How to Create Centers of Influence

Two top remodelers, one in Illinois, the other in Pennsylvania, show how to cultivate reciprocal local relationships that drive new business

authors Patrick O'Toole | February 29, 2016

Darryl Rose of Get Dwell in Winnetka, Ill., and John McCloskey of J. Francis Co. in Pittsburgh own two very different remodeling businesses. One is a full-service company offering everything from small, time-and-materials jobs on up to whole-house remodels; the other is a design-build firm that does not handle jobs less than $10,000. Both, however, excel at cultivating local relationships with professionals and entities who are centers of influence. As a marketing strategy it often goes by the acronym COI, short for Centers of Influence.

The concept is not new. Victoria Downing and Linda Case published a book on the topic for remodelers in 1995, and copies of it can still be found on Amazon. McCloskey, an accountant with a Master of Business Administration degree from Carnegie Mellon University, followed the book’s advice to the letter beginning in 2004, and today he is held up by leaders of the peer group, Remodelers Advantage, as a paragon of COI marketing.

The concept is straightforward: Become the go-to general contractor with people who are in a position to steer remodeling clients your way. Typically, a referral reward is involved. Those rewards can range from $50 gift cards on up to a percentage point of the resulting revenue. Other times no money is necessary, just a commitment to engage in reciprocity. Both remodelers chose not to reveal the specifics of their referral reward programs in order to avoid being held to specific numbers in the future, but that does not diminish the maturity and sophistication they bring to this critically important marketing strategy.

A CADRE OF REALTORS

For McCloskey, who first implemented a COI strategy in 2004, real estate agents were his initial target and they remain an important driver of new business. Real estate professionals and general contractors are natural allies, McCloskey explains. The ability to have a reputable contractor on call to walk through properties with clients is a great benefit, especially if a property needs repairs or is not up to date. Home shoppers frequently want to know the cost of specific improvements, like a new roof or an updated kitchen, in order to sign a contract.

McCloskey’s first foray in connecting with brokers was an all-are-welcome approach. Through a series of lunch meetings, McCloskey, over a six-month period, pitched 700 realtors about the benefits of working with the J. Francis Co., as well as the details of their referral-reward program. He soon discovered it was much more effective to work with just a handful of top realtors. The reason: Most transactions are completed by the top 5 percent of the brokers; the other 95 percent sell only one house per year. After refocusing his efforts on reaching only the top tier of realtors, McCloskey’s COI program took flight.

“For that high-end realtor, we don’t charge for walk-throughs with their clients,” McCloskey says. “And typically general contractors of my caliber don’t charge for the first consult anyway. A lot of times you walk through a property where they don’t have the house under agreement yet, but at the same time, you’ve got someone who is a high-end homeowner who is looking to buy an $800,000 house. So if you impress them during that walk-through with your leave-behind packet or whatever, even if they don’t buy that house, they potentially might still buy from you. They might buy another house and then they call me. And that happens a fair amount.”

Identifying top real estate professionals often begins with current clients who are remodeling a recently purchased home. McCloskey will find out who sold them the home and, if he has not met them, work backward to arrange breakfast or a cup of coffee. Through trial and error, he has developed revenue parameters for working with realtors. Those who sell less than $10 million in a year do not make the cut. His most productive relationships are with realtors who average $20 million annually or more.

Realtors were just the start. Since then, McCloskey has expanded his COI program to include the company’s trade contractors, closing attorneys, handymen and others. It is a full-blown marketing program. Internally at the J. Francis Co., COI is managed formally with reports, delegated tasks and meetings. In weekly meetings among the company’s five project developers, results are measured and new prospects identified. Each attendee leaves with the names of two people to meet in person along with five people to reach out to remotely via email, voicemail, text messages or snail mail. The purpose is to remind each COI of the company’s referral reward program.

A typical belly-to-belly COI meeting for McCloskey might be with one of his trade contractors who needs to provide a quote for plumbing or electrical work on a job in progress. Even if the trade contractor has been told about the company’s referral-reward program in the past, McCloskey knows from experience they forget after 90 days. “I will ask about his family. He will ask about mine. We are friends,” McCloskey says. “And then I will bring up our referral program again.”

In a recent trade contractor meeting, McCloskey says, the trade contractor immediately remembered the program and told a story about recently referring a job to a smaller Chuck-in-a-truck type of contractor. “He told me how it tanked terribly, and he should have sent me. It was kind of funny because we laughed about it.”

The results, however, are nothing to laugh at says McCloskey. “Even in the past year, I can trace from subcontractor referrals, the exact jobs and the exact dollar amounts — a little bit under $200,000.” This does not include activity generated from other COI groups. And it is easy to see the overall impact of the program on a company that averages $2.7 million in sales.

HARDWARE STORES

Where many in the industry have joined forces with big- box retailers like Lowes and Home Depot, Darryl Rose of Get Dwell in Winnetka, Ill., takes a different approach. During the past decade, he’s prospered via key relationships with small, local hardware store proprietors. Last year the company billed $1.5 million in revenue on over 800 jobs. Initially it was just one store, Millen’s Hardware in Wilmette, Ill., but he’s expanded the concept to the point where today his company works with a total of 15 Aces, True Values or Do It Best shops in Chicago and its northern suburbs.

Many of the stores are local icons, having served their communities for several generations. For Rose, working with local hardware stores offered a steady stream of small jobs for well-heeled clients in mature bedroom communities. Hardware store owners typically don’t allow local contractors to put their cards or brochures in their stores unless there is a high degree of trust for that specific contractor. They fear negative consequences and lost clientele by having endorsed a contractor only to have a job go badly later.

“We started working with our first hardware store 10 years ago. We were allowed to put our brochures up on the counter at Millen’s, and we were the only ones that the owner allowed to have at the counter,” Rose says. “It was a year or so into it that I first thought this model could have some legs. I then set about contextualizing what it was that we were doing and the customer service controls that were needed.”

Local hardware stores are almost universally staffed with knowledgeable and experienced employees. They help walk-ins solve repair and improvement problems, ranging from replacing toilets to painting a room. It’s that knowledge along with an in-town location that gives a local hardware store its competitive edge compared to bigger, low-price competitors. A major problem for hardware store owners is customers who leave the store without purchasing anything after getting a load of free advice.

“The benefit for the hardware store is that they are able to sell more products and services than they were able to sell before Get Dwell,” Rose explains. “If someone comes in looking at Benjamin Moore Paint, they are going to look at their color tiles to find their color. They are going to engage with the paint desk and ask questions. Do they want it to be a brand name? Do they want it to be an Ace Hardware paint? Maybe they are painting the bathroom. Should it be bath-and-spa paint? Unfortunately, what happens is the homeowner takes all of that information home, calls a painter, and that painter then goes to their paint supplier, buys the paint and the hardware store did not make the sale. So, with our relationship, they are able to go through that same process before they walk out the door. They can say, ‘I don’t know if you have somebody you trust for your painting, but we recommend Get Dwell. If you want to make the paint purchase now, you can count on Get Dwell to do a good job.’”

For Get Dwell, exceptional customer service and followup is a requirement. Millen’s owners Ed and Doug Sanders were very blunt when a customer once called them to com- plain about a Get Dwell issue. “Fix it,” was the command.

“The No. 1 complaint I hear from hardware store owners is: ‘Boy, not only did I recommend that guy, but he has not even called them back.’ And that really irritates them when they do go to refer someone. So we make sure to let them know, right from the beginning, that we are calling customers back. We are making sure that we engage with them in an appropriate manner to ensure high levels of customer satisfaction.”

The glue in the relationship is purchasing at the store by Get Dwell. As much as possible, Rose and his team will steer purchasing through that store, everything from ladders to bulk orders of fasteners and more.

“Every purchase we make is put under our account. We are able to measure how much revenue we are running through that store,” Rose explains. “We are able to pull out a lot of those big-box and lumberyard purchases and put them through our hardware store partners, whether it is their client or not. We want to partner with those hardware stores, drive as much revenue as we can, either through their clients, or our own that we are giving them.”

All remodeling or repair jobs near a partner hardware store, regardless of where the lead comes from, goes through that partner store. Though the prices are not the lowest, discounts on the order of 10 percent or more are applied to remodeling project orders. Most time-and-material jobs do not get those discounts. The goal, says Rose, is to be the No. 1 customer at each store where they do business. To that end, Get Dwell will generate quarterly reports with the number of referrals received as well as the amount spent at each store.

Those meetings formalize the relationships with partner stores where the lead flow grows with each passing year. As time goes on, the old-timers who work in the stores as sales staff, have come around to carrying Get Dwell business cards with them as they meet customers, says Rose. The company has earned their trust and is getting leads that did not initially come their way. “They see that we know what we are doing and that we will not let them down.”

In 2016, the company is looking to expand its regional partnerships with stores. To do that Get Dwell is no longer relying solely on in-store purchases to remunerate its partners. The company offers payments per lead and will settle up at the end of each quarter. They will add up all of their purchases through partners during the time period and if it does not exceed a certain level, the pay per lead incentive will kick in.

The company plans to use its referral reward program to triple its hardware store count to 45 this year and to vastly increase its service territory. Rose says his company is ready for the move after 10 years of trial and error and knowing how to run the system. The motivation for the expansion is the ease of closing.

“We are very good at marketing generally, working on referrals, putting up signage and putting ads in magazines, etc. But the hardware store referral machine has surpassed everything that we have done,” Rose says. “It has added tremendous growth to our company and that is because hardware store leads are the easiest leads to close other than any current customer’s referral.” |

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