At Contractor 20/20 - Plumbing, Marketing and Advertising, HVAC Marketing and Advertising & Electric Marketing and Advertising is our Specialty. Contractor 20/20 serves over 100 independent contractors in 40 states with complete direct mail. TV and radio advertising agency services and consumer research services. We have developed, researched and tested the "most successful" marketing techniques. We are the largest advertising agency serving independent contractors in the nation. If you wish to maximize your sales to prior customers and new customers - if you want to learn how other contractors hav achieved 15-20% net profit, give us a call at (607) 770-8933, ext. 80 and request a referral list.

The Advertising & Promotion Budget Process
THE CENTRAL logic to smart budgeting is that one should:
1. “Buy” as many new customers as needed to achieve sales and profit goals.
2. Pricing needs to be adjusted to reflect the actual “new customer acquisition costs”
A. The process starts with customer retention; most good companies retain about 75% off their prior customers.
Example: $1,000,000 in 2001 starts you off with $750,000 in 2002
B. When you look at dollar return on yellow page, TV and radio, the normal range is between 1 to 4 and 1 to 6 in new customer sales.
Example: Let’s consider a $1,000,000 company with a 7% advertising budget. Their $70,000 in advertising yields them $280,000 to $420,000 in new customer sales, so with a 7% advertising budget the company can see results that range from:

Company A
$750,000-repeat customers
$280,000-new customers
$1,030,000 total

Company B
$750,000-repeat customers
$420,000-new customers
$1,170,000 total

That’s a 7% advertising budget yielding a 3% to 17% sales increase.
The difference in results is due to market conditions and advertising fulfillment skills.
Reminder: Advertising is what you do to “Brand” your company. It is designed to get people to think of your company when they have a future need.
VS.
Promotions are designed to create the need & get sales immediately.
Example:
Let’s say company B, can do more work with his existing staff AND has a 50% overhead. That 50% is killing his profits, dragging him down from 18% to 8%. So company B’s overhead is 50% ($585,000), to get his overhead down to 40%. His sales will need to increase to $1,462,500. He is $292,500 short of justifying his overhead. He needs promotion to solve his problem.
Example:
If new customers cost him 20% of the sale (typical), He needs to invest $292,500 x 20% = $58,500 to solve his problem. He has 4 alternatives to fund the project:
1. Raise prices 4% to all customers. $1,462,500 x 4%= $58,500
2. Charge new customers 20% more then repeat customers.
3. Eat it; drop profit expectation from 18% to 13%.
4. Suffer

GOOD NEWS
I have developed secret techniques that allow you to raise prices to new customers 20% with no reduction in closing rates (conversion).
And
I have developed secret techniques that allow you to retain the new customers you “overcharge”.

BAD NEWS
Only my clients get the good news and then only with a confidentiality agreement.

CONCLUSIONS
1. Your fixed overhead tells you what your sales goal should be.
2. Your customers’ retention rates in combination with your new customer advertising cost will determine your advertising results.
3. The gap between sales goals & advertising results is your promotion sales goal.
4. Your promotion budget becomes “what it takes” to cover that gap.

RULES OF THE ROAD
1. Customers turn to yellow pages when they need help.
2. Radio & TV are the cheapest way to build a brand name and maximize yellow page results.
3. Direct mail is not cheap but it is instant.

DAY TO DAY
1. Make sure you have enough techs to achieve your sales goal.
2. Use direct mail to cover the sales shortage if there is one.

MONTH TO MONTH
1. Maximize customer retention by mailing ¼ of prior customers. Each month, except when you can’t handle the work.

YEAR TO YEAR
1. Have a system to measure new customer cost for yellow pages, TV, Direct mail.
2. Use ads & spots that have a proven track record.

CAUTION
BAD CSR & TECH conversion rates and low average tickets will ruin the best advertising campaigns in the world. Ask me about our “Executive Control Panel” form that helps to put out “Fires” before they burn up your profit.
You don’t have to guess at budgets and controls; we have the systems that you need; combining 26 years of advertising experience with an intensive market study of over 200 companies in the USA and Canada.



I am proud to be associated with the largest and most respected contractor groups in the nation as a
PHCC/QSC (Quality Service Contractors Industry Partner) and as a Service Roundtable Consult Partner.

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A Final personal note.. The marketing industry has a long dark history of disreputable operators. If you have been in business for a time, no doubt you have your own story to tell. That is why I urge you to check our referrals … see for yourself how our counsel has been a blessing to contractors from Coast to Coast. If you do, you will learn how faithful to our clients' interests we are, so different from too many clients' past experiences. Click Here to E-Mail Mike