After four years of steady revenue, Airoom Architects Builders & Remodelers finds itself back in growth mode. The Lincolnwood, Illinois, company transitioned to another generation of workers and has been pushing harder—and spending more—to create qualified leads, says Michael Klein, CEO. But setting an appointment with a potential client turns out to be only half of the challenge.
“Conversion and sticker shock are still a real problem. A lot of people have good ideas until they hear how much it’s going to be,” Klein explains. “There’s a huge disconnect for a lot of people with how much they can afford, and how much they thought it was versus how much it really is.”
Forty to 50 percent of leads, he notes, pursue a project before the realities of what they want and what they can pay for truly sink in. “We’re selling jobs in 2024 that five or six years ago were 40 percent less, even 50 percent less. A $300,000 job today was probably $210,000 to $220,000 just four or five years ago. I guess the saving grace is their house values are worth more [today].”
Cashing in that additional value if they do not have the money on hand for the job, however, would require homeowners to refinance their previous mortgage at a much higher interest rate. A home-equity line also would present relatively high rates, Klein says. Those combinations have priced out many clients in the mid-price-point area because a scaled-down version of their project would not be worth it.
“Some of these bigger projects, like putting a second floor on a house, would be too far over the top-end in that community,” he adds. “It could be 30 percent over what the market is in that area for top-end. At the same time, moving is not an option [because of the higher mortgage rates]. So, what do you do? You try to dial it way back, but it’s not what you want. That’s what I’m seeing.”
No one strategy has driven considerably more leads than the other for Airoom, who resides in the bigger-ticket, design-build business, Klein notes. “You’re not going to convince somebody with a sale or 10 percent off to build an addition or remodel the kitchen or do their $750,000 house. For us it’s just a slow, steady awareness, proper messaging and consistency; then over time, you want to be coming to mind when they’re actually in the market, and they’re actually thinking about [doing a project].”
The company, which was founded by his father Burton in 1958, began its third generation when Michael’s two sons—Maxx and Jack—joined the business. “My generation is aging out slowly; we have a lot of people who have been with our company for 20, 30 and even 40-plus years,” he says. “For the last few years, we’ve been slowly transitioning as people have been aging out and dialing it down. We’re moving in a younger generation that has newer thoughts and newer ideas.
“There’s always a transfer of knowledge, and updating systems is a big deal for us,” Klein adds. “Some of our systems have even started to wear and tear and age out on platforms that are not great anymore. So, we’re spending time—a two-to-three-year conversion on different systems—and updating our physical design centers and offices. All that has been on the top of our minds.”
With nearly 100 employees (not counting its crews in the field), Airoom must receive more than just buy-in from staff, he says. “It’s about immersion and taking time. It seems like in every position, it takes somebody at least a year and a half to really start to feel comfortable with what it is and what they have to do, and how the company works. You can have meetings and talk about it, but I’m not talking about culture. I’m talking about just what we do and how we do it—the process.”
After updating its systems and facilities, the company will look to arrange partnerships and expand to locations outside its territory, Klein says. “We do some work today outside the Illinois area, but that’s not our concentration. We have a few territories we want to think about, likely in the greater Midwest to keep them somewhat closer to our initial location, for multiple reasons.
“What we’re looking for is growth,” he adds. “Growth in Illinois on its own, at some point it gets harder and harder as you get larger, and you have to start looking outside the Illinois market. Our company is starting to become more dynamic, and our enterprise is producing a lot more volume. We have a lot more room to run on both our custom home and design-build remodeling sides.” QR