Terry Skilling had just gotten off the phone with a prospect. She was referred by her sister, who had her kitchen remodeled by Skilling's company, Rhino Builders, in Kansas City, Kan. She wanted someone to come out and look at her windows. Those kinds of leads — free ones — are Skilling's favorite. Rhino Builders started as a specialty contractor, installing vinyl siding and windows, and evolved toward kitchen and bath remodeling, which is today the preponderance of its business. Skilling remembers spending $20,000 a month on media, trolling for leads. This year marketing costs are less than 3% of company volume.

Referrals Start With Work Siding and window companies often spend anywhere from 8% to 18% of revenue on marketing. Because Skilling doesn't have the money to invest in major media, he needed to find ways to generate leads from repeat and referral business. And, he says, “I truly believe referrals start with the work.” That means approaching a siding or window job much like a design/build job.

Allan Lutes believes the same thing. When Lutes, owner of Alpha Contracting in Ann Arbor, Mich., started doing siding jobs five years ago, he “went out and hired people with a lot of credentials in doing this work. My mistake was that their values were not aligned with my company values.” He estimates he spent about $100,000 in service calls, including having to completely re-side four jobs.

Design/Build Exteriors Today, roughly $850,000 of Alpha Contracting's $3.6 million in volume comes from exterior renovations. But much has changed. Originally a separate division, siding's been folded back into the company. Lutes found that because so many contractors were installing vinyl siding, he needed to differentiate on product and quality. Today 85% of his siding jobs are fiber cement, installed under the supervision of an Alpha Contracting lead carpenter. Siding and window salespeople are cross-trained to sell other projects. And a siding job is often sold along with a porch, deck, or windows.

What both Rhino Builders and Alpha Contracting now sell is their ability to design and install a complete exterior makeover.

“We stopped treating it as a single line trade and started treating it as design/build remodeling for the exterior of the house,” Lutes says. “That's where we've had better success.”