When Melani Bros. lost a critical source of telemarketing leads, it also lost $2.4 million in sales. But it recouped the lost revenue and then some by embracing direct mail.
It started three years ago with a 160,000-piece test. And next year, the Yorktown, VA-based home improvement construction firm will mail 1.4 million pieces.
The loss of leads was a classic case of a few bad apples spoiling the bushel. Melani Bros. was one of several firms capturing leads for sunroom construction projects via kiosks at Lowe's retail outlets. But in 2002, after the do-it-yourself retail chain received complaints about a handful of the other contractors, Lowe's eliminated the in-store referral program.
That decision was a major blow to Melani Bros., which generated 92% of its telemarketing leads through the program. Without this source of business, Melani Bros.' annual revenue fell from $12 million to $9.6 million, and it had to lay off workers.
Initially, the company tried to make up the leads through predictive dialing programs, which contacted homeowners in areas most likely to use its services, as determined by home value and ZIP code. But when the federal do-not-call list went into effect in June 2003 this channel also dried up for the firm, as many of its previous prospects registered their phone numbers.
At this point Melani Bros. (two brothers, Ray and Ron, run the business) brought in Rick Menendez as vice president for sales and marketing. Menendez, in turn, retained Jerome Group, a St. Louis direct mail firm.
Menendez had his work cut out for him: The Melanis didn't exactly embrace direct mail at first. They'd tried it a decade before, and it didn't work.
“They used companies that didn't understand the home improvement business,” Menendez said. “These were companies that might be good at getting pizza ads out, but not at creating leads for the home-improvement industry.”
Menendez used a direct mail program he'd created while working at another remodeling company as a template. The mailer resembles an invitation, and contains a four-color folded centerpiece, a reply card/sweepstakes entry form, and a postage-paid BRE. The envelope is close-faced, with the recipient's name printed in an elegant script.
The centerpiece features three photos of possible home improvements, a photo of Ray and Ron Melani and their families, and the words “The Melani Bros. Family Invites You to Win….” Inside, recipients are offered their choice of several projects — a new sunroom, thermal windows, a bay or garden window, and a deck with a spa — as potential prizes.
Adding the family touch was one of the factors that boosted response rates. When Melani Bros. tested a sweepstakes package without the personal element a decade earlier, it pulled an 0.8% response.
The first wave of mailings using the new package went out in late 2003 — 10,000 a week for 16 weeks, at a cost of $70,000. Responses ran at nearly 2.2%, and the 3,450 returned entry forms yielded 500 appointments with prospects wanting to hear more about potential home improvements.
That 2.2% response rate has held steady since the first test. Melani Bros. quadrupled its mail quantity to 610,000 pieces in 2004, and before this year ends the company expects to send out 1 million pieces. Menendez said 30% of its $19 million in projected sales will be generated through these efforts.
While it may not be the mailing's most attractive element, the reply card is the most essential. In addition to name and address, it asks for a telephone number and a signature. Contest rules give Melani Bros. permission to contact the entrant by phone, regardless of whether the number given is on a do-not-call list. This allows sales representatives a chance to ascertain how seriously respondents are considering improvements, and — if warranted — set up demonstrations.
The reply card also has a box stating, “Check here for a free no-obligation estimate.” Around 11% of all respondents tick it, and these are called first. Oddly enough, they don't convert to sales at any higher rate than those returned without the check mark.
“A lot of people check it because they think they have a better chance of winning,” acknowledged Menendez. (They're wrong.) “But there's value to keeping it on there.”
And what is that?
“The fact that they want a free estimate indicates they're a little more in the market than someone saying they want one of those things down the road,” said Jerome Group's Mike Wegmann. “They have two toes in the water instead of one.”
The program has been so successful that the Melani brothers and Menendez created Sudden Impact, a jointly owned concern, to offer Jerome Group's suite of marketing programs to other home improvement firms.
In 2006, Melani Bros. will send out another 1 million sweepstakes pieces. But it also will take advantage of Jerome Group's variable digital printing (VDP) capabilities in half a dozen different test packages — some 300,000 to 400,000 additional pieces in all.
The latter efforts will feature a harder-sell approach, one that encourages prospects to contact Melani Bros. if they're interested in renovations, rather than offering a sweepstakes. Using the VDP capabilities, Menendez also hopes to target prospects by region.
Some of these mailings will incorporate photos of pre-renovation projects near where prospects live, inviting recipients to drive by and watch the work in progress. Others will include maps of completed projects near prospects' homes. And still others will use computer imagery to show before-and-after pictures of how the renovations might look.
Finally, 2006 will see Jerome Group's customer loyalty expertise come into play. Menendez plans to send past customers a newsletter every six months.
