Five years after being named Professional Remodeler's Remodeler of the year in 2005, Alure Home Improvements has managed to keep its long-term growth strategy intact while surviving the toughest economy since The Great Depression. Having made the decision prior to 2005 that expansion and diversification of services would drive massive growth in sales volume and profit, the Long Island, NY-based company has stuck with the plan, albeit with some key operational adjustments.
Alure's sales volume peaked in 2007 at $50 million then declined for two straight years ($45 million in 2008 and $38.5 million in 2009). Much of that decline was due to the basement remodeling market, which tanked in 2008 and 2009 on Long Island. One of Alure's strengths for years - they were the top volume Owens Corning Basement Finishing Systems franchise in the country since its inception - the division that had accounted for more than 40 percent of Alure's business in 2007 had dropped by more than 10 percent over the next two years.
Playing to your strengths
At the same time, the kitchen and bath business was seeing tremendous growth, which gave President and CEO Sal Ferro the perfect opportunity to take advantage of his company's diversification.
"The benefit of being as well diversified as Alure is, is that it allows me to ride the hot hand," Ferro says. "And that was our kitchen and bath business. From '07 through the end of '09, we grew our kitchen and bath business by 35 percent."
Ferro moved people from struggling divisions to the kitchen and bath operation to help handle the volume. He also marketed heavily to kitchen and baths, leveraging Alure's large base of satisfied past customers.
"We have a very strong brand and that allowed us to leverage it into kitchen and bath sales," Ferro says. "Even during this tough economic climate, kitchens and baths were in demand. Having a strong, very large, customer base allowed us to leverage that customer base with our marketing. And that becomes lower cost marketing."
What Ferro did to focus on the kitchen and bath business is a prime example of the overall strategy he implemented at Alure during the downturn. When he saw the decline in sales volume in 2008, Ferro anticipated the same or worse in 2009 and designed a five-point plan to get Alure through the downturn without sacrificing the long-term health of the company.
"I had to put a plan together that reflected the economic times and reflected where we were at as a company," Ferro says.
Ferro built a plan around five principles:
- He didn't want to lose key people
- Alure needed to maintain market share
- The company couldn't lose brand awareness
- All of those had to be done without accumulating any debt
- The company still had to make money
One way he did that was expanding services. Ferro added a handyman division and a home performance division in 2008. The additional sales from the two new product offerings brought in revenue, bolstered the brand and fed the repeat and referral pipeline that drives Alure's growth engine.
Taking a long-term approach
Ferro and his management team knew they couldn't afford to achieve short-term revenue goals at the risk of derailing their long-term growth plan.
So although many business leaders make the difficult decision to let their best people go because they're the highest paid, Ferro took a different approach. By giving employees a chance to expand their responsibilities by working in new divisions, cross training them and consolidating some operations, he was able to stay on a growth-oriented path while remaining financially sound in the short term.
"We got lean and mean, but I kept my key people," Ferro says. "We did some consolidating. We did some cross training. We weren't relying on one specific group of people to do one specific thing anymore."
Ferro combined sunrooms, which was an underperforming business, with the siding and roofing division. He also moved high performing employees into completely new roles by cross training them to play important roles in divisions that were performing well.
"As long as the person has a good core skill set, you can teach them to do anything," says vice president Lisa DiFilippi. "That is what we focused on. We try to hire good people, with great personalities, great people skills and a great core skill set. And we feel we can teach them to do whatever we want them to do. I inherited someone who was an integral part of our basement production team who we knew we didn't want to lose and he is now an integral part of our kitchen and bath admin team."
Of course, there were also some layoffs. While top performers were identified and retained, low performers were let go. This didn't come without its share of hand-wringing, however. Ferro's strong relationship with all his employees - he still interviews every new hire - made him reluctant to let people go and led him to wait too long to make cuts.
"I hate letting people go, I hate it," Ferro says. "If I had it to do over again, I would have probably made a couple of cuts a little sooner than I did." Morale dipped slightly before and during the layoffs, but it never become a company-wide issue. Ferro, DeFilippi and the rest of the Alure management team kept the remaining employees focused on the job at hand - learning new roles, selling what they could and producing a quality customer experience.
"We got buy-in from everybody," says DiFilippi. "How we did it, I really couldn't tell you specifically. I think it's more a credit to our culture and the approach that we take that 'Hey, do you want to be standing here after this economic downfall is over? Do you want all your people to be with us? Well, we need your help in doing that.'"
Five years later, Professional Remodeler's 2005 Remodeler of the Year's diversified approach is paying dividends