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Marketing Savvy
By Phil Zaleon
While they say a little knowledge can be a dangerous
thing, lack of knowledge can be even more dangerous.
However, lack of knowledge seems to be a key trend when
it comes to marketing in the kitchen and bath industry.
In fact, many kitchen and bath dealers have no idea how
much they are spending in specific areas of marketing.
Additionally, many are not tracking leads or sales in
relation to spending, making it far more difficult to
assess if/how their marketing is working for them.
However, of those who do track their marketing, the
Internet is emerging as a key venue for gaining leads
and building sales and awareness, while referrals remain
the strongest marketing area for generating a positive
return on investment. That’s according to a new survey
that polled more than 220 kitchen and bath dealers from
all across the country. The responses represented a true
cross section of the industry, not only geographically,
but by business structure and showroom sales volume.
To better understand how kitchen and bath dealers spend
their marketing dollars, and what avenues produce the
most leads and greatest number of jobs, dealers were
asked what percent of their marketing dollars are spent
on the following:
- Network TV (local channels
- Cable TV
- Radio
- Newspapers
- Magazines
- Yellow Pages
- Internet Marketing (Google, banner ads)
- Web site (design, development, updates)
- Outdoor (billboards, bus signage)
- Direct Mail
- Other
Lack of Knowledge
Perhaps the most troubling finding of the survey was
the response rate for “I don’t know” in each category.
Indeed, for each of the 11 marketing channels, the
percentage of kitchen and bath dealers who responded “I
don’t know” ranged from 43% to a whopping 92%.
As a business owner, it’s critical to know exactly where
you are spending your marketing dollars, as well as how
much is being allocated to each media. This is
especially important because marketing is not a
one-size-fits-all science. The best media or marketing
channel for a business can vary widely based on
location, size, type of jobs, target market, and many
other factors, so tracking what works and what doesn’t
for your specific firm is key to maximizing your
marketing dollars.
Likewise, having a system to track leads and closed jobs
is essential so that you can determine what marketing
avenues are bringing in leads, and which are translating
into sales. For that reason, every business should be
asking each person who walks through the door, “Where
did you hear about us?”
Tim Aden, CMKBD, principal at Sawhill Custom Kitchens &
Design, Inc. in Minneapolis, MN says, “We developed a
tracking system that includes a simple pre-printed card
to remind everyone on staff of the information we are
hoping to collect from showroom visitors. The card has
spaces for contact information, the type of project they
are interested in pursuing with us and a blank space
asking, ‘Where did you hear about Sawhill?’ Without
gathering that information, we would have no idea what
aspects of our marketing program are paying off.”
’Net Marketing
Of those survey respondents who do track where they
spend the marketing dollars, the results were a mix of
familiar favorites and newer venues. It’s no surprise
that the Yellow Pages, long an industry staple, still
accounts for over 50% of where the industry spends its
advertising dollars (see Graph 1).
The figure that is intriguing, though, is the marketing
avenue that won the number two spot on the list of most
dollars spent. That was the Internet. Indeed, nearly 40%
of the industry is spending money to market their
showrooms on the Internet with programs such as Google’s
AdWords, paid banners and paid placement on search
engines, according to the survey results.
Although newspapers and magazines only lagged by a
couple of percentage points, it’s interesting that paid
Internet advertising showed such strong results,
especially since this is a relatively new marketing
venue that has eclipsed almost all of the more
traditional media just in the past few years.
Indeed, for dealers like Kathie Maughan Francis,
principal of Maughan Design, Inc. in Portland, OR, Web
marketing is so effective, the company doesn’t need to
pursue other avenues right now. She explains, “We have a
Web site and an established client base that sends us
referrals, and we don’t currently do any additional
marketing.”
Paul McDonald, president of Royal Cabinet Company in
Hillsborough, NJ, sums up his marketing strategy by
saying, “We still use traditional media such as
lifestyle magazines, newspapers and cable, but we are
now also venturing into online advertising. In all
cases, we want to send the potential client to our Web
site for a closer look at who we are, what we do, and
most importantly, what we can do for them by showcasing
dozens of examples. We use our Web site as a statement
of who we are to help potential clients decide if we are
the right place for them to visit in person.”
Jacob Nelson, owner of Studio Dwell in Salt Lake City,
UT, also spends a portion of his marketing budget on
Internet-based advertising. He notes, “We are always
looking for new ways to advertise and I believe magazine
and Web advertising seem to be the best.”
So how does it work? Marketing by Internet begins with
understanding Search Engine Optimization (SEO), which is
the process of optimizing a Web site so it can be found
and highly ranked on search engines. Effective SEO is a
result of many elements that make up a Web site, as well
as some luck and the right keywords – in short; it is an
inexact science at best. Programs such as Google AdWords
help supplement the process and create a guaranteed way
to create Web site traffic.
Brian Long, president of Harbor View Custom Cabinets &
Interiors in Mooresville, NC, is sold on this form of
marketing for his Internet-based business, The Cabinet
Joint. “When we started ‘reselling’ kitchen and bath
components, we set up a Web site immediately. While the
site was great, nobody knew about it. In December of
2006, we decided to spend $500 per month each for Google
and Yahoo keyword advertising. By ‘bidding’ on keywords,
we were able to ensure that our company was at or near
the top of the browser list when a given keyword was
entered by a potential client. We only paid if the
client actually ‘clicked through’ to our site.
“The effect was instantaneous. We began getting phone
calls, faxes and e-mails on the first day, all as a
result of hits on our site. We now do no other
advertising. And our revenue for the first eight months
of 2007 has been almost $500K!”
Long continues, “We can’t say enough about search word
advertising. We can actually see the results immediately
when we change the price we are willing to pay for a
keyword or when we increase our budget. We believe this
is the way of the future for marketing and the payback
is tremendous.”
Other Venues
While the Yellow Pages and Internet topped the list
of media dealers use to advertise their showrooms, most
dealers surveyed said they use a multi-pronged approach
to marketing, incorporating several different venues to
maximize their exposure.
Of those surveyed, 51% said they spend money on Yellow
Pages ads, 38.7% spend marketing dollars on Internet
advertising, 36.8% invest in newspaper ads, 35.8% spend
dollars on magazine advertising, 29.4% spend dollars on
direct mail and 23% invest in radio advertising.
A smaller percentage of dealers said they see television
as a viable marketing vehicle for their firms, with
13.7% investing in cable TV ads and 7.4% investing in
network TV advertising. A small portion of dealers
(4.9%) said they spend marketing dollars on outdoor
billboards to capture potential clients’ attention.
In addition to the Internet, Yellow Pages and other
primary marketing avenues, there are many secondary
costs which most dealers do not view as part of their
marketing budget, per se, even though they are essential
elements to supporting marketing efforts. These include
areas such as Web site design, collateral materials,
sponsorship of community events, home shows, public
relations expenditures, signage and more.
Of these, nearly 60% of those surveyed said they spend
money on Web site design, development and maintenance,
42.6% invest in collateral materials, 37.7% sponsor
community and cultural events, 37.3% spend money on home
shows, 24.5% invest in public relations, and 22.5% spend
dollars on yard signs (see Graph 2).
The survey also looked at annual gross sales in order to
determine if sales levels played a role in how dealers
marketed their businesses. According to the results,
larger companies tend to spend more on magazine and
television advertising, while smaller companies trend
toward the more cost-effective options like newspaper
advertising, yard signs and public relations (see Graph
3).
The great equalizers appear to be Web site design,
Internet advertising and radio, the demand for which
runs across the board, regardless of size of firm or
annual gross sales.
Return on Investment
Since the purpose of marketing is to achieve a
favorable return on investment, the survey also looked
at what media avenues had the strongest correlation to
leads brought in and jobs sold. According to those
polled, referrals showed the greatest return on
investment.
Indeed, of the 36.8% of dealers surveyed who spend money
on referrals, 67.2% get leads from these, and 67.6%
close jobs from these (see Graph 4). And, the monies
spent on referrals create a 184% return on investment,
according to the survey (see Graph 5).
As Maeghi Lucier with Designs by Maejic in Duncan,
British Columbia said, “I work in a small community on
Vancouver Island, British Columbia and most leads and/or
advertising comes from word of mouth.”
Advertising on network television stations was the next
most profitable marketing investment, showing a 140%
return on investment, according to those surveyed.
However, it’s interesting to note that this was the
least commonly chosen investment of ad dollars (fewer
than 5% of of respondents buy TV time), which suggests
that this might be too large an investment for the
average dealer to make. Or, conversely, it might suggest
that dealers are getting free TV time via interviews and
news segments.
As Rick Clarke, owner of Rick Clarke Design, RCDC of
Victoria, British Columbia, explains, “My advertising on
TV has amounted to interviews on camera for our ‘Young
Life Home Tour,’ which we have been doing for 17 years.
They have come to some of our homes that have been
renovated or redecorated and had us on the noon hour and
local evening newscasts. Being out there as one of our
hometown experts in the field has given us a great
return for our time on TV.”
Loreen Perry of Perry Supply Company and Golden Eagle
Design in Albuquerque, NM explains her firm’s investment
in television advertising. “We spend about $11,000 a
month in television advertising, so it is very
expensive. However, as large advertisers working closely
with our station rep, we are able to get favorable
spots. We advertise during weekend NFL games, and plan
to have a presence during the Olympics. Our customers
include many who travel from out of town because they’ve
seen our TV ads. It helps our bottom line. The ads
definitely pay for themselves.”
Of course, what works for one firm may very well be
ineffective for another, as marketing is a complex
science that must factor in geographic location,
business structure, target market, budget, business
goals and even the style and personalities of the
salespeople.
This snapshot of the industry’s marketing trends is
something to keep in mind as you begin to formulate your
2008 marketing budget. More importantly, remember to pay
attention to where your marketing dollars are going, and
where your leads and jobs are coming from. As Loreen
Perry puts it, “They say that it takes money to make
money, and there is some truth in that statement. But
placement of your advertising dollars is too important
to leave to chance."
********
Philip D. Zaleon is founder and president of Chapel
Hill-based Z promotion & design – a full service
integrated marketing and creative agency focusing on the
kitchen and bath industry.
Prior to founding Z promotion & design in 1996,
Phil held the position of v.p./research &
development for a new technology-based communications
firm.
Phil is currently Vice President
Communications/Technology for the Eastern Carolinas
Chapter of NKBA, an industry speaker on marketing,
advertising and technology subjects and author of "A
is for Advertising... B is for Branding... a hands-on
guide to improved profits through marketing your kitchen
and bath business - volume 1".
Z promotion & design is a member of NKBA and KCMA.
He can be reached at Z promotion & design, P.O.
Box 17291, Chapel Hill, NC 27516; Telephone:
919-932-4600; Fax: 919-932-4447;
E-mail: phil@kitchenmarketing.com
Web site: www.kitchenmarketing.com
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Click the image above for the pdf version.
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Click the image above for the pdf version.
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