Everyone wants 2011 to be better than last year, but only a few plumbers will take active steps to ensure improvement and prepare a marketing plan. If you haven't already created a marketing plan for 2011, here's what you can do now to ensure improvement this year.
Recap: Take a minute and look back over the past year. What worked? What didn't? Why? What are the lessons that you learned from 2010 that will help you this year?
Project sales: What do you expect sales to do in 2011? How much are you going to grow? Is the number reasonable? A small contractor can easily double. The same growth rate might cause a multi-million dollar operation to implode. Remember, growth requires an accompanying growth in your infrastructure. You're going to need new trucks, tools and plumbers. You might also need more office staff. Outgrow your ability to service your customers well and your reputation (i.e., your brand) will suffer. On the other hand, don't be timid. If your target doesn’t make you a little uncomfortable, you're not stretching.
Spread your sales: Once you project total sales, spread it by the month, based on past seasonality. Are some months better than others? Why? Does weather, holidays, or some other factor reduce the need to market during certain months? Remember, you waste money when you out market your capacity. If call volume increases due to seasonal factors, marketing during those periods may not only be unnecessary, it might be a waste.
Set a budget: How much are you going to invest? As a percent of sales, smaller companies need to spend more than larger companies. Companies planning on aggressive growth need to spend more than companies in a slow growth mode. So what does that mean? For most plumbing companies investing less than 5% of sales on marketing is treading water. In order to grow, budget closer to 10%. To grow aggressively, consider more.
Once you've set a budget, spread it. Assign a portion of your total marketing budget to each month, according to your need to boost call volume. Then, assign each month’s marketing toward customer acquisition, customer retention or sales efficiency.
Customer acquisition: As the name implies, customer acquisition is attracting new customers who have never done business with your company. This might involve community wide direct marketing campaigns or low cost radius marketing efforts around clusters of existing customers. It might be as simple as improving your truck ID program.
Often, customer acquisition programs focus on incentives to encourage prospects to try your company. The problem with this approach is most people only think about plumbing when it breaks. Your marketing must hit at just the right time, to encourage trial. This means you must either market continuously or get lucky. If your budget doesn’t allow for continuous marketing, focus on discretionary consumer purchases, such as tankless water heaters, solar thermal, water conservation, better performing toilets, kitchen and bath remodels, water purification systems and so on.
Customer retention: Existing customers have already purchased from you once. Chances are good they'll buy from you again as long as they remember you. Customer retention is aimed at maintaining brand awareness levels. It doesn't take a lot of expense to stay top-of-mind. Plus, you can also promote discretionary plumbing products and services and expect a better response rate than you will get from the general public.
Sales efficiency: On any service call, the greatest expense is positioning your truck and plumbing professional at the consumer's front door. Hopefully your pricing covers overhead and direct costs in the basic call. Once overhead is covered, every additional gross profit dollar you generate falls straight to the bottom line, improving your sales efficiency by boosting your average ticket.
Set aside some of your marketing for sales efficiency marketing. This includes preparing sales tools to support add-on items, such as flood safe washing machine hoses, water alarms, outside faucet covers, showerheads, grab bars, toilet seat arms and more.
Costs: Your marketing includes two costs. The communication costs appear in your budget. These are the costs of Search Engine Marketing, printing and mailing, Yellow Pages adverting, and so on. Communication costs can be further broken down into production and media costs. Often, plumbing contractors forget to budget to produce compelling marketing and take a DIY approach that carries a hidden opportunity cost (i.e., the lost sales due to ineffective marketing). Set aside part of the budget for professional copywriting and graphic design, even if this reduces your media exposure. Remember, once an ad or direct mail piece is created, it can be used over and over again.
The second marketing cost is the promotion cost or the cost of your offer. This doesn't usually appear in your budget. Some marketing may not involve any discounting (e.g., most sales efficiency marketing). Other marketing includes discounts and incentives that expire to create a sense of urgency for consumers to act now. If you plan on discounting, estimate how much of your total sales will be discounted and adjust your basic pricing accordingly. Otherwise, you will hurt your bottom line.
Create a calendar: Once the budget is set, pick specific tasks for each month. For example, you might run a tankless water heater direct mail campaign for September. Back up six weeks for a start date, so the mail will hit on time.
Plot everything, including start dates, execution dates and projected results on the calendar. As the year progresses, be sure to record your results on the calendar. This becomes a resource for next year's recap and planning.
Creating a marketing budget and calendar is not difficult. It’s tedious. Yet, it will improve your performance, making 2011 your best year ever.
Matt Michel is the CEO of the Service Roundtable, a business alliance of plumbing, HVAC, electrical, and service contractors. Learn more about the Service Roundtable at www.ServiceRoundtable.com, or e-mail Matt at: [email protected].