There is an important distinction between information and insight. Information often is limited to numbers and facts. Insight comes from experience and it often is far more valuable.
Three years ago, GE Money wanted to gain greater insight into the home improvement industry. Although we have been involved in the business for more than two decades, there is always something to be learned when you have meaningful dialog with customers, industry insiders who own and run their companies. Advisory boards are nothing new, so when we invited several home improvement business leaders to join our board, the invitation was met with a bit of skepticism.
But its value to GE Money and the board members quickly became evident. The board members recognized there was a tremendous amount of collective wisdom in the room, and that as a group they had a lot to offer, both to GE Money and to their own businesses. And GE Money was gaining insights into customer business practices and how we could help them continue to grow.
"The advisory board has become an invaluable resource for my business. We talk about best practices, figure out how to run our businesses better, and discuss our biggest challenges. I really look forward to the meetings," said Craig Carpenter, president of Custom Remodelers in Minnesota.
Carpenter is one of 12 board members from divergent areas of the home improvement industry. The board originally was scheduled to meet just once a year, at GE Money's expense, but their exchange of information has been so productive, they now meet twice a year at their own expense, have quarterly conference calls, and occasionally travel to each other’s businesses.
GE Money had three primary objectives in mind when we created this advisory board—to help grow our customers' businesses, to grow our own business, and to promote an expansion of the home improvement industry. Thanks to the enthusiastic participation of the board members, we are achieving all three objectives.
In recent meetings, the discussion has revolved around important industry topics such as lead generation, environmental marketing, and the use of promotional financing. All of these topics are relevant to business growth, especially in today's economy. The ideas they have generated serve as a "best practices" program for successful contractors.
"Everything we talk about is relevant to business growth," said Larry Meadows, president of American Exteriors in Littleton, CO. "How to find customers, how to get them financed, operational ideas, social media…the shared insight in the room has been invaluable."
Looking for Leads
Generating leads is essential for contractors, but the practice has become more difficult in recent years, largely because of "do not call" registries that restrict telemarketing efforts. Business owners have found direct mail to be increasingly ineffective. Some are turning to new media, finding an online presence an important but underdeveloped channel for generating significant numbers of potential customers.
While discussing this problem, board member Vaughn McCourt mentioned that his company had resorted to the old-but-effective method of generating leads: canvassing. "We've created canvassing teams that go into neighborhoods and go door-to-door," said McCourt, director of operations for Penguin Windows in Seattle, WA. "Last year, canvassing accounted for approximately 40 percent of our business."
Larry Green is one board member who is adopting McCourt's idea into his own marketing plan. Green's company, Systems Paving, recently began a canvassing program.
Some GE Money board members also have been successful with "in-store" canvassing, where they arrange with wholesale clubs or large retailers to canvass their customers in exchange for a percentage of the sales.
In times of economic distress, consumers tend to become more judicious about their purchases. The members of the advisory board agreed that big-ticket items such as room additions or major kitchen renovations have been difficult to sell. Consumers are interested in smaller, more practical projects that help save energy and enhance value.
"Big-ticket projects are just non-existent right now," explained Brad Pompilli, president of Tri-State Home Improvements in Branford, CT. "But consumers still see the need for projects that save energy, such as blown insulation, windows, and siding. In fact, we had a record year in siding sales last year."
Fortunately, Uncle Sam has provided some incentives in the form of tax credits for consumers to reduce their carbon footprint. Focusing on "green" home improvement projects, with the lure of tax credits, makes closing deals easier.
"The government stimulus program has been helpful," added Chris Edwards, president of Total Remodeling Corporation of Union, NJ. "Window replacements, for example, are popular right now. Most new window manufacturers will guarantee a 30 to 40 percent decrease in your energy costs, plus you'll receive a tax credit from the government of up to $1,500. The windows almost pay for themselves."
Consumer financing is essential in the home improvement business, but new federal regulations have created some concern for businesses that sell with financing. That's certainly true in the home improvement business where financing often is integrated with the sales process.
Our board members have played an important role in helping GE Money develop credit programs that comply with the new lending guidelines and meet consumer needs. Based on board member discussions and our own research, we found that consumers were interested in credit plans that have predictable payments and locked interested rates. As a result, we created fixed rate/fixed payment options.
The fixed rate/fixed payment plan helps consumers feel more confident in their ability to repay the loan over time, especially in an uncertain economy. Virtually all of the board members agree that the fixed rate/fixed payment plan has helped them generate more sales.
The Power of Positive Thinking
It can be easy for small business owners to be discouraged during a recession. However, that's exactly when an added dose of determination is needed. All of the board members have been in business through several market ups and downs, so they know positive thinking is essential for sales success during a sluggish economy.
"Being on GE Money's advisory board has helped change the mind-set of our company," revealed Chris Edwards. "I came back from our meetings with renewed determination to succeed. That positive attitude of the others has helped us be more successful over the last several months."
Jeffrey Shawd is vice president of marketing for GE Money’s Home industries. GE Money is a leader in consumer credit programs, with more than 70 years in the financing business. For more information, visit www.gemoney.com.