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Benchmarks help remodelers evaluate their company's performance. Some benchmarks are averages, some represent reasonable targets, still others set thresholds. The danger, however, is that a benchmark that is meaningful for most companies may not be appropriate for some.
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The REMODELING benchmark for marketing expenditures is 3% of annual revenue (August 1998), but the fact is most residential remodeling companies don't do any deliberate marketing at all. To complete the vicious cycle, the ambushed remodeler executes a half-baked emergency marketing scheme, which achieves marginal success at best, reinforcing the conviction that marketing is a waste of time and money.
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How do you determine what to spend on marketing when you need to boost sales efforts for growth?Joaquin Erazo Jr., marketing vice president at Case Design/Remodeling, Bethesda, Md., uses a formula that relies on history as an indicator of future performance. "The goal is to make sure you are not overspending or underspending," Erazo says.He recommends working through this process twice a year, once for planning, then once midyear.
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The REMODELING Benchmark for marketing expenditures is 3% of annual revenues, less for large companies, more for specialty remodelers.