Lead flow down across the country

Some highlights this quarter:

• Lead flow down in the three months September to November compared with the previous quarter.
• Lead flow down this quarter compared to the same quarter last year
• Orders down in South and North, but significantly up in the Midlands

Jason Currall, Marketing Manager, James Harcourt

Lead Flow

Twenty percent of fabricators reported increased leads in the three months September to November compared with the previous three. Thirty eight percent saw a decrease and 42% reported no change.

The difference between the number of companies reporting an increase over those reporting a decrease is the net balance, expressed as a percentage. A positive net balance indicates growth, zero implies little has changed.

On this basis, the number of leads decreased seasonally, with a net -18% of firms reporting fewer leads in the quarter compared to the previous three months (chart 1). More medium sized companies (-29%) and large firms (-24%) reported a fall than small companies (-11%). Fabricators in the South (-21%) and North (-20%) were affected more than the Midlands (-9%).

As with quarter-on-quarter lead generation, lead flow worsened compared with the same period last year with a net -18% of fabricators reporting a drop (chart 2). Notably more medium (-36%) and large firms (-35%) reported a fall than small companies (-4%). A net -36% of firms in the South and -20% in the North saw a downturn in the number of leads. In contrast 18% of companies in the Midlands improved lead generation over the same period.

Number of leads

The average number of leads a month was up 23% from 57 per firm in August to 70 in November (chart 3), and up 6% on November 2003.

Retail Orders

A net -4% of fabricators reported a drop in orders in the last three months compared with the previous three months (chart 4). Large firms (-30%) and medium sized companies (-11%) reported decreases but small companies (7%) saw an increase in orders. Firms in the South (-17%) and North (-14%) recorded fewer orders, but companies in the Midlands (36%) saw an increase.

Overall, fabricators reported little change in the number of orders over the last three months compared with the same quarter last year (chart 4). Medium sized (-22%) and large firms (-12%) saw the level of orders fall, compared with an increase across small companies (15%). Fabricators in the Midlands (41%) did significantly better than the North (-8%) or the South (-14%).

Conversion ratios

SIZE	Average leads per firm in November	Average orders per firm in November	Calculated average conversion ratio in November*
Small	44	22	1:2(50%)
Medium	59	33	1:1.79 (56%)
Large	175	82	1:2.13 (47%)

* Orders do not necessarily relate to November leads

Average order values

Average order values were up 19% from £2,596 in August to £3,090 in November (chart 6), and up 24.5% on November 2003 (£2,483). Average order values were highest in the South (£3,386), and Midlands (£3,227) compared to the North (£2,660).

Finance

The percentage of firms selling finance decreased from 11% in August to 9% in November.

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"Following super complaints from the National Association of CABS and the OFT the DTI has launched a consultation programme regarding the introduction of potential legislation on doorstep selling to deal with the subject of rogue traders. The possibilities suggested range from an outright ban to the extension of cooling off periods for unsolicited calls.

"The definition of doorstep selling used by the DTI is extremely wide and some of the potential legislation would outlaw many of the traditional and legitimate marketing methods, as well as having a devastating effect on the legitimate part of the industry and possibly leave the rogue element untouched. Many professional bodies, including the GGF and business, have responded to the DTI's consultation paper with constructive comments as to how practical changes in legislation can be implemented and how to eliminate the undesirable rogue trader in the home improvement market.

"It is critical that businesses keep abreast of proposed and actual changes in legislation to ensure that their marketing methods remain legal and are not unfairly restricted. It is also sensible for businesses to ensure that their marketing is not over dependent on one particular method which through circumstances outside of their control could be removed."

Mr Nigel Richmond, President of the GGF
Chief Operating Officer
Bowater Home Improvements, Norwich

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Budgets

Companies reduced their marketing budgets to an average 4.53% of turnover spent on lead generation in the twelve months to November (chart 7).

Lead Sources

The average number of sources used to produce leads increased marginally to 5.48 in November compared to 4.9 in August. Fifty eight percent of companies use five or more different sources to produce leads. The three most common sources of leads were referrals & recommendations used by 97%, add ons (74%) and Press advertising (39%). Yellow Pages (34%) and sign writing on vans (15%) also contributed.

Sales Planning

Forty six percent of companies plan to sell windows and doors on the first visit. Twenty eight percent say they don't sell in a planned way (chart 9).

Overview

"The dollar is plummeting against the euro and the pound," says Mike Rigby, whose company produced this report, "making European exports more expensive. Meanwhile the Chinese economy is in overdrive and taking a significant and growing share of world trade.

"Back home, the cosy consensus of opinion has been smashed and there is genuine uncertainty in the housing market. Virtually all accept that the price boom is over but the jury's still out whether it will be a soft or hard landing.

"Gordon Brown, the chancellor, says the economy is great. There is no Black Hole; he hasn't broken his 'golden rule'; the economy will grow fast in 2005 and there will be no shortfall in his finances to fund with higher taxes. So that's all right then. Except its election year in 2005 and hardly anyone believes him. For sure there's not likely to be much change before May. So we'll have to suspend belief until June. And keep our fingers crossed."

Comment

"The biggest issue in lead generation is the proposed changes to Doorstep Selling legislation," says Jason Currall, Marketing Manager of James Harcourt who sponsor this survey. "They will affect many people in the industry.

"The need for more sophisticated lead generation is paramount if companies are to survive. Today's consumer, according to the response to the Trading Standards Institute survey, doesn't want to be disturbed by doorstep sellers. The industry gets the blame for the actions of a few rogue traders and their unscrupulous business practices. But however unfair this is the days of door canvassing are numbered, or at best heavily circumscribed.

"But James Harcourt has shown that there are many ways of generating leads without upsetting potential customers. Crude doorstep selling does more harm than good. We use a variety of lead generation methods, including public relations, direct mail, advertising and the internet. Used professionally they are more effective than the crude hard sell."

The James Harcourt Report, a quarterly trends survey, is produced by Michael Rigby Associates, and sponsored in conjunction with WFI. The aim is to provide fabricators with key information on current trends and the effectiveness in practice of lead generation methods.

The survey covers a representative sample of 100 retail window fabricators. Telephone interviews took place between the 22 - 26 November 2004 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).

© Copyright Michael Rigby Associates 2004
Full report available free: call Lucia Di Stazio on 01453 521 621