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The James Harcourt Lead Generation Report
Lead Numbers Buoyant
Some highlights this quarter:
Jason Currall, Marketing Manager James Harcourt
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Lead Flow
Just under one in two firms improved lead flow in the three months March to May compared with the previous three months. Just over one in ten had fewer leads and just over four in ten saw no change.A useful way to look at the results is by the net balance of merchants reporting either way. If for example 36% of merchants saw an increase in sales, 16% a decrease and 48% no change, the net balance of 'ups' and 'downs' would be +20% (+36% less 16% equals +20%). Reverse the figures and it would be a drop of -20%. A net balance of zero implies little has changed.
On this basis a net balance of 34% of firms increased lead flow compared with the previous three months (as shown in chart 1). Large firms (net 58%) outperformed small and medium-sized firms (29% and 27% respectively). Companies in the North (net 45%) and South (34%) reported more improvements than firms in the Midlands (19%). The greater the number of frames produced per week, the greater the number of increases in leads.
Year on year leads were up with a net 40% of firms reporting improvements in the last three months compared with the same period of the previous year. Again large companies (net 58%) did best, although small and medium-sized companies (net 37%) also had more leads. All regions performed well, with the North (49%) and the Midlands (46%) ahead of the South (30%).
Number of leads
The average number of leads per firm was up 36% in May compared with February, but 41% down on May 2002. Large companies did particularly well, generating 47% more leads than three months ago. Small and medium-sized companies were up 18% and 17% respectively on February.
Retail Orders
A net 50% of firms increased orders in the three months March to May compared with the previous quarter (see chart 2). Large (58%) and medium-sized (57%) firms did better than small firms (43%). Companies in the North (55%) were slightly ahead of those in the South (49%) and Midlands (46%). Firms producing more than 50 frames per week saw significantly more improvement than those producing less than 50 frames.
Year on year orders are also buoyant. A net 54% of companies saw orders improve (chart 2). Companies with more than 50 employees did best, with none in this category reporting a fall in orders. Firms in the Midlands and the North (58%) did better than the South (48%). The bigger the weekly production, the greater the number of increased orders.
Conversion ratios
| SIZE | Average leads per firm in May | Average orders per firm in May | Calculated average conversion ratio in May* |
| Small | 48 | 25 | 1:1.92 (52%) |
| Medium | 101 | 59 | 1:1.71 (58%) |
| Large | 307 | 76 | 1:4.04 (25%) |
Average order values
Average order values were up 2% from £2634 in February to £2693 in May (chart 3) and 13% up on May last year. Order values for medium-sized companies were up 11% from £2577 to £2867. Large companies were up 8% from £2761 to £2987. Small companies' order values were 6% down to £2481 in May from £2627Average order values were up by 7% in the Midlands and 5% in the South, but values in the North fell by 7%.
Finance
The number of firms selling finance was down slightly to 10% in May from 13% in February.The average order value of financed sales was 17% higher than non-financed sales (chart 3).
“We are located on an industrial estate, but our 20ft x 40ft company sign can be seen over a large area. The showroom attracts not only retail custom, but helps support our trade customers who bring their own clients to preview our product.“We display a variety of window designs, coloured doors and three different conservatory designs - a lean-to, a Victorian and a square-hip. We plan expansion from 1,200 square feet to 2,500 square feet by the end of the year.
“Since setting up our showroom 6 months ago our conservatory sales have grown three-fold.”
Mr Andrew Bawden, Partner
Altex (UK), Southend on Sea.
Budgets
The proportion of turnover spent on lead generation was 3.6% of sales in the year to May, compared with 4.2% in the year to February (chart 4). Just over eight out of ten firms spent 5% or less of retail sales turnover on marketing.
Leads from the Internet
The average number of sources used to produce leads is down from 6.8 in February to 6.6 in May but 85% of firms interviewed use five or more different sources compared with 70% last quarter. The three biggest sources for leads were referrals and recommendations (92% of firms), add-ons (53%) and press advertising (51%). The single biggest source is referrals and recommendations (55%), down from 71% in February followed by press advertising at 18%.The Internet continues to feature strongly as a lead source - more than four in ten firms now generate leads from the Internet. Direct mail, local press and showrooms are also sources that companies are keen to develop.
Sales Planning
Just under three in ten firms plan to sell windows and doors on the first visit, but less than one in ten firms plan to sell conservatories in this way (chart 6).
“A showroom is the best way to present windows, doors and conservatories to a customer. We have had a showroom throughout our 32-year history and more recently set up a second in a nearby garden centre. Both have a full time sales person.“Our aim is to make the experience informative and relaxing for customers by including point of sale leaflets, a comfortable quiet area for discussion and advice, and a children's play area.
“The main showroom attracts customers for whom the decision-making process is advanced, and who are therefore in buying mode. It provides fewer but better quality leads than the garden centre. We encourage those who enquire at the garden centre to visit the main showroom so that we can help them develop their ideas and needs.”
Mrs Linda Foulkes, Owner
Paramount Windows, Kidderminster
Overview
“The global economy is in a fragile state with some nations teetering on the brink of deflation,” comments Mike Rigby whose company produced this report. "In the first quarter prices in Japan were down 3.5% on a year ago while manufacturing activity in Germany fell sharply in April and unemployment climbed for the 13th successive month.“Japan and Europe's difficulties have been blamed on their failure to stoke domestic demand and Europe's exports are now under pressure from a strong euro. In contrast monetary policy in America and the UK has encouraged consumer spending and with a weak dollar and pound, prospects are good for exports.
“Share values are recovering and April was the FTSE 100s best month in five and a half years. Business investment grew 0.8% compared with the previous quarter. Inflation stayed at its highest level in almost five years largely due to high council tax bills, but is expected to fall again in the long term.
“The Bank of England has left interest rates unchanged at 3.75% for the fourth successive month in June. Low interest rates have made borrowing more affordable and total consumer debt is at a high. House price to income ratios are 20-30% above the long-term average. But with low interest rates and high employment, a crash in house prices is unlikely.
“In the UK the predicted slow down in the housing market has arrived. Halifax reported a rise of just 0.4% in April and Hometrack indicated house prices were down 0.1%. Compared with 23.6% last year this is quite a fall and Halifax now predict that the annual rate will fall to 9% by the end of the year.
“The cooling housing market and high taxes has impacted on consumer demand but consumer confidence remains up. Re-mortgaging as a percentage of mortgages is still high and a large percentage is spent on home improvement. According to the Woolwich the general public spends three times more on home improvements than on self-improvements such as clothing, nutrition and fitness. On average we spent £2700 on our homes in the last 12 months. Good news for the home improvement industry.”
Comment
Jason Currall, Marketing Manager of James Harcourt who sponsor this survey comments: ”As the housing market cools and consumers begin to reign in or delay their spending, window companies will find it harder to sell over the coming months.“After a lengthy period of plenty when we have experienced unprecedented levels of home improvement spending, how prepared are you for leaner times ahead? Fewer customers mean a more intense struggle for business. The first to feel the effects will be those who fail to invest in building their future.
“Knowing your customer and understanding their demands is key. Those who continue to buy will be more discerning and looking for quality brands. If you have a solid brand underpinned by proactive and targeted marketing, backed up by quality service and product, you have what it takes to win during good times and bad.”
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The James Harcourt Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored in conjunction with The Installer. The aim is to provide fabricators with key information on current trends and the effectiveness in practice of lead generation methods. Michael Rigby Associates is a management consultancy specialising in fact based marketing, PR, research and performance improvement for the window and home improvement markets. The survey covers a representative sample of 100 retail window fabricators. Telephone interviews took place between the 2nd and the 10th June 2003 across a balanced spread of size of firm and geographical area. Numbers employed was used as an indication of company size. The categories are small (1-19 employees), medium (20-49) and large (over 50 employees).
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