Last month in this space, I reviewed a series of market projections for 2014 from Harvard University as well as the industry’s leading associations.
In the absence of adding resale value, customers need a new reason to trust their decision
Joaquin Erazo is senior vice president of marketing and public relations at Bethesda, Md.-based Case Design/Remodeling, a highly respected full-service residential remodeling firm with strong brand recognition. He generates roughly 580 appointments a month for 21 salespeople. “My ads need to work,” he says. “I need qualified leads, not just leads.”
Until a year ago, he says, his job was easy. “You’d put a pretty picture of a kitchen in an ad and the phone would ring,” he says. “I could control everything start to finish. Then the economy changed and consumer behavior changed.”
Not only that, but competition was fierce after builders went under and reopened as remodelers. He saw his response rates drop. The only thing that seemed to generate leads was a discounted offer. It wasn’t a game he wanted to play.
“We had a lot of new players in the market,” he says. “I needed to differentiate Case from all the noise out there.” It’s a challenge that’s been replayed across the country in recent months. The messages that once resonated with customers are no longer valid, or even appropriate.
“People are rejecting conspicuous consumption,” says Robert Kraay, president of RT Marketing, Inc., a Hickory, N.C. marketing firm that specializes in remodeling. “That great big house in the fancy part of town? People are a little bit embarrassed to have that. A couple of years ago, it was a status symbol. With that little bit of a different mentality, even if they can afford (a big remodeling project), they don’t want people looking at them saying they’re wasting money or wasting energy.”
As an example of how remodelers have updated their marketing messages, Kraay says, his firm did a campaign for McBride Construction in Petoskey, Mich., in 2008 that had a luxury feeling of “you deserve the best, that kind of thing. We’ve revised the direction of those campaigns to ‘We can work within your existing footprint and make your space more efficient.’”
Cyndee Woolley, APR, is owner of C2 Communications in Naples, Fla., one of the hardest hit real estate markets in the country. Now that the market has reached its bottom, foreclosures are being snapped up and the buyers are ready to spend money on remodeling that they didn’t have to spend on the purchase price of the house. The big mistake she sees remodelers making is shifting their focus to bargain basement pricing and incentives.
“Clients here are willing to pay for quality and contractors that show up,” she says. “They should be emphasizing stability – that you’re still going to be open in three months. Longevity, customer service and the ability to provide solutions are so much more important than discounted offers and free give-aways. The companies that treat this as a service business are doing quite well.”
Another message that’s resonating well, Kraay says, is about safety in the home and the environment, focusing on indoor air quality and green materials. “Those kinds of messages are coming across very well,” he says.
Indoor air quality and energy efficiency are strong motivators for today’s consumers, especially with the federal tax credits for energy efficient remodeling, says Kyle Hunt, a former remodeler who now owns a marketing company (Remodel Your Marketing) for remodelers based in Howell, Mich. One of his clients is a window dealer, he says. They organized a seminar for the public on five things a homeowner needs to know before making a replacement window decision.
“Twelve people showed up; eight asked for an appointment,” he says.
Erazo says that his firm has certified green remodelers, as well as certified aging in place specialists if customers want those services, but in his markets, there’s not a lot of demand for them. What he does have is a lot of competition from some of the country’s best remodelers.
After spending “a lot of time” studying his competitors’ pretty-picture-of-a-kitchen ads, he decided to take a completely different approach. He launched two campaigns, focused on Case’s two different markets - the highly competitive Virginia market where Case has less brand recognition and the Maryland/D.C. market where it has strong brand recognition. The Virginia campaign focused on comparisons between basic items, such as hotel soap and vanilla ice cream, and their high-quality counterparts.
“There are differences between remodelers,” he says. “I have to make that clear or the customer will shop on price.” In the Maryland/D.C. market, he focused on satisfaction and how customers would want to feel after their remodeling job was finished.
With ads that showed bars of soap or people jumping with excitement, Erazo says he knew he was taking a risk. “I was scared,” he says. “This is very different. ... The good news is that it’s working. We’re ahead of sales; we’re holding our own.”