Using this sales goal template, College City Design-Build’s salespeople build their own year by projecting reachable targets and charting progress. The individual sales plan takes into consideration the salesperson’s capacity, ambition, and desire for income, so the template drives results, says Bjorn Freudenthal, the Lakeville, Minn., company’s vice president of marketing and sales.
Each salesperson is given the same template with a different number of bids, leads, and project types. The template is divided up by month, quarter, and by number of projects and type of project.
Although goals are set at the beginning of every year, Freudenthal meets with each salesperson every two weeks to review leads, bids, and jobs sold and to review sales goals and year-to-date results.
Freudenthal, who developed the template with a local supplier, Charlie Bradburn, the sales manager at Automated Building Components’ millworks division, says it allows salespeople to be more strategic about their performance, which “leads to company buy-in ... . We have people who [see] themselves as owners and manage this form as an owner would ... a P&L.”

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Small Bites
The budgeted sales for this individual are $1.3 million. For the first quarter, $325,000 is his sales goal. As of January he had reached $215,000, but he still had February and March to hit the $325,000 mark. He was just 33.8% behind his quarterly goal.
Sales Strategy
Some salespeople lean toward certain types of projects and have an easier time selling those. “But if you say that you want to sell more kitchens,” Freudenthal asks his sales team, “What actions are you taking to do so? Taking workshops, going after prospects, striking up relationships with showroom reps?” This is a way for salespeople to look at their own sales more strategically.
Goal-Oriented
Freudenthal and each sales rep review the document to see if the salesperson is on track and if activity goals and volumes are on target. “If we’re not,” Freudenthal says, “we ask why and [look at] what obstacles are in the way and how can we get to the desired results.”
Make Your Margins
This is your company’s average closed margin, which you put in. After the contract is executed and the project is built, that closing margin is tracked, and that’s the number on the sales template for a particular salesperson. The goal is to have the closing margin be the same as (or better than) the pre-construction margin.
Which Path?
“D/B” is for those design/ build jobs that follow College City Design-Build’s 12-step system. (Small jobs have a lead designer and don’t follow the D/B process.) These numbers are used for tracking.
Suggested Follow-Up
These cover goals and objectives and how best to attain them.

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Move Me

From New Jersey to Florida, Michigan to California and Seattle, remodelers describe their clients the same way: hesitant, indefinite, vague. They have no sense of urgency. They are Internet savvy, researching more, and know their product prices. They want as much remodeling as they can get for as little money as they can spend — and they are going to interview 27 competitors to get it. How are remodeling companies changing their sales processes to reach these new consumers, meet their shifting expectations, and get them to say yes?

A few years ago, many remodelers had gotten off the job-bidding wheel. Now they’re back on it. “There is a lot more competition, and the economy has forced people to do things they would not have done before,” says Dave Mattson, CEO of Sandler Training, in Owings Mills, Md. “It’s last man standing: ‘I’m going to price things insanely low to keep my guys working. You’ll go out of business before I do and I’ll eventually make it up.’ It’s insane, but it makes sense when you’re emotionally involved in the process.”

To combat this competitive attitude, you have to be better organized and have repeatable processes. Bill Tanasse, owner of Key Builders, in Lansing, Mich., has spent the last several months investing time in his sales strategy and working on his sales process. “Clients know there is value to be gained out there, and you have to be sharper. At every juncture, I present myself as a professional. Every process has to be crisp.”

While competing on price can be a death spiral, the distance between price and value has narrowed. “They are attached at the hip,” says Karen Zieba of Zieba Builders, in Long Beach, Calif., who has always “tried to sell value and not cost” to her mostly high-end clientele. Now, she says, “We have to offer good cost in order to get anyone to believe they’re getting value. They need to see they are getting Zieba Builders for what they were going to pay some ‘one-off guy.’”

Strategy Shift

Selling value in this economy might mean changing your marketing strategy and showing clients that you’re willing to work with them in new ways and that you are knowledgeable about products.

While most remodelers are now willing to take on smaller jobs, many companies that never made the margins on those types of jobs are having difficulty marketing their talents. “I don’t want to change my image in the marketplace,” says Sunny Zimmermann, owner of Zimmermann Associates, in Lakeland, Fla., who knows that the perception of his business is that it’s expensive. For Zieba, too, positioning her company is proving to be challenging. As Zieba Builders takes on smaller jobs, she sees her client base shifting from sophisticated consumers for whom quality always trumped price — “They didn’t care what it cost if they got what they wanted,” she says — to more middle-class clients “[who] don’t need the fancy stuff or the extreme appliance package with some obscure product from Istanbul.”

Zieba is targeting different neighborhoods and is sending out small batches of brochures created in-house. She’s trying to position the company as “someone you can trust; your neighborhood contractor; a member of the community; and family-centric.” She is also leading with offers of discounts on cabinetry — something the company hadn’t done before.

It’s a fine line to walk, since marketing materials can be costly. And what happens when the recession subsides? Which clients do you pursue? Which image do you maintain? “We’re at a crossroads,” Zieba says. “What will the economy do for us? There may be more money, but there’s a lot more risk in a premium market.” And she enjoys working with the more midlevel clientele and would like to be able to maintain that market base in the future.

Glen Lumia, president of Creative Design Construction & Remodeling, in Northvale, N.J., has expanded his geographic radius and increased his warranty to five years. He has increased spending on marketing and is doing both “old and new things”: direct mail, door hangers, client parties, educational seminars, donating design services to schools, appearing on radio shows, doing more home shows. He has changed his “package” price, the creature comforts that were built into his base bids. “We’ve peeled back standard features,” he says. “For example, a standard kitchen package includes a double garbage roll-out, lazy Susan, roll trays, tilt blanks at the sinks, three-step crown, undercabinet lighting.” Now, Lumia allows clients at a “challenging price point” to pick items à la carte. Although it’s more difficult to make margins, it brings down the base bid, and clients can always add on.

Lumia is also more open to allowing clients to supply their own materials, such as appliances and tile, but draws the line on plumbing fixtures since the company warranties them. Tanasse doesn’t normally allow clients to do part of their job, but recently finished a project through drywall and, for a consulting fee, is “helping to steer [the clients] in the right direction as they finish it.”

Zieba says that her clients aren’t asking to do parts of their projects, but she does find that she is working harder to seek out products and materials at lower prices for them. She has even found herself abandoning some of her usual vendors. “I recently bought [a shower door] from a new vendor because I almost felt I was being cheated [by the old vendor],” she says.

The Internet has made everyone a crackerjack researcher. “You have to be knowledgeable of the marketplace and keep up to date with the newest products and their costs,” says Tom Barber, owner of Barber Construction, in Roscommon, Mich. “But you have to do a lot of educating. [Clients] go online but they’re skimming things. They don’t have the details to make a good decision. You have to help them make a good decision.”

Overcoming Inertia

Ultimately, any sales process must combat the inertia that is gripping nearly all consumers. “The biggest challenge for [remodelers] is to create urgency,” Zieba says. And there are good reasons for homeowners to invest in their homes.

“I emphasize that commodity prices are low. There is real value to be gained right now in the industry — labor prices and material prices are at record lows,” Tanasse says. “You couldn’t pick a better time to do this project.”

Individual remodelers need to work on telling their story. “We got caught in our comfort zone. We became successful and the economy made us successful. Now we have to go back to the things we used to do to survive and thrive earlier on,” Mattson says. “Just saying, ‘The value of my workmanship sells,’ doesn’t work anymore. Thinking, ‘I don’t have to do all that stuff I learned at [sales training]’ doesn’t work anymore. Sometimes you have to go backward to move forward.”

Press On

Ten years ago, Chris Dreith, owner of The Home Improvements Group, in Woodland, Calif., couldn’t find a local publication in which to advertise. As a member of the SEN Design Group (a kitchen and bath industry buying group), she was introduced to the nationally distributed Signature Kitchens & Baths magazine. “I think I’ve gotten a job [from] every spread I’ve ever [placed in Signature], and I’ve been doing it at least 10 years,” says Dreith, whose company does design/build remodeling.

Think National, Work Local

Signature Kitchens & Baths, which publishes projects from any designer or builder (you don’t have to be a SEN member) as long as the project is attractive and the photography professional, is basically an advertising vehicle. Sold for $14.95 at bookstores and newsstands, the magazine is a four-color glossy with some editorial as well as submitted projects accompanied by staff-written advertorial. Each issue contains a buyer’s guide. A two-page spread is a $2,595 investment, and featured remodelers receive 160 copies of the publication.

Another, similar publication, is Home & Remodeling Trends. Also sold at bookstores, the full-color magazine is structured like a book with a table of contents and chapters. Advertorial is staff written and photographed. Although nationally distributed, clients pay a local or regional rate of $3,100 per page. Stories are repurposed online and get a unique URL; featured remodelers receive 20 copies. The magazine also will create e-brochures or printed brochures for clients.

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So how can a national publication work for you?

Credit: David Sharpe

Remodeler Chris Dreith uses Signature Kitchens & Baths in several ways. The magazine functions as an extension of her showroom for clients to get ideas. “Each spread is actually someone’s home rather than a photo that promotes a particular product,” she says. “Clients start to learn the terminology of K&B remodeling … and it [also] helps me get to know what they don’t like.”

Dreith leaves copies of SK&B in doctors’ waiting rooms, salons, and high-end fitness studios. She even left a copy in a local bookstore, which displayed it with a sign noting that a local designer was featured on page “x.”

Other remodelers have used publication of their work inSK&B as a way to goad architects into working with them or as an entry into putting on remodeling seminars.

Brad Cruickshank, of Cruickshank Remodeling, in Atlanta, is often featured in Home & Remodeling Trends and says he gets “a really good response from the custom booklets Trends puts together.” He delivers them to prospects before the initial meeting and finds that clients are passing them on to their neighbors

Major Overhaul: Address Weaknesses in Your Business

Mike Majors was stuck. Back in 2004, Majors Home Improvement, in Milton, Fla., had produced an annual revenue of around $1.2 million each year for several years, but Majors wanted to grow the business. Since he wore all the hats — sales, marketing, scheduling, production, human resources — as well as lead the company, he couldn’t dedicate the time to make the sales happen. Then, a series of hurricanes forced him to make dramatic decisions.

“Because of the hurricane damage, leads were starting to come in fast, but I couldn’t handle them because I was handling everything,” he says. “I had to make a change.”

Know Your Limitations

Majors decided to add staff. First he identified his own weaknesses: marketing and selling. “I could close sales but that was ... because my name was on the company,” he says. “If I was serious about growth, I needed good salespeople.” He was determined that once he hired good people he would maintain the revenue needed to keep them.

“I never ran help-wanted ads because I don’t want people who are looking for work; I want people who are successful in their current position,” Majors says. He spread the word, and a mutual acquaintance introduced him to Jonathan Wells, then working in a local advertising agency. With an MBA and years of experience in direct-response marketing, Wells turned out to be a great fit.

Next, Majors focused on sales. Again, mutual friends told him about Chuck Mepham, another MBA who had proven his sales success in years with Sears. Today he is Majors Home Improvement’s sales manager.

Let Go

In 2005, the company grew to $3.2 million and both new team members earned significant compensation. Now that the hurricanes are a thing of the past, volume has dropped but is significantly higher than before Wells and Mepham joined the team.

It wasn’t easy for Majors to hand over control of two major areas of the business. “It was difficult to give the responsibility,” he says, “but I think that the fact we were so busy and I had so much to focus on forced me to let go.”

Majors still keeps his finger on the pulse of the company with daily lead, sales, and production reports, and his key managers have earned his confidence. “Now, while they may run some things past me, I trust their judgment and know that they are better at their jobs than I ever was. This confidence lets me focus on other important aspects of the business.”

New Law Will Save Big Bucks for Small Businesses

A bill was sent to President Obama’s desk yesterday that repeals a small part of his own healthcare legislation. However, if it becomes law, it will make life a little easier for remodelers, contractors, and any other small business that uses its fair share of vendors.

By a vote of 87 to 12, the Senate approved the Small Business Paperwork Mandate Elimination Act of 2011 on April 5. The law repeals a burdensome tax paperwork requirement that was part of the Patient Protection and Affordable Care Act approved last year. This would have mandated that starting next year businesses would be required to file a 1099 for every vendor that provided more than $600 in services or goods throughout the course of a year.

The annual $600 limit was for all vendors so contractors would find themselves sending out a stack of 1099s not just for their subs and vendors but also for mundane purchases such as coffee, office supplies, and even fuel.

No doubt the requirement — had it become a law — would have meant that businesses would have to spend resources on accountants and bookkeepers to adhere to the rule rather than on expanding their operation in a more meaningful way.

Aside from eliminating the 1099 requirements, the new potential law also repeals a component in the Small Business Jobs Act of 2010 that stipulated that as of Jan. 1, 2011, landlords had to submit 1099s to vendors that supplied them with more than $600 of services.

Contractors, remodelers, and other small businesses can continue sending out 1099s as they have been in the past based on the IRS’s reporting procedures.

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The State of the Kitchen & Bath Industry

At the recent Kitchen & Bath Industry Show (KBIS) in Las Vegas, Karen Strauss, president of the Masco Cabinetry Group (which includes KraftMaid, Merillat, and Quality) in Ann Arbor, Mich., addressed a group of professionals about the state of the industry.
Strauss offered suggestions on how designers and remodelers can survive in today’s tough market.
First, she urged professionals to face reality. Kitchen and bath sales are down 30% since 2006, she said, but even with a few small rises in consumer confidence, the market is still “bouncing along the bottom.” Though the unemployment outlook has improved, professionals need to pay attention to the quality not just the quantity of new jobs on the market. With a 75% decline in sales of new homes, that market continues to be a “roller-coaster ride,” Strauss said, and tight credit will continue to affect these sales. All of these factors mean the rest of 2011 will be volatile and consumers will be reluctant to spend money on their homes.
However, there are reasons for optimism. With the low availability of new homes, as foreclosed houses are processed through the market, the need for homes will increase. Foreclosures also offer an opportunity for repair and remodeling — especially in kitchens and baths. Three positive factors that will influence the market are an increase in household growth, immigration, and the second-home market.
Strauss pointed out that K&B designers and remodelers are competing against other big-ticket consumer items such as vacations, so they need to “create a compelling reason to buy in our category.”

Reaching Today’s Consumers

In her presentation, Strauss stressed that the industry also needs to find out what today’s consumers want, citing some statistics that could help to define today’s top buyers. She said that homeowners see their kitchen as an experience and a “lifestyle support tool for what matters” to them.
And today’s consumers are the ones who control the message — they don’t wait for retailers to “push the message out to them.” They are connected in ways that most retailers never imagined. Strauss said that consumers:
• Want to participate in the conversation and be an equal partner in the process
• Are more likely to include their friends’ opinions in their decisions
• Want designers to bring them solutions worth splurging on
And, she added, there are 200 million blogs online, and consumers are using resources like this to make purchase decisions online — before they even set foot in a store. With all these changes, it’s important that the industry finds a better way to reach consumers from a distance, including phone applications and mobile sites. Strauss pointed out that the better you know your customer, the better you’re equipped to reach them, which means not just knowing their demographics but also their psychographics. She cites the example of a researcher who defines the ideal customer of Trader Joe’s grocery stores as a “Volvo-driving professor who could be CEO of a Fortune 100 company if he could get over his capitalist angst."
Designers need to ask their clients about the key triggers that prompted them to renovate a kitchen or bath. In addition, designers need to be innovative and inspire their clients. “No one cares about your products, they only care how your products will improve their lives,” Strauss said.

Having choices is essential to business agility

The economy shows signs of picking up momentum, yet unemployment, housing values, and world events remain unsettled. Funding is still elusive for our businesses and our clients, yet banks are reportedly hoarding cash. We are seeing more activity than we have since the fall of 2008 (yes, the double meaning is intended), but will it translate into actual revenue?
Mixed signals and uncertainty create more personal and business stress than times of clear direction. Is it better to hold onto our cash and live to fight another day? Or is it prime time to risk investing to gain market share and get a leg up on our competition? We all have responsibilities — to ourselves, our families, our teams, and our clients — and investing in the wrong areas at the wrong times could spell disaster.

Finding Options

In times like these, having all my chips on one uncertain investment or direction is too risky for my taste. I like options. I want to seize opportunities as they arise, but I also want the flexibility to pull back if those opportunities lose momentum. Think “nimble” — a mouse dancing in the moonlight.
Diversified services. Options come from looking at our business as a “portfolio” balanced to suit our appetite for risk. Large, design-intensive renovations such as additions, kitchens, and master bedroom suites offer great returns in good times, but they dry up quickly when clients are forced to focus on need-based projects and repairs.
To balance this risk, we try to serve our clients regardless of project size. Our smallest project last year was $78; our largest was more than $700,000. We have also balanced our business portfolio by offering services beyond just home remodeling.
Variable costs. Options come from making our costs as scalable as possible. We have blended more independent contractors with in-house labor over the last two years. We are using more temps in the office to fill short-term needs, and we have outsourced more elements of our business, such as payroll, hosting services, and graphic design. Hedging our decisions through investments in variable, rather than fixed, costs allows us to be nimble.
Team effort. Options come from transparent communication with a committed team. My goal is to have the entire team on the lookout, not only for risks and new opportunities but for creative reinvention strategies as well. To achieve that goal, they need the authority to think creatively, which requires knowing where the company is heading and understanding the decisions we make. And they need to be committed — to doing what’s best for the business, to breaking out of traditional boundaries, to wearing multiple hats. Team members need to become “utility players,” adding value in myriad positions.
Every business is affected by forces that it cannot control — competition, the economy, even the weather. Effectively positioning around these externalities, especially in such uncertain times, is a competitive advantage. We are following the path of flexibility through options — a mouse dancing in the moonlight.

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