December 7th, 2010
Quit Worrying About the Next Tax Credit
Everyone in the industry is still wondering, “What will window sales will be like next year without the tax credit?” and, “Will Congress come to the rescue with a new program that will keep us chugging along?”
In response to this, I say, “What ever happened to marketing?”
Do we really need another government program to help us sell windows? The last time I made a major purchase, it was a car, and I sure didn’t buy one because of Cash for Clunkers (CFC) program. In fact, with close to 200,000 miles on my odometer at the time this stimulus program was introduced, many automobile dealers would have thought I was a sure bet to cash in on this program, but I passed, Why? Because at the time, I didn’t see anything exciting going on in the auto industry, and in fact I didn’t even know which auto manufacturers would be around in the year ahead. I think the general consensus about CFC was that the whole program was a fiasco. It was only a beep or two on the auto industry’s heart monitor and was a red tape nightmare for auto dealers.
Despite the failure of the CFC Program, the automobile industry continues to gain steam! Check it out. There were substantial gains in 13 out of 16 categories. Back in July of 2009, when CFC was being initiated, who would have guessed that 2010 sales of Luxury SUVs would gain nearly 28 percent over 2009 levels! And when you open the link, be sure to note that two of the three declining categories were small cars and small SUVs, which were two categories that the CFC program was supposed to stimulate!
So how did the automobile industry do it? Marketing! Yes, marketing is what did it for the automobile industry, and it can also be the engine that keeps the window industry racing toward recovery as well. The automobile manufacturers designed more fuel efficient vehicles without causing a sacrifice in luxury and comfort. New technology excites consumers and this is why we are buying new cars, trucks and SUVs. New hybrid models were introduced, smaller yet still roomy SUVs and Crossovers were rolled out, and new sporty yet fuel efficient midsized vehicles were launched to get consumers excited enough to visit dealers’ showrooms again!
So, as far as the window industry is concerned, let’s not worry so much about the next stimulus program. Instead, let’s continue to work on advancing the state of the art in new window technology while at the same time working more cost effectively at informing consumers about it! Yes, that’s right … advertising and promotion!
One can invent the best window technology out there, but if you don’t invest in a cost effective marketing program to communicate that message to the consumer, then nothing will result from it. Indeed, Graham Parker noted something awry when he researched websites of window companies listed as suppliers to the R5 Volume Purchase Program. Many of them had no mention of R5 Products on their websites! See DWM’s recent article on this.
Over the years, I have seen two opposing philosophies as it relates to spending on advertising and promotion. I have seen companies that budget this category based on a percentage of sales. When sales decline, the marketing staff is asked to cut the budget accordingly in an effort to preserve profit as a percentage of sales. Usually what happens in this instance is that sales numbers continue to decline. Then there is the opposing viewpoint, that when sales decline, the marketing department is given more dollars to spend but is challenged to figure out how to reach a larger audience per dollar spent. These have been the most successful companies that I know.
Everywhere I go, I am seeing new and innovative window designs being rolled out incorporating new frame designs, state of the art glass coatings, triple pane and even “quadrapane” IG construction, and exotic gas blends, not to mention R5 dual-pane windows.
The challenge before us is to now take these technologies and combine them with the power of marketing to create our own window industry stimulus … one that is truly sustainable!