In a bold move, dealer Mathew Hall threw out conventional marketing advice and decided to use its advertising dollars to support its builders.
That decision not only won the St. Cloud, Minn., dealer points from its existing customers, it also brought in more business and helped the yard come in under its already pared-down advertising budget, earning it the ProSales Excellence Award for Marketing for 2013.
In the past, “we just felt like we were throwing things on the wall to see what sticks,” says Holly Ruether, Mathew Hall’s interiors manager, and architect of the marketing plan.
“We sell so many products, it’s hard to advertise everything at the right time. We have gone through four [advertising] agencies while I’ve been here,” she says, “and the first thing they tell you is that you need to spend more money.
“We finally figured out that we’re the ones who know best how to market,” Ruether says. “After all, half the battle is knowing who your customer is.”
For Mathew Hall, it’s builders. The 90% pro yard had gone overboard in the past few years chasing retail customers, she says. “We weren’t selling to retail; we were selling the hardware [Mathew Hall added 10,000 square feet of hardware to its yard in 1992] to our builders. Yet we were spending half our [advertising] budget on 10% of our customer base.”
With that realization, plus the confidence of owners Loran, John, and Dan Hall, and input from the department managers, Ruether hunkered down and radically revised the budget for 2013.
Every year, the dealer had dutifully doled out dollars for newspaper and radio advertising, even though figuring out the return on investment was like trying to pin Jello to the wall. The dealer’s advertising agency kept touting the merits of Internet marketing, Ruether says, “but I kept going back to [the fact that] 75% of my builders don’t have a smartphone; they have a flip phone. And they are everything for their company—the accountant and the cleaner.”
And every day, builders were walking into the store with tales of hardship.
“It was making it harder for them to do business, which, of course, made it harder for us to do business,” Ruether wrote in her awards entry.
“That was the one fact that helped us decide what to do,” she says, of the inspiration for Mathew Hall’s “Back to the Builder” marketing program.
The dealer gives almost 100% of its advertising budget to its builders, either in “Builder Bucks” that the customer can use to purchase select items in the store or save up to purchase items in a gift catalog the yard produces, or in direct aid, whereby Mathew Hall pays for a new sign for the builder customer’s truck, new uniforms for their crew, or a radio advertising campaign.
Ruether and the management team held a roundtable discussion with some of their top builder and remodeler customers to explain what they wanted to do and to find out exactly what their customers wanted from them. Those discussions helped Ruether and her team design the program.
In the process, Mathew Hall dumped its advertising agency, and it now only uses an agency consultant for graphics work, such as the builder’s catalog, Ruether says. The dealer does no newspaper, radio, or television advertising. For the past three years, thanks to the economic downturn, Mathew Hall’s advertising budget had been $100,000, slashed from its pre-2008 budget of $300,000.
“This year’s will be even less,” Ruether says, “because I didn’t need to spend it to get the results I want.”
The linchpins of the program are a scheme to help builders defray their own advertising costs, Builder Bucks, and sponsored fun events and educational seminars for builders and their families.
Mathew Hall set aside 20% ($20,000) of its total advertising budget to directly reimburse builders for their advertising costs. The dealer paid billboard costs for one customer and has paid full-page ad fees in the local Central Minnesota Builders Association Tour of Homes magazine for several builders to help them promote their tour homes.
Depending on the customer and the need, the dealer could be funding a builder’s initial website setup costs or covering booth fees for some builders during the local builder association home show. Ruether says that this portion of the marketing budget has had an extremely high return on investment.
One local builder, who used to spread his business half and half between Mathew Hall and a competitor, swung all his business to Mathew Hall—earning the yard $120,000 for 2013—when the dealer agreed to pay for the builder’s radio campaign costs (a request the competitor had refused).
Ruether used to spend $800 per week on newspaper advertising. But rather than going after the newspaper’s general audience, she has figured out a better way to reach the professional builders and remodelers who are Mathew Hall’s real customers.
Turning that outlay back to the builders has given her greater power to make a difference for Mathew Hall’s builder customers and has turned their gratitude into increased sales for the business. By offering to pay the $800 entry fee for the local tour of homes to builders who agree to buy the whole package—lumber, trusses, lighting, flooring, and windows—from Mathew Hall, Ruether has already secured an oral commitment from two builders who don’t normally purchase all their materials there. “For those who already buy all from us, [the entry fee] is a thank you,” she says.
Builders can earn Builder Bucks—wooden nickels printed with a denomination ranging from $1 to $100—for a variety of actions. And sometimes just for the asking. “I have guys who come to me at the lunches and say, ‘Where’s my money?’” Ruether says. “They know they’re going to get a buck.”
Every Wednesday in July, the dealer offered its builders a free lunch, barbecuing brats, burgers, and chops in the parking lot, served up with all the fixings. Or, builders who wanted to, could use their Builder Bucks to buy a steak for the grill. “I also sell a 12-pack of beer for $50, and they can use Builder Bucks for that,” Ruether says. No surprise—the beer is always a big seller.
“If they bring us a bid from a competitor already priced, we say thanks, and hand them some Builder Bucks,” Ruether says. For Halloween, the dealer planned a big potluck dinner for its builders at the yard, and a pumpkin-carving contest with employee competitors and builder judges. Judges earned Builder Bucks for their service, and participating employees earned Employee Cash (which they can use to purchase the same items the builders can with their bucks). Builder Bucks were also available at the different service desks, and builders were encouraged to go trick or treating to collect them.
The various departments had different denomination coins available to give out, Ruether says. “It was a way for them to talk to someone in each department, not just their regular salesperson.”
Mathew Hall allocated $15,000 of its advertising budget to the Builder Bucks campaign. Its General Store—located within the store—offers 100 items that can be purchased using the wooden nickels, and there is also a 40-item catalog of specialty products and services that builders can buy from. Catalog items include everything from a one-week vacation at a lakefront lodge in northern Minnesota to a Weber gas grill, iPad, and countertop wine cooler.
The dealer also used its Builder Bucks as a motivator to solve a problem in the making.
A lousy winter and a wet spring meant that builders were holding off on truss orders until it looked like the weather was going to turn. At that point, the dealer knew its truss plant would be working overtime, and orders would be delayed. To get weather-idled plant workers busy, Mathew Hall offered any builder who placed a truss order during the last two weeks of April $500 in Builder Bucks. “I got 17 confirmed orders, so we were able to get through the backlog that we knew was coming,” Ruether says.
The best part about the Builder Bucks program is that it allows Ruether to “do something fun, based on whatever whim I have at the moment,” she says. “The options are endless.”
A chance comment—about staff never seeing the builders—by an employee in the business office led to the sucker promotion; a scheme so popular that Ruether ended up allocating $4,000 of the budget to it.
She put a bunch of suckers whose hidden tags bore denominations between $5 and $100 (to be redeemed in Builder Bucks) in a bowl, and let builders know that if they came into the office to pay their bills, they could pick up a sucker.
“At first, I thought it was a lame idea, but they love it. Now we have builders who come in religiously and head right down to the basement to pay their bills.” Needless to say, the business office staff can now put names to a lot more faces.
Meanwhile, retail manager Mike Leudenbach had noticed that the free popcorn that was always offered in the store, along with coffee, was disappearing at a much faster clip than in the past. They figured out that builders were munching on popcorn as a lunch on the go.
Ruether’s brainstorm was to open the Snack Shack—actually a basket of snacks such as potato chips, crackers, beef sticks, sunflower seeds, and cookies— set it up in the showroom, and let builders pay for the snacks with Builder Bucks, at $5 per snack.
The shack works on the honor system, with a coffee can serving as the till. If a builder shows up with an appetite, but empty handed, he won’t have to leave hungry, as the shack’s sign makes clear: “And if you don’t have your Builder Bucks on you, take a snack anyway! It’s a long time until dinner.”
Fun events for the dealer’s builders and their families, as well as free educational opportunities for builders and remodelers, round out the dealer’s customer-related marketing efforts. Ruether allocated $30,000 of the advertising budget to this leg of the program, which also includes apparel, Christmas gifts for Mathew Hall’s builders, and other customer service–related expenses.
Hearing builders complain about the expense of keeping on top of licensing requirements, building code changes, and OSHA regulations, as well as keeping abreast of new products and their correct use, Ruether decided to sponsor informational lunch-and-learn sessions in the store. The dealer brought in a speaker for a two-hour mini-seminar after the lunch. The seminars proved very popular, with 25 to 50 builders in attendance at each one. Taking into account the builders’ work schedules, seminars were scheduled for February and March, and resumed in the fall.
One of the dealer’s free fun events for its customers was a ladies’ night out for all builder wives and female business partners with a wine and appetizer tasting followed by a concert at a local theater. In the fall, Ruether held a casino night in the store for builders to gamble with play money and to win prizes.
Finally, Ruether set aside a portion of her marketing budget for internal advertising, aka morale-building, among the staff. Employee Cash, which works like Builder Bucks, was the prize.
Staff were split into teams, with each team having members from each department, as well as a mix of new staff members and old-timers. Then teams were given challenges and could win a set amount of Employee Cash and points for each 1st, 2nd, 3rd, and 4th place finish.
With so many ideas for ways to connect with builder customers, Mathew Hall’s take on marketing can serve as inspiration for other dealers, offering fresh ideas and takeaways from the company’s experience.
—Kate Tyndall is a special reports editor for ProSales.