Case Study No. 3; Recruiting more dealers like your best dealers

Problem:  An engineered building manufacturer realized that 52 of nearly 300 independent contractors (19%) accounted for over 80% of the manufacturer’s total annual sales revenue (i.e., Pareto’s 80/20 Rule).

Challenge:  Find and recruit more contractor-dealers like the 52 most-productive dealers.

Strategic Solution:  Identify large, successful contractors who were already representing competitive engineered building manufacturers in those areas where the client’s presence was soft.  Create and produce highly personalized direct mail packages aimed at CEOs of the targeted businesses.  Make phone calls to follow up mailings and set appointments for our client’s District Sales Managers.  Create and place direct response ads and publicity releases in those publications contractors read most often as a means for reinforcing the direct mail program.

Results:  Our client was able to recruit new top-notch contractors to join their team as authorized Builders:

  • Our program produced 224 qualified leads in the first year alone
  • 33% qualified as genuine prospects = 74
  • 25% became authorized Builders = 19
  • The first-year value per Builder (based on a Lifetime Value calculation)  = $25,500  ($25,500 x 19 new builders) = $484,500
  • With a program budget of $90,000, our client’s Return on Investment was 538%

For more information on how these results were accomplished, you are urged to continue reading:

Through a national network of independent dealer-contractors, our client sold its engineered building systems, including retrofit roofing systems, by providing engineering support, manufacturing of all steel and metal building components, and delivering the components to contractors’ construction sites.

The manufacturer challenged Hogan Direct to develop and implement a program that would identify and recruit contractors in 14 Western states with profiles similar to their top 52 Builders.

We began by developing an offer in the form of a fulfillment kit that provided a complete story about the manufacturer’s support for its Builders.

The fulfillment kit’s components included: a personalized cover letter, an overview booklet, a Q&A brochure, testimonials, and a bounce-back questionnaire.  This kit had to be mailed to prospects within 24 hours of receipt of leads.

A series of four direct response full-page ads that told actual contractor-support case studies:

Ad 1 headline “How to win on a Fast Track” pertained to the manufacturer’s engineering and manufacturing departments working closely together with a Dealer-Contractor in meeting an extremely tight construction schedule.

Ad 2 headline: “How to win a Beauty Contest on a Budget” pertained to the manufacturer designing buildings that allowed contractors to meet their customers’ budgets while providing attractive and functional buildings.

Ad 3 headline: “How to Win your place in the Sun” pertained to the manufacturer’s buildings being designed and built so Builders can provide customers with functional buildings that are aesthetically appealing.

Ad 4 headline: “How to Choose the Right Winning Team” pertained to the manufacturer providing total support for its Builders.

Contractors’ level of awareness of the manufacturer’s support was further increased with these well-placed feature articles: “Considerations in selecting the right contractor” in Systems Building Review and “Pre-engineered building systems help builders race to the wire at Eureka Downs” in Rural Builder

Lifetime Value — the net present value of a customer over time, discounted back to present day dollars – was used as the ultimate measure of the program’s success:

The average Lifetime Value of a good Builder at the time the program was developed was determined to be $156,623 based on 5-year 60% rate of retention.

Program-3-chart

Breakeven for the program was calculated as follows:

  • Cost per direct mail lead generation = $2.15
  • Initial lead cost @ 2.5% response  = $86
  • Add fulfillment kit cost @ $28.47 ea. = $114
  • Add telemarketing qualification @ $20.00 = $134
  • Cost per qualified lead @ 33% rate = $407
  • Cost for two personal visits @ $200 each = $807
  • Cost per new Builder @ 25% closure rate = $3,230

Based on the measured results of the program, it was judged as “Best in Show” for the Kansas City Direct Marketing Association’s annual AMBIT competition.  Moreover, the program was presented at several regional AMA and DMA association luncheon and dinner meetings.

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