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The Real Deal: Remodeler Grows Business by Packaging
Package deals are found in most industries with standardized products. So why not remodelers? Coleman & Laurienzo Builders of Damascus, Md., wondered the same thing: why not package design and materials for customers?
Travel agents do it. So do software firms, telecommunications companies and restaurants. Package deals are found in most industries with standardized products.
So why not remodelers?
|1. Kitchen recycling center
2. Eco-friendly flooring
3. Stained concrete or indigenous stone
4. Air admittance valve
5. Wall insulation
6. Energy Star windows
7. Energy Star task lighting and lighting controls
8. Energy Star appliances
9. Universal design kitchen cabinets
10. Low-VOC paints and finishes
11. Mold-resistant gypsum or cement boar
12. Induction cooktop
Coleman & Laurienzo Builders of Damascus, Md., wondered the same thing: why not package design and materials for customers?
The company's Classic Addition includes a cathedral ceiling, eight 3 foot by 5 foot energy-efficient windows, a 6-foot elliptical feature window, a 6-foot gliding door, a masonry foundation, pre-finished hardwood flooring and a ductless heat pump with remote control thermostat.
"From the moment we put it out there, our packaged addition was very well-received," says Jill Coleman, sales/operation manager for Coleman & Laurienzo. Since marketing the Classic Addition, about 75 percent of the company's addition work uses the package approach with some variations.
The benefits to package deals — sometimes referred to as product bundling — go beyond the consumer response. Bundling products allows remodelers to buy in bulk and develop time- and money-saving practices.
Whether it is a meal or a new kitchen, there is value in a well-crafted package deal.
Package deals frequently translate into customer savings because the package ensures sales of multiple items. That's why buying a combo meal at a fast food restaurant will cost you less than buying a burger, fries and soda separately.
"We definitely include savings for the customer," Coleman says. "After all, there are savings for us and guaranteed product sales."
Coleman says her customers also appreciate the simplified process. Clients can feel overwhelmed by the sheer number of products available, and a package deal eliminates the need to make difficult product choices.
"There are consumers out there who want to be involved in every detail, but there are others that just want a new kitchen and only want to address the major items," says John Rymer, a Tampa, Fla.-based housing industry marketing consultant. "These people are looking for a little guidance from their remodelers. Packaging is a tool to provide that guidance."
|Simple and elegant are the hallmarks of the Coleman & Laurienzo's "Classic Addition," which delivers the space and natural light many consumers desire. The package includes a cathedral ceiling, eight 3 foot by 5 foot energy-efficient windows, a 6 foot elliptical feature window, a 6 foot gliding door, a masonry foundation, pre-finished hardwood flooring, and a ductless heat pump with remote control thermostat. Photo courtesy of Coleman & Laurienzo|
Developing the Deal
Some remodelers avoid packaging because they assume each project and each client is unique. That is generally true, but there are often a lot of similarities among customers in a specific market, Coleman notes.
"After many years of building custom additions, we began to see a trend in what most of our customers were interested in: a great room that almost stood alone in a sense," Coleman says. "It was a room that was far different from the rest of the house with a lot of glass, high ceilings, a feeling of openness, but yet a room that didn't look like an add-on."
Most of the products Coleman & Laurienzo chose for the Classic Addition package were familiar to their customers; they just responded better when presented together.
Only the ductless energy-efficient heat pump, a Partnership for Advancing Technology in Housing-profiled technology, typically required some explanation.
"This type of room needed a unique heating/cooling system that would not tax the existing house unit and would be quiet, because this would be the 'hangout,'" Coleman says. "It is whisper quiet, fairly small, and the install time is reduced since there is no ductwork to run. The efficiency was a bonus that sealed our decision and is a great selling feature."
The great thing about packages, Coleman says, is that nothing is written in stone; it can all be fine-tuned to meet the clients' needs. Coleman describes the 18 by 18 Classic Addition as a starting point, where clients keep what they like and tweak a few smaller items to suit their taste. The packaging helps them see their vision more clearly.
|The key to Coleman & Laurienzo's package approach is that little options can significantly change the look and feel of a room to fit the customer's taste.
Photo courtesy of Coleman & Laurienzo
Many consumers see the benefits of the package deal in the single price tag, but there are just as many benefits to the building process — and savings for the builder.
For Coleman & Laurienzo, standardization means that crews become familiar with building the addition, which allows them to work faster and more accurately.
"As a result, we have increased our sales volume consistently over the past several years and have only hired two additional employees," Coleman says. "Our vendors and trade contractors also have a much better idea of what we're doing, making it easier for them to install and test their systems since they understand the addition so well."
The company plans to buy products in bulk and warehouse them once there is enough of a backlog on the Classic Addition. The company also plans to pre-build wall frames in the warehouse before installing them on site, which will not only be faster but will ensure better quality by being more accurate.
Because business has been so good for the Classic Addition, Coleman & Laurienzo introduced two more packages: the Classic Addition Junior, which is smaller and less expensive, and the Classic Addition Deluxe, which is larger and more expensive, with a fireplace, skylights and a deck. The company is also considering other packages.
"I think packaging is possible in a lot of different applications, whether it's a kitchen, living room or basement," Coleman says. "We are just taking it one at a time and seeing how the market responds."
Rymer reports he's seen an increasing number of remodelers offering package deals, particularly because more homebuilders are offering remodeling services to supplement their earnings. He says bundling can be a great way to make customers feel at ease with a construction project.
"Builders already offer these sorts of deals in new construction because they know how effective it can be," Rymer says.
Scott T. Shepherd writes about better building practices on behalf of the Partnership for Advancing Technology in Housing (PATH). PATH is administered by the U.S. Department of Housing and Urban Development. Learn more at www.pathnet.org.