The remodeling industry has a growing problem on its hands that must be addressed immediately.
Ben Crawford says it's a footrace to see who can build the first national brand in the remodeling industry. And he plans to get there first. Armed with a background as a former executive at GE, Crawford has quickly built Crawford Renovation into Houston's Market Leader.
|Crawford plans to be running several locations in the next five years from the company’s Houston headquarters.
Photo by Charles Edwards
Ben Crawford says it’s a footrace to see who can build the first national brand in the remodeling industry. And he plans to get there first.
Armed with a background as a former executive at GE, Crawford has quickly built Crawford Renovation into Houston’s Market Leader. The design/build firm started with $2.8 million in business in 2003 and has already grown to a projected volume of $18.5 million this year with much bigger plans for the future.
“There’s not a segment out there in the U.S. economy that hasn’t either seen consolidation or doesn’t have a national brand in place,” Crawford says. “You couple that with the aging housing stock in America. You couple that with six out of 10 people at purchase will do a major renovation — that’s why I say it’s a footrace for somebody smart to come in here and build a national brand.”
Crawford’s plan is to roll out a series of company-owned “experience centers” throughout the country where customers can sample the lifestyle they can get with a Crawford remodel. Crawford has identified 25 markets where he thinks the model the company uses in Houston would work. The Crawford plan is to open four or five of these centers over the next five years, with each one generating $25 million in business.
It’s an ambitious plan, to say the least, but one Crawford had from the moment he started the company.
In 2002, after years of flying around the country looking for acquisition targets for GE, he quit with the idea of spending more time with his family. It was his wife who came up with the idea of starting a remodeling firm — even taking it to the point of printing up business cards with the name Crawford Renovation. He had learned some remodeling skills while growing up, and over the years he had remodeled a handful of homes for himself and his friends. But beyond that he knew very little about the remodeling market. After analyzing the data from Harvard University’s Joint Center for Housing Studies and other sources, he was shocked by the size of the market and that nobody had come up with a national company beyond a few franchise models.
“I came into it with the idea of building a category killer,” he says. “After all the research, I saw this is an industry that is ripe for a national brand.”
His outsider perspective has allowed him to have a different view of the industry than someone who has grown up in remodeling.
The model he has used to succeed in Houston is one Crawford is confident can be replicated throughout the country.
While making his plans in 2002, Crawford knew he needed a model that would allow him to quickly make inroads against his more established competition. So he hit on the idea of marketing his services to the top real-estate firms in Houston.
Crawford sets up open houses, breakfasts and lunches to get in front of agents. The company caters weekly chef’s breakfasts at local real-estate offices. It’s all about building relationships.
“Week in, week out, we put ourselves in front of them,” Crawford says.
Crawford uses those opportunities to deliver the company’s message: Crawford Renovation is a professional firm that can help the agents sell more homes.
“We always ask if they had a home that needed to be renovated, and of course they say yes,” he says. “We tell them we’re the obvious choice. We’re white collar guys, we wear nice slacks, we wear nice shoes like their clients wear and we drive up in clean white trucks — and we have a process to help them sell that home, and we’re not going to screw their deal up.”
That idea of directly marketing to agents allowed the company to grow swiftly. Doing almost $3 million in business out of the gate already made it one of the largest remodeling firms in Houston.
“Our sales force is the best and brightest of Houston’s Realtors,” Crawford says. “They’re selling for us; they introduce us to clients before anyone else ever gets to them.”
At one point, real-estate agents represented almost all of the company’s business but now are only responsible for about 60 percent, as the company begins to realize dividends from referrals and other marketing efforts aimed at consumers.
Every part of the consumer marketing program is designed with the idea of creating the message that Crawford is a professional, high-quality firm — that if you’re hiring the company you’ve reached a level of success.
“We don’t sell kitchen remodels, we don’t sell bathroom remodels; we sell a lifestyle that depicts a picture-perfect family living in an awesome, award-winning kitchen, and people look at that and go, ‘I want that.’ I think because we get that piece of it we do very well,” Crawford says.
The company has covered the basics like truck and job signage, direct mail and print advertising, but also does a lot of community-based marketing. Crawford has donated bathroom remodels to schools for raffles, sponsored Fourth of July events where kids can build toolboxes and birdhouses (with the Crawford logo on them) and provided photos with Santa and his reindeer at local churches. The company spends about 4 percent of its gross profits on marketing.
“We’re trying to touch that consumer seven to 10 times, because we know at the end of the day when they have the need, they have to think Crawford Renovation; they can think of no one else,” Crawford says.
(For more on Crawford’s marketing strategy, visit www.ProRemodeler.com for exclusive online content.)
It hasn’t all been easy for Crawford to get to this point. Although volume has steadily increased, a few years ago the company found that gross profits had gotten painfully low, down to about 23 percent. Cash flow was tight and the company wasn’t getting the returns that the leadership had planned.
At the time, project managers were handling all the estimating on top of their other production responsibilities. Realizing this was an inefficient way of doing business, Crawford conducted a national search and found an experienced estimator who, although he had to learn the remodeling market, was able to bring the core skills to the company and set up the entire estimating department. The company is now generating 33 to 34 percent gross profit.
Another challenge was client satisfaction. Until last year, the company didn’t know how customers felt unless they provided unsolicited feedback. So one of the company’s 2007 initiatives was to create a metric to measure that. That revealed a shocking number — only 83 percent of clients were satisfied.
“What we realized is that we have to protect our brand at all costs, so in ‘08 one of our initiatives is to increase client satisfaction to 98 percent,” Crawford says.
Once again, the company found it necessary to add more staff.
“We learned that you can’t run a project manager into the ground where he’s running six to seven $300,000 transactions at once,” he says. “He can’t do it. Client satisfaction goes down.”
So now project managers only work on three projects at a time. If the project is from $600,000 to $1 million, it’ll be the only one a project manager works on. And for jobs over $1 million, it’s a project manager plus an area manager.
“The client now sees that we’re spending a greater amount of time at the job,” Crawford says. “We’re preventing problems from happening with unsupervised subs, and our costs are in line because there’s someone there around the clock. Even our project managers are happier now because they’re not so strung out.”
Both problems stemmed from staffing — finding the right people to put in place. And that’s what Crawford expects to be the biggest challenge for the company going forward.
“Our future growth is a function of human capital, not money,” he says. “Anyone can build the sticks and bricks retail locations, but how fast can we find the right talented leaders to put into these experience centers?”
Crawford Renovation recently launched a new marketing initiative called the Peace of Mind Guarantee
“What we tell people when we first meet with them is that we’ve built a design process that alleviates the two biggest issues homeowners have with a remodeling project – budget and timeline,” says company President Ben Crawford.
If a client goes through the company’s design process (“Keep in mind these people write huge checks to go through that process with us,” he says) Crawford guarantees a fixed-price contract with no hidden conditions and a guaranteed completion date. The guaranteed completion date is backed with a damages clause of $200 a day for any delays.
“It’s not so much the $200 a day, because on a $1.8 million transaction, who cares?” Crawford says. “It still sends a message to the homeowner that we are driven, that if we don’t complete it on that timeline, we’ve got some skin in the game.”
The company’s detailed design process allows it to guarantee the price and the timeline.
“If you took a poll of 1,000 contractors, I’d be that 90 percent of them would say we were smoking crack, that there was no way we could do that. We can do that because of our process,” Crawford says.
Crawford likens the guarantee to what Dominos Pizza did 25 years ago when they introduced its 30 minutes or its free guarantee.
“They built a brand around that and that’s what we’re trying to do here,” he says. “We want to differentiate our brand and we think this is one of the ways we can do it. Customers need to understand that if they don’t choose a remodeler that has these types of guarantees, they’re stupid.”
|How Ben Crawford spends his average week|
|General management oversight||20 hours|
|Marketing activities||4 hours|
|Executive meeting||4 hours|
|Hallway discussions with employees||2 hours|
|Mentoring employees||10 hours|
|Strategic planning||10 hours|