Whether you own or manage a design-build remodeling company and tend to rely heavily on referrals and repeat business, or you operate at the other end of the spectrum in the specialty remodeling and home improvement space and depend on leads you create through a marketing program, this year will be different than the previous three years.
It bears repeating that the COVID-impacted years of 2020, 2021 and 2022 were highly unusual. Stuck at home with no place to spend their money, homeowners poured funds into home improvement projects big and small. The huge surge in improvement spending during this period played an outsized role in creating an inflationary environment across many categories of good and services in the U.S. economy.
It also bears repeating that high inflation in 2022 was not stopping homeowners and consumer from spending, so prices continued to rise throughout the spring and summer last year. Something had to give. That something was the United States Federal Reserve Board, also known as The Fed. The Fed has embarked on a program of sharp hikes in interest rates in order to slow the economy and perhaps tilt it into a minor recession, a slowdown scheduled for the current year and perhaps into 2024.
Where once the cost of money was very cheap, mortgage interest rates had been steady in the range of 3 percent. Today, those same mortgages carry a 6 percent rate. That is why forecasters ranging from Harvard University’s Joint Center for Housing Studies to John Burns Real Estate Consulting are projecting a slower rate of growth and likely a slight decline in remodeling activity this year. Regardless of which sources of leads that you’ve relied upon in recent years, they are likely to underperform year-over-year, especially if your firm is trying to grow.
According to Dawn Dewey, senior vice president for Dreamstyle Remodeling in Albuquerque, New Mexico, a broad mix of strategies and tactics required to maintain growth targets for 2023 must be monitored closely. They need to be “tested, invested and rested,” she says.
A consistent rotation of lead sources was the theme of Dewey’s presentation at Qualified Remodeler’s TOP 500 LIVE in November 2022. QR asked Dewey to revisit the topic to see if anything had changed over the winter and to gauge which sources are working well today.
“It is imperative to maintain a diversified source pool, a balanced source mix to deliver on what I view as a marketing leader’s core responsibility in our industry, which is to sustainably drive leads at an effective cost,” Dewey says. “What that means for us is casting the widest net and constantly seeking out what is the cutting edge, what is the next new lead source that’s going to come in and dominate and drive volume while also maintaining and nurturing time-tested sources, which might be losing their luster a little bit but still may [be working].”
Dreamstyle, which is part of Dallas-based Renovo Home Partners, is one of the largest diversified remodeling and home improvement companies in the U.S. It offers a range of services across the western third of the country. In 2022, the firm was ranked No. 13 on the Qualified Remodeler TOP 500 list, posting $151.9 million on 10,621 jobs.
Though that kind of scale is very different than most remodeling firms, the marketing principles and concepts that work at that level are applicable for smaller firms as well. According to the company’s 2021 TOP 500 application, the company’s top lead source was direct mail, accounting for 23 percent of the leads that drove new business that year.
This was followed by online lead-generating services, 21 percent; the company website, 13 percent; and a mix of other sources that comprised the balance. These included TV, home shows, paid social media, Google Ad Words and canvassing or radius marketing.
“Right now, we have about 100 active sources and sub-sources driving leads for us,” Dewey says. “All of them are tracked very closely. And our spend is managed and shifted as necessary to continue delivering on that core responsibility of driving leads at an effective cost.”
Digital marketing as a category has grown substantially for the firm. In 2019 all its digital lead sources combined for 27 percent of Dreamstyle’s leads. By 2022 digital leads from all sources had grown to 52 percent of the company’s annual supply of leads.
“For us, it’s a very high priority to ensure that we are staying ahead of the curve with digital and on the hunt for the next digital revolution in terms of what the new lead source is going to be. And we execute that through what we’ve kind of dubbed our best-in-breed digital strategy,” Dewey says.
“We are continuously seeking out digital experts, digital partners, across all these niche channels from native to programmatic, to social, to paid search, to organic, and looking for partners who can drive leads at an effective cost and work with us in a way to continue expanding that medium. We are continuously looking for new vendors and staying ahead of the curve digitally.”
‘Go-Get’ Sources Skewing Higher in 2023
During the past two years, as digital marketing continued to grow as a lead source, in-person lead sources maintained a steady flow. These included home shows, in-store marketing and a small level of canvassing. These are what Dewey refers to as “go-get” lead sources. Many of the lead sources the company utilizes require potential customers to take action. And in 2020 and 2021 those sources had a steady response rate.
“Today, we are leaning into a lot of ‘go-get’ marketing,” Dewey says. “If people are not going to be calling into our call center from a television ad, or if TV is getting super expensive like it does in election years, then we are going to explore all the different ways we can go out and get that lead. Again, we have to stay agile and be ready to shift, and our mix is always evolving. And right now, we are seeing those face-to-face and go-get strategies starting to take a bigger share of the pie in 2023.”
To obtain a more ground-level view of the sources and tactics working well today, Qualified Remodeler presented Dewey with a list of sources commonly utilized by both remodelers and home improvement professionals. We then asked her to provide her opinion on the effectiveness of each of those lead sources this year.
QR Codes
Photo: © Adobe Stock / Ursula Page / Pavel
Introduced more than 15 years ago, QR codes—those square-shaped cluster of dots that accompany many advertisements these days—are experiencing a resurgence.
The resurgence came about when smartphone manufacturers, both Apple and Android, made it easier to scan those codes to launch everything from webpages and videos to phone numbers and forms. QR codes are now commonplace once again and allow potential clients to take immediate action in response to an advertisement.
Dewey’s take: “In traditional media like print and broadcast, we are utilizing QR codes, and we’re seeing success with them. We’re definitely seeing people choose to convert that way. So, for us it’s about how we can make it easiest for a person to convert. For a very broad swath of our demographic, that’s going to be dialing the phone number.
But QR codes have become so much easier to use these days. You just open your camera, and it gives you a link. It’s an important tool in terms of evolving and staying current. It’s a tool to make it easy for people to convert, and we’re absolutely using them.”
Canvassing
Canvassing falls into the go-get category of leads that is becoming more important to marketers in 2023.
Dewey’s take: “Canvasing is as old as the home improvement industry itself. I think it’s an ageless lead source. People will always have homes and they’re always going to open their door when someone rings the doorbell. So that is an important source. I think canvassing will become more important, particularly as we head into presidential election year when advertising spending rises dramatically. They are forecasting that political ad spending is going to far surpass anything in prior history. So, we are really looking ahead to that. We are planning for the time when TV is pretty much unavailable.”
Home Shows and In-Store Engagements
These are among the go-get strategies employed by Dreamstyle and other big marketers in remodeling and home improvement.
Dewey’s take: “These are very important. Home shows are obviously our bread and butter. We try to get in every single event possible, whether it’s a wine festival, a bridal show, etc. If they will let us in, and there will be people in a shopping mentality, we want to be there to generate leads.
“And from the retail side, we do quite well with that as well. Retail environments are also important to us—from big-box stores down to a local hardware store, to plant nurseries. So, in terms of casting the widest possible net, if we can be there to generate leads, we will be there to generate leads.”
Radio
Dewey’s take: “We do a bit of radio. We focus mostly on radio for retail products. In our home market, we do some retail products like stoves and hot tubs. So, we do a lot of radio on shows where people call in and ask questions. But in terms of driving leads, we haven’t done radio in a few years now.
“I know some of my colleagues, marketing directors at Renovo sister companies, do quite well with radio. I think it’s also dependent on your geography and your brand equity in the market. If you’re in one market, and you’ve been there for 50 years, and people really know your brand, radio might be a more cost-effective source. It has its place.”
Newspapers
Dewey’s take: “Newspapers used to be a really big piece of our mix 10 years ago when I started. Today, leads that come from newspapers have just gotten smaller and smaller and smaller. It’s definitely still part of our mix. We mostly work on performance agreements with newspapers. These are age-old sources that are kind of drying up, but there is still juice to squeeze from that lemon.
“We are going to keep squeezing that lemon until it runs dry. I would say if they’re merge-mail type of magazines, and I define merge-mail as something that’s really heavily coupon oriented like the Home Mag or Val Pack, things like that, we use a ton of those. They work really well for us. It’s not going to be huge volume, but those mediums will generate phone calls and leads for you.
Television
Dewey’s take: “I think I’m going to surprise you. I have TV turned off entirely right now. I have a love-hate relationship with TV. It keeps getting more expensive. I recently came across an interesting statistic related to TV. This year, the number of households who do not subscribe to broadcast or cable television will surpass those who do subscribe to traditional broadcast and cable. The majority of households rely on apps like Netflix and Hulu and Apple TV and HBO Max, etc. So, I think TV, like newspapers, is starting to become less relevant and therefore less justifiable to spend on.
“Another key statistic is that viewers of all age groups are spending less time watching TV. You can see the line charts going down and down. People are consuming their media differently. They’re streaming media on demand. There’s still a place for TV-like ads on these apps like Hulu, but placing those ads is different because it’s technically digital. We’re not spending on broadcast TV, and I honestly don’t see us going back on TV for the foreseeable future.”
Pay-Per-Click Advertising
Dewey’s take: “Google’s always changing things. Staying on top of their changes to ensure you’re getting the right results out of that source is challenging. We’ve seen a decline in our overall volume of pay-per-click in the past few months. We’re working with our vendor to figure out how we can get that back up. So, pay-per click, it’s not a huge source for us.
“It’s super important to invest in, especially when you are utilizing things like broadcast TV. When someone sees that TV spot, they go and search. You want to make sure that you’re right there at the top. And if your organic listings aren’t where you want them, then you need to pay to make sure your name’s at the top. But PPC and organic are both challenging sources that are hardest to stay ahead of because of how often Google changes things from my viewpoint.”
The Impact of Artificial Intelligence on Search
Artificial Intelligence, or AI, is aiding marketers in many ways. In paid social media, it is being used to help marketers zero-in on clearly targeted audiences with very precisely crafted messages. Microsoft is beta testing an AI bot for its Bing search engine. Google says it will be following suit shortly. Once fully implemented into search, the impact on paid search will undoubtedly be profound.
Dewey’s take: “AI in search is still so new, and yet it’s a very hot topic right now. I think it’ll be really intriguing to see how it impacts organic rankings and organic conversions in the months and years to come. ChatGPT could also be a tool to automate things like writing a blog post; I mean, you can just plug topics, and it’s going to write the blog posts for you.
“Hopefully it will generate hot keywords that will help with rankings. It’s still a very new tool. I think it’s something that will become a mainstay. We’re going to need to figure out how to work with it, but we’re not doing much with it yet, admittedly.” QR