The remodeling industry has a growing problem on its hands that must be addressed immediately.
2010 Remodeler of the Year: Case Design/Remodeling
Case Design/Remodeling is named Professional Remodeler's 2010 Remodeler of the Year
Most remodelers will never forget 2009. Good remodelers closed their doors across the country and previously sound market leaders found themselves in serious trouble as the market drastically changed. Those who have survived are facing financial challenges, smaller projects and wary clients.
Case Design/Remodeling was certainly not immune to these challenges, as the company saw a more than 30 percent drop in revenue from 2008 to 2009. At the same time, the remodeling giant successfully navigated a change in company leadership.
Because of the way it has handled these challenges and the plan the company has for the future, Case is the 2010 Professional Remodeler Remodeler of the Year.
Since Fred Case started the company almost 50 years ago, the company has seen plenty of ups and downs, booms and crashes in the residential industry. Every slow market is a chance to improve the company, says Case, now the company's co-chairman and CEO.
"It's always been our philosophy that a downturn is a great time to increase our market share," he says. "We have now gotten to the point where we tweak this, that and the other things ... and we're going on the offensive, trying to do everything the tightest, best way."
The company's average project price tag has dropped by 40 percent, but Case actually completed more projects over the last 12 months than the previous year.
"Because we've had this broad breadth of services for many years, we could adjust quickly to the shrinking job size, but it obviously led to some shrinkage on the revenue side," says company President Bruce Case, who now runs the day-to-day operations of the firm. "We're optimistic because we feel like we're capturing market share by doing more jobs." (Editorial note: Bruce Case writes a blog for HousingZone.com called "Case Studies.")
The leadership team was quick to realize that this downturn was going to be especially tough and required changes in the way the company approached its business.
"We discussed how long is this going to last, when do we think it's going to get better — that affects the type of changes we make," Bruce Case says. "So far, we've done a reasonably good job of that, so as a result we did make changes core to our business instead of saying, 'Oh, it'll be better in three months,' and not make changes."
One of the company's themes today is a "Focus on Excellence." While growth or market opportunity is a key part of that, it means managing to ensure Case delivers top quality to its clients.
"We're making decisions based more on excellence than growth," says co-chairman Mark Richardson, who served as the company president before Bruce Case took over in 2009. "They're not mutually exclusive, but if we're going to move forward, excellence is the right way rather than growth. That helps us make better decisions and be clearer about what those decisions should be."
In an effort to better respond to client needs, one of the most significant changes in 2009 was a reorganization of the company by region instead of by type of work.
In the past, certain designers/salespeople would work, for example, only on outdoor projects. Then, if a past client was happy with that experience and wanted to hire Case for a kitchen remodel, they'd end up working with a different set of people. Now, they'll get to work with the same team.
"We're now structured around the needs of the client because they can continue to deal with that same person," says Bruce Case. "We feel like relationships, especially going forward, are critical to our success."
As part of this change, the company is moving toward a day where design is a stand-alone part of the business rather than a subset of sales. It's part of a longer-term plan to make sure design offers the best quality and value to clients.
Demonstrating that value to homeowners is more important today than ever before.
"The client has changed pretty dramatically over the course of the last three to five years," Richardson says. "Marketing has to respond to those changes and focus on relationships. That responds much more to what the client is looking for."
One of the most significant ways Case responded to that challenge in 2009 was by launching a line of value products: Express Kitchens by Case and Express Baths by Case.
The idea was to create a product that allowed for limited customization at an affordable price.
"It gets back to responding to the consumer and listening to the marketplace," Bruce Case says. "We feel like we've always been a great value, but we wanted quantifiable ways to show that."
The projects allow clients to make a limited number of selections from products that are readily available, don't have long lead times and the production teams are familiar with for ease of installation. There are dedicated field teams that actually produce the projects.
The salesperson, armed with a laptop, can make changes to the plan on site at the client's home and create a contract for the client to sign right there, but the limited potential for changes means pricing is relatively simple. The projects also require a shorter design and construction time.
"Now we're able to do branding campaigns around that that actually puts a price on the ad," Bruce Case says. "It helps consumers understand they can get the excellence of Case at different price points. We can be Lexus, but we can also be Honda."
It addresses a key concern for Case as luxury projects have become sparser; many clients have assumed Case only builds high-price projects.
"It's not uncommon to bump into someone using a different company because they thought Case was not approachable," Richardson says. "It's not to take away from being able to do that custom higher-end piece, but introducing some of these other things sends a message that we're here to serve you."
Besides incorporating the Express projects as an important part of the company's marketing, Case has also changed the way it gets the message out.
"I don't want to get sold to right now," says Bruce Case. "I want to feel like I'm buying it. We're trying to reposition our marketing with that in mind."
Just a few years ago, Case spent 80 to 90 percent of its marketing budget on print advertising and marketing, such as direct mail. Now that makes up only 20 percent of the marketing plan, with the rest going toward "grassroots/guerilla marketing," Bruce Case says.
"Print still serves its purpose, but it's branding, not lead generation," he says.
Instead, the focus is on in-person opportunities, such as seminars, "project celebration" open houses, parades and neighborhood events.
"It's a shift from mass marketing to more of the boots-on-the-ground, neighborhood level, face-to-face marketing," Bruce Case says.
2009 was not only a time of turmoil in the industry but also a year of change at Case as the company navigated a change in leadership with Bruce Case's taking over day-to-day management of the company. Richardson, who had served as president for 13 years, joined Fred Case as co-chairman in February.
It's a transition that many a remodeling company has failed to make successfully.
"The key word is company," says Fred Case "To me, a company is when you build a strong management team. Otherwise, you just have a practice."
Making a successful transition is all about planning and communication, Richardson says. In some ways, this one has been planned since Bruce Case joined the company in 1996.
"The time frame goes back to a philosophy that if you want to keep this thing sustainable, you've got to be looking at who's going to come in and push you forward," Richardson says. "Some folks that aren't in the immediate family might find it a little disconcerting that Fred's son is here. I looked at it as who is the most capable person to come in and fire me — not literally, but in terms of pushing me forward and allowing me to do other things."
Despite having the Case name, it was never guaranteed that Bruce Case would take over the company.
"It wasn't a matter of right, but earning it, not only with Fred and I, but also with the team," Richardson says.
Although he had worked in the company since he was 12 and loved working with his dad, Bruce Case also wanted to do something else after he graduated from Vanderbilt University. He spent six years working for a large insurance brokerage firm running large risk management programs, rising to the vice president level before the "sawdust in my blood" called him back to remodeling.
"I looked at the industry forces and the fragmentation of the industry and saw a lot of opportunity," he says.
Both Fred and Bruce felt he needed to work his way up through the company, so he started as a project coordinator in the handyman division, coordinating a team of 15 craftsmen in the field. After a year of doing that, he launched and led the bath division, which eventually grew to a $9 million business before he moved on to head up the local handyman division and finally the national franchise operations.
Spending time in another business was an important part of his growth, Bruce Case says.
"I recommend it to anybody who I'm talking to who's looking at a succession plan," he says. "It gives them a chance to get their own confidences and have experiences other than working for Mom and Dad."
It's a sentiment that Fred Case echoes.
"That was a must-do," says Fred Case. "When he and his brother came out of college, I said go work somewhere else for 3 or 4 years and then we'll talk."
The Case team expects 2010 to be flat with 2009, but that the company's revenues will continue to grow as the economy improves in 2011 and beyond.
"I see American homeowners moving past this skittishness," Richardson says. "At some point, they can't let their house die. It's a question of what they do and when they do it, not if they do it."
The new programs the company has put in place, the tightening of its operations and breadth of services should position Case well to grab more market share and increased revenues as the market improves, Fred Case says.
"The economic drivers are so good in this business — the aging of the clients, the aging of the housing stock," he says. "It'll be gradual, but there will be more growth."