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.
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.

Elton 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’ marketing 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, 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 Internet-savvy, 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 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 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 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.”