The remodeling industry has a growing problem on its hands that must be addressed immediately.
Bartelt-Filo plots a marketing plan that takes the company over the $5 million mark.
|Rick Bartelt (left) and Rick Filo have constructed a marketing program that has increased their company’s volume by $7 million over the past seven years.
Figure out how to get the word out and success is inevitable. Seems simple enough, but most remodelers know how complicated marketing can be.
Rick Bartelt and Rick Filo, owners of Bartelt-Filo, Menomonee Falls, Wis., discovered that successful marketing requires one thing: a creative and well-coordinated plan.
Founded in 1993, Bartelt-Filo Design/Build averaged $1 million to $1.2 million in volume through 1996. Filo ran the production end of the business, and Bartelt managed company finances. Remodeling was their primary focus, and they managed their company similar to so many remodeling companies across America. Overhead consumed 30 percent of gross profit, direct costs ran to 70 percent or more, and net profit to the owners varied from negative to slightly positive.
Marketing plans are the road map a company must follow to succeed in securing prospective customers. They are slow-moving, require time to work and do not always yield immediate returns on investment. For Bartelt-Filo, the investment began with a marketing program started in 1993. The intent was to move into higher-end remodeling projects and increase average job size. The logic: Increased job size could be accomplished without a substantial increase in overhead, yielding higher net profits for both the company and its owners.
The first step was to design a company logo. The owners used the logo on their new business cards, letterheads and envelopes, and spread it to job-site signage, trucks, hats and shirts. They advertised in the Yellow Pages and the Sunday newspapers. In addition, they began showing their work at two home shows a year and participated in a local parade of remodeled homes. Marketing expenses for the entire year totaled approximately $35,600.
Similar marketing programs were implemented during 1994 and 1995. Programs included a more professional home show display booth, and Bartelt-Filo began to enter association awards contests to increase recognition of its remodeling work. Marketing expenses dropped, totaling just $22,556 in 1995. Remodeling revenue for the three years was relatively flat as well.
This traditional marketing program, similar to one by so many remodeling companies, failed to accomplish its intended results. Revenues were relatively flat, net profits varied, and average job size did not increase significantly.
Realizing that more recognition was needed for the company, Bartelt-Filo made two investments in 1996 that paid almost immediate dividends. First, the company participated in a community project under the direction of the local NARI chapter. The program, designed to raise money for a foundation to support the training of carpentry and trade apprentices, included the rehabilitation and eventual sale of a house. The project was a public relations success, and Bartelt-Filo received significant publicity for its charitable work.
Bartelt and Filo decided to purchase property on a major regional highway artery so they could enlarge their office space. “We also recognized the highway marketing potential of the location,” says Bartelt. Armed with a bank loan, they not only fixed up their new offices, but also erected signage prominently displayed for all passing cars. Sales for 1997 grew by 75 percent to more than $2 million. Their marketing program that year consisted of all the traditional components and cost just less than $30,000.
Realizing more creativity and innovation were needed to accomplish their business development goals, Bartelt and Filo turned to a more experienced marketing firm. In 1998, they retained the marketing services of Tom Kaupp, the owner of Image Makers Advertising, a local marketing company. With the aid of an expert and a desire to continue expanding into high-end remodeling, they decided to take marketing to yet another level. The primary focus for an expanded marketing program was to introduce the company’s name and remodeling work to higher-income earners.
In response, marketing expenses for 1998 jumped to almost $90,000 when they added television commercials, a Web site, a company video and their own television program. Using a creative approach and borrowing proven advertising concepts from other industries, Bartelt-Filo increased its exposure and revenue. Sales for the company grew 33 percent and approached the $3 million mark.
In 1999, the marketing plan was expanded yet again. “With net profit all over the map, we believed the bottom line would ultimately improve after overhead built up and growth stabilized,” says Bartelt. They undertook another community project with their NARI chapter, building an addition for a family with quintuplets; added four call-in radio shows; and started a vendor appreciation night to recognize their subcontractors and suppliers. Sales surged by almost 70 percent and approached $5 million. Marketing expenses were $95,000.
The year 2000 saw yet another expansion of the Bartelt-Filo marketing program. With a marketing budget boosted to almost $140,000, Bartelt-Filo increased its radio program to eight times per year, redesigned the company brochure and spent almost $35,000 on a new home show booth. Sales grew by almost 38 percent and hit $6.5 million. More important, net profit substantially exceeded the 5 percent target sought by so many in the remodeling industry.
As a result of eight years of cumulative marketing efforts, Bartelt-Filo hosts a 30-minute local television show four times per year and a one-hour radio show eight times per year. The company runs print advertising in selected publications, owns attractive company trucks, and has carpenters and staff wearing logo-ware. Its marketing budget for 2001 is close to $200,000 and includes an interesting cooperative component that allows Bartelt-Filo’s key vendors and subcontractors the opportunity to advertise in markets that would otherwise be unattainable while it offsets a small portion of the total advertising costs.
To further demonstrate the effectiveness of the marketing program, one need look no further than Bartelt-Filo’s source of job leads. “When we first started, customer referrals were our primary source. As we grew, most of our leads came from home shows. But in the past 12 months we’ve really pushed our Web site, www.barteltfilo.com. With so many mouths to feed, we can no longer rely on just customer referrals,” says Bartelt.
Today, the primary source of job leads for Bartelt-Filo is its Web site. “Every place you see our name, you'll see our web site address,” adds Bartelt, with the address now featured on television and radio spots, print advertising, trucks and business cards. It is also displayed most prominently on the highway billboard next to the corporate offices, a location passed by hundreds of thousands of cars each day.
Bartelt and Filo credit the well-coordinated marketing program as one of the primary reasons for the company’s explosive growth. Despite the success of their plan over the past eight years, the company isn’t through, says Bartelt. “Our growth target is 25 percent per year.”