Dec 1, 2005 12:00 PM,
By Don Kreski
Find the market plan that works best for your business.
Photo courtesy of Tandberg
Marketing planning is a lost art in the AV industry. Many contractors don’t know where to start. I asked three AV integrators how they plan their marketing programs. Their answers may help you understand how you can get better results from your promotional dollars.
Why even consider marketing? “It’s the only way I’m ever going to get more profitable,” says Mike Palecek, owner of 2 1/2-year-old startup SmartChoice AV Solutions in Racine, Wis.
Palecek runs a marketing program that’s unusually aggressive for a company with only one full-time employee. He created a 100-page website, regularly sends mailers, offers seminars and web conferences, gives away pens and other premium items, and even runs a telemarketing program.
Palecek says he plans marketing activities whenever he has excess cash. “It just ain’t so neat and tidy,” he explains. “You go to B school and everybody talks about marketing plans and budgets, but you look at the reality of cash flow and you throw it all out the window.”
Aaron Carmack, director of business development for residential integrator Progressive Audio in Columbus, Ohio, says formalized planning is probably as much a factor of business size as anything else. At $5 million to $7 million in revenue, Carmack says he is just now starting to think about an annual marketing plan and budget, instead creating informal plans as needed throughout the year. “The process really begins when you decide you need to be consistent in your message and your approach,” Carmack says. “[A few years ago] we hired a company in town to rebrand us from Progressive Audio, the high-end Columbus retailer, into Progressive Audio, the expert home integration company.”
Unlike many marketing managers, Carmack does not view marketing and sales as separate disciplines. He built a program designed to enhance the credibility and success of his sales force. His marketing materials include a new website, a seminar program, and a packet of educational materials for homeowners that helps sell audio, video, and control system concepts, plus the Progressive Audio brand. Each is crafted to build on what Carmack sees as its chief source of new business — word of mouth.
GROWING AN ESTABLISHED FIRM
Mike Alley, a former president of Fifth Third Bank of Indiana, takes a more formal marketing approach at Electronic Evolutions — a $5 million commercial and residential AV contractor based outside of Indianapolis. Alley purchased the 20-year-old company from Escient Technologies and renamed it in 2003. He’s been careful to narrow his focus on corporate and healthcare commercial customers, as well as high-end residential projects. Perhaps it is because of the methods he has brought to the firm that he has been able to achieve a 22 percent growth rate for 2005 (year to date).
Alley uses a somewhat different marketing mix than SmartChoice or Progressive. He and his marketing coordinator, Jon Adkins, place advertising in such local publications as Indianapolis Business Journal, Indianapolis Monthly, and some architect and builder newsletters, and they send monthly emails highlighting recent installations to their customer base. Alley also sees seminar marketing important enough as to build a customer training facility and a residential showroom in the company’s new headquarters.
Each year, Adkins creates a detailed marketing budget and plan. “It’s an important discipline that we define what our strategy and approach is going to be, and then it’s just a matter of following up on execution on a regular basis,” Alley explains.
FINDING THE BEST SYSTEM
My background is in marketing management at commercial integrators. My old boss and mentor, Bob Walsh of Midwest Visual (now part of AVI Midwest) insisted on an annual budget with monthly reviews of our progress. He used to say, “What you don’t plan and don’t measure won’t happen.” At Midwest Visual, we used a percentage of total revenue to determine the marketing budget: just under 1 percent (not including salaries); at United Visual, Itasca, Ill., we used 2 percent.
Alley takes what is generally considered a better “zero base” budgeting approach. “We start the year assuming we’re not going to spend anything unless it’s justified, and then we build it from there,” Alley explains. “We establish a formal budget and try to live with it, but we are agile enough to make a directional change if circumstances dictate.” Alley is much more aggressive than my former managers. Next year, he plans to spend rougly 3 percent to 5 percent of his total revenue on marketing, plus co-op funds from vendors.
Scholars will tell you that measurement and evaluation are the critical last steps in any marketing program. Alley and Carmack report that it’s difficult to find good measures, but they are careful to go back and figure out where their new business is coming from, using weekly sales meetings and one-on-one conversations with staff. In addition, Alley runs a bi-annual strategy meeting with Adkins and his sales force, using the forum to evaluate past programs and help formulate future plans.
Palecek also carefully measures the success of his investments. “I would say if I can take what I spent on a given activity and, within three months, double it in gross profit, I feel real good about it. Because there’s residual value to any marketing in terms of orders coming in down the road and in terms of name recognition. So, even if I just double it, it was money that was well spent. Anything beyond that is just a bonus.”
What’s the best way to institute a marketing program? I’ll outline a seven-step approach, which I will describe in Sound & Video Contractor‘s January Management Perspective web exclusive, illustrating it with examples drawn from the AV industry. In February, we’ll take a detailed look at the marketing activities that work best for a small contractor or integrator.