Energy Matters

Your Home Performance Marketing Plan

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This is the first in a series of posts during the arbitrarily-proclaimed Home Performance Marketing Week. Check back each day this week for another marketing morsel.

Lead SouresI get this question all the time. “What is the most effective marketing?”

Contractors are rarely satisfied with my answers to this, including “Your most effective marketing is what works best for you.” Whew, the tomatoes start flying. I can also offer—heck, I guarantee it—that whatever plan I can give them, including the creative content, the channels, and the spend, would not be the right answer even if it was exactly what their most successful competitor where doing.

My point is this: You are not your competitor (although admittedly it sometimes seems that way). Marketing, which permeates everything you do, is inherently unique to your company and the service you provide. Finding the right answer involves not just that nifty radio jingle or tagline, but also planning, tracking, adjusting. And since the right answers change over time, more planning, tracking, adjusting. Forever. And that’s an area where most contractors could do better.

As a basic starting point, you need three things.

You need a plan.

Now this plan can get quite involved. Or it can be simplified. But it has to consider your business, your customers, your market, and the ecosystem in which these come together. It should be a plan that considers how needs and actions change throughout the year. For example, you don’t necessarily want to be pushing the high-efficiency furnaces on a radio campaign that starts July 1. (Or maybe you do!)  The air-conditioning campaign might not gain traction in New Hampshire in December. Your plan should reflect a deliberate approach, weighing the leads needed in busy and slow times and the messages that correspond with them.

I like breaking this down monthly, since that’s how I break down an annual plan, and how I look at prepared financials. But even a simple quarterly plan will do.

Planning ahead also means you can work out messages and campaigns carefully rather than throwing them together at the last minute. If you know you’re going to run a furnace replacement special in September, you don’t have to wait until Labor Day to develop the ad. If you know you’re likely to see ice dam problems in January, you can develop that radio spot months ahead of time. An so on and so on.

You need a budget.

The budget will tie into your marketing plan (and your annual business plan and cash flow analysis). How much should you spend? Refer to those answers I gave above—the ones you hated. It depends. Hopefully you have some historical information from your business to draw from. If not, here are some reference points that you can start with and refine as you gain experience.

Polling contractors on a panel last summer at a DOE-hosted event, the consensus seemed to be that most home performance contractors spend around 7-8% of their gross revenue on marketing. Informal surveys over the past few months corroborate that. Maybe it’s not a bad starting point. However, if you’re starting out in a new market or with a new business, that could be significantly higher, as high as 20%. Likewise, even for mature businesses, if your plan calls for a strong growth and a boost in market share, you’ll have to bump that 7-8% up several points. With more conservative plans, you might be in the 4-5% range. And if you’re an established HVAC company adding home performance to a strong existing business, you might only spend 2-3% of associated revenue for that portion of your business. In any event, make sure your spending plan lines up with your overall business plans—at least as a starting point.

Within your overall marketing budget, I’m most comfortable with about a 15-20% of your marketing spend being used on branding, things like uniforms, vehicle branding, yard signs, business cards for staff, etc. You will get leads out of this, but your’ll also gain awareness and support your professional image.

You need to launch, track, evaluate, adjust, repeat.

So with your plan and a budget mapped out, jump in. Pump out the creative in the chosen channels. And then, track results. Planning and budgeting are important first steps. But seeing how different messages and media are working, the leads you’re getting, the sales you generate, the dollar volume of business, and the return on your marketing spend is critical. Without the tracking and evaluation, you’re just guessing.

Let’s say the average cost of a new customer is $250. (When I ask contractors, I usually hear it’s in the $200-300 range.) If you look at a particular campaign, and see that it costs $476 per new lead generated, you should be concerned that is expensive and perhaps not sustainable. On the other hand, if the lead costs $95, I might think “excellent”! Don’t make the mistake of thinking it is just about leads, though. That’s only an early indicator. Quality matters! So you ultimately need to track how many leads convert to sales.  Maybe for a variety of reasons those $476 leads close at 80%. That might work. What if those $95 leads close at 10%? They don’t look so attractive now. This lead cost per sale, or what some call a cost per acquisition, is critical. And it’s why those $35 leads from an online lead mill might not be worth the time of day.  From time to time, I also like to dive deeper and look at things like the revenue generated by lead source or the service agreements by lead source, but I think those numbers are most useful with a good long term average not as an early indicator.

Some campaigns will work. You can momentarily put them on autopilot, and then tweak—or dump completely—until you’ve got a set of campaigns you’re comfortable with.  Keep doing what works. Change or stop doing what doesn’t work (even if worked great two years ago! “What have you done for me lately, Tired Old Ad?”). And always be dabbling in a couple of new ideas because sooner or later what used to work won’t work any more.

These three steps should be within the ability of most contractors in the home performance world. That said, the majority of contractors I met don’t follow them, and they really struggle to find effective marketing approach. In contrast, the vast majority of successful contractors I know do these things. Which camp do you want to be in?

You notice I haven’t suggested a single message or channel to use. We’ll discuss some possibilities this week. But you won’t know if they’re right for you unless you test and evaluate them. Setting up your plan and putting in place a mechanism to track and evaluate the effectiveness is a prerequisite.

You don’t have to make this complicated. If you’re not doing any of the above, this marketing planning and evaluation tool (Download Excel .xlsx file) can help you get started. Ideally, you would have this tied directly into your CRM, financial, and tracking system(s). However, even the manual method in this tool is a start. And it’s better to start today than putting it off anther month or year or more.

Cheers,
Mike

The entire arbitrarily proclaimed Home Performance Marketing Week:

  1. Your Home Performance Marketing Plan
  2. Some Marketing “Don’ts” For Home Performance Contractors
  3. Are Existing Customers YOUR Best Source of Business?
  4. Improving Online Lead Generation: 6 Simple Things
  5. The Gas Pump Pitch
  6. Guerrilla Marketing in Home Performance
  7. Your Marketing Worked. You Got the Phone Call. Now What?

 

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About the Author:

Mike Rogers is the President of OmStout Consulting. A nationally recognized expert in residential energy-efficiency, he works with contractors and programs to scale sustainable market approaches to improving homes. More on Google+

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