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Credit - VeCtora_Light_5/6 Customer Focused: Bill Rossiter says that retaining existing customers is less costly in the long run than trying to force your marketing program to constantly “buy” new ones. 44 / ProSales / September 2013 www.prosalesmagazine.com Done right, marketing connects you to customers and leads to sales Making Magic Photo: Michael NeMeth E lton Mayfield recently replaced the furnace and central air conditioning in his home. He hired an HVAC installer he’s used before and trusts. “I didn’t even ask if he sold me a Trane or a Carrier,” Mayfield says. “I trust him. And if I have a problem, I will go to my guy.” Mayfield, who is co-founder and partner of ER Marketing in Kansas City, Mo., thinks this is the kind of relationship that dealers should strive for with their customers. The problem that he and other marketing and public relations experts see is that many pro dealers still don’t really know who their customers are, so they can’t know for certain how marketing translates into leads and sales. Without a game plan, a goal, or a measuring stick, dealers’ marketing inevitably becomes a hit-or-miss exercise. “There are customers and there are customers,” says Rick Fernandez, a long-time public relations consultant. That might sound simplistic, but Fernandez isn’t the only expert who thinks that dealers’ market- ing aim is more true when they paint a bull’s-eye on their existing customer base. Retaining those customers is less costly in the long run than forcing a marketing program to “buy” new customers all the time, says Bill Rossiter, a former sales and marketing executive with Owens Corning who now runs Sylvania, Ohio–based Interrupt Marketing. Know Your Customer Rossiter recommends a systematic approach to “profiling” customers. That means dealers should be gathering reconnaissance on who’s coming into their locations and how often, what products and services they came in for and what they ultimately order, and why any customer whom a dealer’s marketing targets does or doesn’t shop its yard or store. It’s one area where trade partners such as manufacturers and buying groups—sometimes underutilized resources, say marketing experts—can help. They often have access to demographic data, By John caulfield & Kate tyndall www.prosalesmagazine.com September 2013 / ProSales / 45 Air Time: Parr Lumber employees Corey Valdez (left) and Tony Cookston man the mikes on Parr’s Weekend Warriors radio show. such as the age of homes in a given market and when they might need renovations, which dealers could share with their contractor customers or use to target specific homeowners. Serving the Pros Because there is a great deal of movement within the residential building industry, the amount of churn is substantially higher than for all businesses, reports the National Association of Home Builders (NAHB). So it behooves dealers who think they know all the builders and remodelers in their market to take a second look. They may find that they need to dial back a bit on loyalty programs and reach out to new builders. Dealers with a lot of retail customers are the ones who find they need to develop programs to reach that market segment. That group is Internetsavvy, price-aware, not afraid to comparison shop and ask questions, and is very willing to walk away when unhappy. Dealers such as Cincinnati’s Nisbet Brower and Hillsboro, Ore.’s Parr Lumber, which both serve 46 / prosales / september 2013 several market segments, have found that they need to customize their marketing efforts. What works for a builder who is already familiar with the yard won’t necessarily work with a retail customer. About 15% of Parr’s overall sales are to retail customers, says marketing director Nancy Cranston, although some of the dealer’s 31 facilities (which include seven cabinet design centers) depend more on retail sales than others. “Our builders know everything we have, and we have developed relationships with so many of them, but it’s the retail customer who doesn’t know we have decking and fencing and cabinets and appliances,” she says. “It’s constantly a challenge to get that segment in.” Parr’s “Weekend Warriors,” a home improvement radio show, has proven a draw not only to builders and remodelers but to retail consumers as well. The show, a winner of a 2012 ProSales Excellence Award for marketing, has now been syndicated to 11 new markets in Oregon and Washington. The dealer gets feedback from customers who www.prosalesmagazine.com photo: Leah Nash / Novus seLect Marketing Marketing for one agency that she consults only for graphic design work) and radio and newspaper ads. The dealer used to spend $800 per week on its regular newspaper advertisement. This spring, for the local Parade of Homes, the company offered to pick up the $800 entry fee for any builder who would agree to buy all project materials from Mathew Hall. “We picked up three builders that way,” Ruether points out. Along the way, she has been able to slash the marketing budget by two-thirds to $100,000. This year, Ruether thinks the budget may be even slightly less. “Half the battle is knowing your customer,” Ruether says, “and a lot of people waste a lot of money figuring that out.” Be Flexible No Dough: Bill Gutherie of Gutherie Lumber spends nothing on marketing. His only effort at marketing is stealing pens from his dentist and giving them to his contractors. He says he has about 20 contractors who regularly ask him if he has any more of those great pens. 48 / ProSales / September 2013 enjoy the radio program, but Cranston acknowledges that figuring out whether the show translates into sales at the register is difficult. “Measurability is really a challenge for us,” she says. The marketing department has used Google Analytics to measure its website traffic, but other than that, objective measurement often yields to instinct. Like many other dealers, Parr scaled back marketing efforts during the downturn. It was only this year that the company ratcheted up its efforts. The dealer spent almost all of its $170,000 radio budget on a series of 30- and 60-second spots broadcast from each location, thanking all the trades for their business. Mathew Hall Lumber has done more than just thank its builder customers. The St. Cloud, Minn., dealer used its entire marketing budget to help its builders. “We might help them get a new sign on their truck, new uniforms for their crew, or some advertising,” says Holly Ruether, Mathew Hall’s director of marketing. Ruether says that the change came a few years ago, when the dealer realized that it was spending 50% of its marketing budget to chase 5% of its customer base rather than playing to its strength: its pro customers. “After doing everything and spending so much money on advertising,” Ruether says, “we got smart. We finally figured out that we’re the ones who know best how to market [the company].” Ruether cut out advertising agency fees (except Along with knowing your market, Bob Chamberlain argues that flexibility is key to a successful marketing plan. That’s why the Nisbet Brower marketing director has built checkpoints into his plan, where at intervals he can evaluate a particular strategy, tweak it if need be, or eliminate it altogether. The Ohio dealer serves residential builders, commercial builders, and consumers, the latter primarily through its showrooms in Cincinnati and Dayton. Depending on the target customer segment, Chamberlain says his company has to determine what makes the most sense when it comes to defining strategies and allocating marketing dollars. With builders, especially semi-custom and custom builders, relationships are very important. On the consumer side, it’s a different scenario, Chamberlain points out. “You really do need to have a significant Internet presence for the retail segment.” “Part of the Internet process is how you choose to engage people,” he adds. “Sometimes we get leads through the Internet on the kitchen and bath side. They contact us about looking for a remodeled kitchen. Those are easy to measure.” For that retail segment, Nisbet Brower has used a mix of television, radio, and print advertising, but Chamberlain admits that trying to figure out ROI is at best “kind of fuzzy.” For the showroom’s TV campaign, sales associates asked customers if they came in because they saw the commercial. But since a resulting sale might not occur for months, if ever, figuring ROI is tough, Chamberlain notes. At Jackson Lumber and Millwork in Lawrence, Mass., marketing manager Pat Marcotte has learned to change with the times. When the dealer catered more www.prosalesmagazine.com Marketing to the retail trade, Marcotte spent more marketing dollars on print advertising but found retail customers hard to woo. The dealer decided to refocus its marketing on courting builders and remodelers. As a result, she says, “We started advertising totally differently. I went from doing cut-and-paste ads in papers to doing events for remodelers and builders.” Now Jackson Lumber offers its builder customers continuing education courses and classes on the lead-paint issue. Two years ago, the dealer set up a rewards program for remodelers. Newer platforms, such as social media and smartphones, will work only when a dealer has a good handle on what content customers want and how they prefer to receive it. “You can’t just do things the same way you used to,” says Kimberly Brandner, director of marketing and client services for Brandner Communications, a marketing and public relations agency in Federal Way, Wash. “You have to be creative about how you reach customers.” Stick With What Works With its 99% pro base, Syracuse, N.Y.–based Erie Materials doesn’t have to worry about dividing up its marketing dollars. “If we were having to market to consumers and homeowners, we would have to inflate our marketing budget a lot,” says Jim Santoro, Erie Materials’ marketing director. The dealer, which has 10 locations (including a 50 / prosales / september 2013 Clear and Consistent Messaging Even retailers that are proficient at marketing can be a little heavy-handed in their self-promotion and a little light on the variety of their promotions, observes Katy Tomasulo, public relations and social media manager for Seattle–based agency C Squared. Marketing by small businesses tends to be “too intense for too short a period of time, so no one pays attention,” says Mike Michalowicz, co-founder and CEO of New Jersey–based consulting firm Provendus Group. He recommends “a constant drip” [of information or promotions] so customers in need will think of that dealer first. Beyond traditional advertising, that message can be delivered in many ways: newsletters, blogs, and opinion pieces in local newspapers, for example. It can also be delivered through a dealer’s branding. Each of these platforms, though, must be consistent and clear, says Jennifer Swick, a former marketing director with Parr Lumber who now is a partner at marketing firm Wheelhouse 20/20, in Portland, Ore. Swick and her partner, Scott Ericson, another Parr Lumber alumnus, note that clarity might entail developing separate campaigns for different markets and even individual yards, especially if locations don’t stock everything that the dealer is selling in its weekly circulars. Swick and Ericson agree with other marketing experts who say that a price-driven marketing strategy www.prosalesmagazine.com photo: Courtesy JiM santoro Feed & Greet: Erie Materials hosts barbecues and trade shows to stay in touch with its pro customers. distribution center) serving customers in northern New York and Pennsylvania, ranked No. 20 in this year’s ProSales 100, posting $182.8 million in total sales in 2012. “We rely a lot on direct mail and electronic communication, and we try to evaluate [our efforts] based on buzz and feedback,” he says. The dealer sends out postcards and mailers with the occasional coupon. Santoro says that he has found email to be the most cost-effective form of marketing. To that end, Erie produces a monthly email newsletter and uses email blasts to announce a new product or send a reminder about a promotion. Like most other dealers, Erie hosts customer appreciation events such as barbecues, which are held at each of its locations, and sponsors outings such as a dinner cruise, a fishing trip on Lake Ontario, or a golf weekend. The dealer also puts on a biannual trade show, along with smaller events and seminars for customers, which often give local architects the opportunity to earn continuing education credits. Marketing 52 / ProSales / September 2013 Big Builders Are Gaining Market Share 600,000 New Home Closings will eventually yield diminishing returns—despite conventional wisdom that price drives transactions. “I can price-shop anyone in three minutes on my smartphone, but if it’s a price-only proposition, you constantly have to reacquire that customer,” says Mayfield, the Kansas City marketing consultant. Ericson asserts that the question any dealer’s marketing must answer is, “Why should a customer buy from me?” The answer, he says, must be unambiguous: Why are your quality and service unique? And if the dealer’s marketing can’t answer those questions, Ericson points out, the dealer needs to find its value proposition and figure out a way to improve it. Value-added marketing emphasizes how dealers can help professionals sell to their customers, says Interrupt Marketing’s Rossiter. Tomasulo of C Squared adds that dealers can position themselves as experts to both pros and homeowners by marketing services such as installation or sharing the latest product trends. In that vein, dealers should leverage their relationships with suppliers. Tomasulo points to decking tool kits that her client Weyerhaeuser Distribution recently created that include 10 how-to articles, which dealers can print out and post in their stores. “Engagement should be the key to all marketing endeavors,” Brandner says. And the more personal and face-to-face that engagement is, the better, say other marketing experts. ER Marketing recently polled dealers buying from distributor Huttig Building Products about their preferred communications mode. Email ranked first by a wide margin. But faxing placed a surprising second. Mayfield explains that dealers like receiving pricing and product information from distributors that they can post at their service counters for customers to read while they’re waiting to place orders. As more contractors embrace electronic and digital communication, dealers need to be where their customers congregate—be it online forums or social media platforms. The National Association of Home Builders polled its membership last spring and found that 86% of builders are equipped with smartphones and more than two-fifths use iPads. Both of those delivery systems present robust marketing opportunities to savvy dealers. A recent survey of 65 online retailers, conducted by marketing research firm Forrester, also found than 89% either implement or plan to implement mobile email optimization in 2013, with more 500,000 101-200 400,000 11-100 Top 200 Share Top 100 Share 60% 50% 40% 300,000 Top 10 Share 200,000 30% 20% Top 10 10% 100,000 2005 2006 2007 2008 2009 2010 2011 2012 SOurCe: MetrOStudy Market Power: Growth in big builders’ market share increases the need to look more closely at your your desired customer base and the best ways to help them reach their clients. $70,052 Average amount spent on advertising in 2012 by dealers taking part in the Building Material Operations Comparison survey. $10,737 Average amount money that dealers taking part in the Building Material Operations Comparison survey received in 2012 from vendors for co-op and marketing support expenses. www.prosalesmagazine.com Marketing than 70% planning to optimize paid searches for smartphones and tablets. Before any dealer leaps into digital marketing, however, it needs to be confident about its online presence. That usually starts with a website, which Brandner says should act as a dealer’s “business card,” be in sync with the company’s broader marketing strategy and goals, and be regularly updated with new information. That goes for dealers engaging their customers via social media, too. Dealers need to give pros and homeowners a reason to visit their Facebook or Pinterest sites through such enticements as giveaways or remodeling tips, or serving as a community bulletin board. But don’t expect social media to lure huge audiences, Tomasulo cautions. “You should be thinking quality, not quantity.” The message can be delivered in newsletters, blogs, opinion pieces, but it must be consistent and clear. It’s All About Sales 54 / ProSales / September 2013 Jennifer Swick, partner at marketing firm Wheelhouse 20/20. Credit -Doug PhoTo: VeCtora_Light_5/6 PluMMer Dealers must also realize that social media sites are communications platforms, not selling platforms. It’s easy to forget that the whole purpose of marketing is lead generation and converting those leads to sales. “Too many dealers don’t attach what they’re doing [in marketing] to conversions,” Rossiter says. That’s one reason why Rossiter prefers event marketing—golf outings, monthly breakfasts, new-product seminars, and cruises for preferred customers—as a personalized bridge to sales. Admittedly, measuring marketing’s results is easier said than done and can be more art than science. But one thing is certain, says Ericson of Wheelhouse 20/20: Marketing that does not integrate sales into its endgame “will fail.” And, he adds, a bad sales experience is all it takes to undercut a dealer’s marketing. Wheelhouse recently contacted the two top customers and five top prospects for each salesperson at one dealer and the biggest complaint it heard, Ericson says, was, “I can’t get hold of my salesperson.” Swick adds that when Wheelhouse does “secret shops” of different dealers, “95% of the time they never ask for a name, an address, a contact number, or when the project might start.” Much of this inattention stems from the fact that salespeople have many tasks competing for their attention, so they often view answering phone calls as a distraction. And in this era of austerity, dealers are not going to hire more people. Dealers that want to see their marketing click, says Ericson, “need to have a process for answering phones, for accountability, and for visibility.” www.prosalesmagazine.com