allow them to design their own direct mail and have it printed and mailed automatically.

It was a comparatively expensive process, however, which inspired the concept of a single, generic website and a limited choice of postcard sizes to assure small to midsized companies an affordable cost.

Thus, PostcardBuilder offers three sizes, from 4¼ to 5 1/2 inches in height and 5 1/2 to 11 inches in width. Once designed, the client’s mailing list is uploaded to the central website, credit-card payment is completed online and printing and mailing is handled at PostcardBuilder headquarters.

The cost: 32 to 98 cents a card, depending on volume, card size and mailing class. A typical order of 800 5 1/2-by-8 1/2-inch cards would cost $600 for standard class mail and $680 for first class. Better yet, the company guarantees a turnaround of two days or less.

The PostcardBuilder website offers free graphics, including several thousand photos from which to choose, plus a dozen typefaces and the ability to move the images on the screen and position the type around them. Or, if clients prefer, they can upload their own photos, sketches and logos to tie the content even more closely to their companies.

Of course, if the clients are neo-Luddites like me (Luddite: Someone who is incompetent when using new technology, according to the online encyclopedia www.whatis.com), they can simply fill out a questionnaire, provide text and graphics and PostcardBuilder will handle the design free of charge.

“And we’ll do it a whole lot faster than they will,” Johnson said. Indeed, about 45 percent of clients go for that option; some others rely on their ad agencies to do the designs.

If needed, the company also has five marketing people working with several vendors of business and residential mailing lists to help clients develop targeted mailing lists.

In short, things are humming along — although not everything fell into place at once: “It took us two years to figure everything out,” Johnson said. But considering that 70 percent of revenue is generated by repeat business, it appears they got something right.

Although the company was profitable in its first full year of operation, it wasn’t until the second year that there was enough cash for the owners to pay themselves a salary.

Cash flow also has been an issue in the printing process. It wasn’t until late in 2007 that PostcardBuilder stopped outsourcing the printing and began handling the jobs internally with about $450,000 of purchased and leased equipment.

And now, with cash flow improving, the company is planning a back-to-the-future strategy for luring large companies to the client list. The bait: custom-built websites that bigger companies can use to design their own direct mail for printing and mailing at the PostcardBuilder shop.

Hmmm, that sounds familiar somehow.