When Jack Kostak bought All-Seal Home Improvement in 1990, the company was one of many low-profile, mom-and-pop window and siding operations in Dayton, Ohio. Sales were $1.1 million. Today All-Seal, with three showrooms, is the biggest locally-based replacement contractor in that city (population 950,000), with $6 million in annual sales.
Most replacement companies are launched by individuals who either sold home improvement jobs or installed them. Kostak, who has a master's degree in business, fits in neither category. Before purchasing All-Seal, he had worked in project management and marketing for Pitney Bowes, a Fortune 500 company manufacturing office supplies. The closest he had come to replacement contracting was doing summer jobs in construction and, coincidently, having a father-in-law in the window business. What Kostak, looking for a career change, saw in All-Seal was a company that provided good products — windows and siding, primarily — and good service, but which did a lackluster job of promoting itself.
“They weren't doing a lot of advertising,” he recalls, and the promotion that the company did do, Kostak describes as “homespun.”
Know Your Limits For the new owner, staff changes were not in the offing. “The people in place were highly skilled,” he says, which relieved him of the necessity of knowing all aspects of the home improvement business. He had carefully reviewed the business and its books, and knew that it was profitable and had good financial controls in place.
Instead, drawing on his strengths as a corporate manager, he focused on marketing and advertising. The goal: Make All-Seal more professional in the public eye and gain recognition in the market without spending hundreds of thousands of dollars doing it.
To that end, the company's logo was updated, marketing materials such as job and truck signage were coordinated, and workers began wearing uniform company shirts.
With a significant portion of its sales — approximately 30% — coming from repeat business, Kostak also recognized that he could leverage his existing customer base to build business while holding down marketing costs. “I knew from my MBA days that it was easier to get business from existing customers than to try to get new customers,” he says. “That database was a gold mine that needed to be mined.”
To start the process, Kostak launched a quarterly newsletter and began spending money on direct mail promotions, offering discounts to past customers. Under his direction, the company increased its show and events marketing and brought in a new display to use. Promoting the referral reward program became standard operating procedure. All these measures paid off. Today, repeat customers are 40% of All-Seal's business, with referral leads making up another 15%. Marketing typically costs the company about 8% a year, in a mid-sized metro market where it competes with major home improvement companies like Gilkey Windows and Champion.
NEW OWNER Change can be scary, and new ownership is a big change. But nervous employees who didn't know what to expect from a regime change were reassured. “Jack pushed the company, not the employees,” says production manager Charles Harris, who worked at All-Seal before Kostak bought the company. “He reinvigorated All-Seal.”
Kostak still regards the employees as one of the company's strengths. “They're extremely dedicated people who have the right backgrounds and chemistry,” he says. “They don't need baby-sitting, and they're not fast-buck job-hoppers.” Never having been either an installer or a salesman was not a barrier to being able to manage those activities. “I never professed to be a salesperson,” he says, “and I still don't.” But successfully managing salespeople, he maintains, is about defining their triggers. “Most salespeople are money-motivated and results-oriented,” Kostak notes. “You can't be nebulous. They need to know what they need to do and how to get it done.” The key to successfully managing them, he says, is straightforward communication and goal setting, and making sure there is a compensation plan directly linked to performance.
