If you ask a remodeler -- or any businessperson, really -- if he or she would like business to grow without having to spend a fortune on more marketing, few will decline. The real question isn't whether or not to grow your business, it's how to do it.
Recently I was listening to an interview with a marketing and sales guru who provided a simple answer, one that I think has a lot of relevance to any business, but especially to remodeling. He said that there are three ways to dramatically increase your business:
1. Increase your close rate -- that is, increase the number of people who move from inquiry to contract.
2. Increase the average sale -- the amount of money that the typical client spends with you.
3. Increase repeat business -- particularly the frequency with which you do business with clients.
On the surface, this answer seems almost too basic. But if you look a little closer, the numbers can be dramatic. Take increased close rate, for example. If you do, say, $1 million in annual sales closing half your leads, an increase of 10% in closings would bump sales to $1.1 million -- a very respectable increase in most industries.
Volume also grows if you increase the dollar amount of the average sale. Let's say the $1 million in sales in the previous example comes from 25 jobs averaging $40,000 each. A $4,000 increase in average project size (to $44,000) would also boost annual sales to $1.1 million.What if you did both? If you closed 10% more leads and sold every job for 10% more, sales would increase to $1.21 million -- a substantial growth spurt for most businesses.
To take this a step further, if you were also able to do second projects for past clients 10% more frequently, your volume would grow to $1.331 million (a 33% increase over the previous year ... wow!).
Many people would argue that these are just number games and that this kind of growth is easier said than done. I couldn't agree more. But these examples illustrate simple strategies that will work, providing you have the discipline and put in the work.
Getting started
The prerequisite is to have a good handle on your numbers, which then become milestones to look for modest improvement. What is your close rate? What is your average size transaction? How often are you doing a second project for a client?
After doing some simple historical analysis, ask yourself what you would need to do to see a 10% improvement in one or all of these areas. Increasing your close rate may mean sharpening your sales skills, improving your presentation tools, or finding better ways to differentiate yourself from the pack. To increase the average transaction amount, you might encourage clients to make a laundry list of other work they have planned and suggest they take care of it now with today's dollars.
All of these suggestions cost you virtually nothing, and you really see an improvement in both the top and bottom lines. You just need to know where you are and where you want to be. After that, it's just a matter of creating a simple plan to get there. Where most fall short, however, is in having the discipline to follow through and monitor the journey.
-- Mark Richardson is president of Case Design/Remodeling and Case Handyman Services, Bethesda, Md., and author of 30-Day Remodeling Fitness Program. 301.229.4600; [email protected].
