Cover Story: Not Your Average Home Expansion1 Feb, 2017 By: Thomas Haire Response
Marshal Downey says that online home improvement leader Build.com is successfully expanding its performance-based marketing efforts into the offline space.
“Nobody wakes up, out of the blue, and decides to call us for home improvement,” says Marshal Downey, director of direct marketing for Chico, Calif.-based online home improvement retailer Build.com. “Everybody is exposed to marketing in some way. Our role is to keep visitors coming to the site and to keep our sales center’s phone ringing. It’s about getting people in contact with our team, and letting our team handle their needs.”
Downey joined the team directly out of California State University, Chico, just a year after the now-17-year-old business took on the Build.com name in 2010. Founded by Christian Friedland (who remains president to this day) as FaucetDirect.com in 2000, the business grew steadily during the first decade of the 21st century, adding multiple brands and sites until the decision was made to bring everything under one umbrella brand. By 2011, Build.com had become the second-largest online home improvement retailer.
As Downey’s role in the company changed and grew during the past five years, he’s seen the focus of Build.com’s marketing change and mature, capitalizing on its branding efforts through outstanding customer service after its performance-based customer acquisition efforts bring those customers to the store. Though Downey focuses heavily on the company’s ongoing email and print mail efforts, Build.com has also used other media, including TV campaigns since 2014, to drive prospective customers to the site.
But, no matter the media chosen, Downey says that all of Build.com’s marketing efforts are performance-driven.
“When I hear the word ‘campaign,’ I stumble a bit,” Downey says. “Our marketing efforts are not campaign driven. They’re ongoing with every creative. We build a creative, put budget to it, and if we hit the performance objectives, we don’t turn it off. Our marketing budget is a function of the revenue we deliver. How much revenue can we drive at the right ROI?”
Growing Up Together
Downey — who holds a trio of degrees from Chico State — has spent his entire professional career with Build.com “Build.com has been my career. I was hired as an intern a week after graduating from college, and I’ve been here since,” he says.
He’s seen a bit of everything inside the company, however. “I’ve bounced around — every year or year-and-a-half — to new positions. It’s been great to get ushered through, creating a broad experience in different business units. Though Build is all I know, my role as director of direct marketing is my fifth position here. I headed up A/B testing, worked in strategic partnerships, became a product manager, and then was director of business development, which was a true catchall for many things.”
Today, his role is more defined. “I’m responsible for all email marketing and all print mail marketing,” Downey says. “I do wear some other hats. In the past year, I’ve taken on leadership for trade show marketing, including booth logistics. I also have a role in new vendor evaluations.”
Creating flexibility and an array of skills in its staff seems to be nothing new for Build.com, a company that’s had to be nimble from the start. It now boasts more than 400 total employees — “About half of our total staff is made up of our product experts in the sales center,” Downey says — began as a college class project by Friedland, with the financial support of his friend and classmate David Boctor.
That project became FaucetDirect.com, one of the first online sources for plumbing projects, in 2000. Three years later, the company added Handlesets.com, and then launched LightingDirect.com in 2004. One year after that, ImprovementDirect.com launched to combine all products of the niche stores in a single site.
The 2010 rebrand as Build.com was a major steppingstone for the company. Not only did it reflect the diverse breadth of product the site was offering, but it allowed the company to enter the competitive set of major brick-and-mortar retailers like Lowe’s and Home Depot — within a year after the rebrand, Build.com had become the second-largest online home improvement retailer.
Today, not only does the company operate Build.com, it continues to run a number of niche shopping sites — including those three sites mentioned above and others like VentingDirect.com, PullsDirect.com, FloorMall.com, and VentingPipe.com. It offers more than 1 million products across a vendor base of more than 350 manufacturers. And beyond its powerful customer service sales center, it also connects with customers on Facebook, Pinterest, Twitter, and Houzz.com.
Building a Complete Arsenal
It’s a suddenly vast online shopping empire to which Downey must drive consumers. How does Build.com’s marketing work to do that while also maximizing brand recognition and respect?
“We view it as two-pronged approach,” Downey says. “Customer acquisition is very performance-driven. A lot of people discover us because they need one thing, and it’s out of stock at a showroom. That’s where the second prong comes in: great customer service. Our Net Promoter Scores (NPS) are off the chart. When someone makes that first purchase, it’s a transactional-based experience. But our goal is to create such a good experience with our sales center, that we can sink our teeth in with more marketing messages and they keep coming back.”
He continues, “Our branding shines as we work with those customers more. It’s tough to market customer service, though. You don’t know it until you experience it yourself. So, our performance-based marketing drives customers. And our customer service drives the brand.”
Downey says there are both challenges and advantages to being an online-only retailer that is competing with the big boys of home improvement.
“We were born online. It’s all we know,” he says. “When we compare ourselves to companies with brick-and-mortar locations, we are fortunate not to face the problems they do. We’re more sophisticated with our online marketing and our site offerings.”
Who are those key competitors, both online and off? “Home Depot, Lowe’s, Amazon, Wayfair, and others — a rotating, kind of amorphous group of local and regional showrooms around the country,” Downey says. “We position ourselves as having selection and variety. Our customer tends to have fairly high discretionary income and is looking to express herself through her home. This isn’t necessarily the case at a Lowe’s or Home Depot store. Often, the showroom experience is catered to the contractor, not the consumer. Consumers are often forced to go online.”
Downey says that Build.com has expanded its email frequency in recent years and that scale has helped. “Two years ago this time, we were sending a tenth of the number of emails we send now,” he says. “We are always working at segmentation. It takes the same amount of time to put together an email for one person as it does for a million people. And we tweak the message and the delivery based on subscriber activity — those who open get more content, while non-openers receive less.”
Downey also says the Build.com team has different ways of measuring the success of its online campaigns. “When we’re measuring email trends, we look at total sends, revenue by total recipient, as well as revenue divided by total send,” he says.
Downey says that both Home Depot and Lowe’s sites and online outreach programs are competitive, while Wayfair is “more home décor, but is moving into home improvement.” In an intriguing twist, though, Downey says that as the big box stores are moving more heavily into online marketing, Build.com has moved offline to drive more reach.
“While our online marketing is still working well, as some of our initiatives plateaued, we began exploring offline outreach,” he says. “Print mail is not something you’d expect us to do. You know the story: ‘Print mail’s dead.’ But we’ve found that it works well for our analytical mindset. We mail, and we track purchase from those addresses in a given amount of time. In the end, it’s similar to online — just a different medium.”
The company is doing “four quarterly catalog drops — one for each season,” Downey says.
“It’s a learning experience for us,” he adds. “When we were online only, we used to be able to launch an A/B test in the morning and see results at the end of the day. Instead, catalog is a many-month run. The biggest challenge there is to get the organization to understand these things take more time to measure and assess.”
In the end, though, the goal of all of Build.com’s marketing efforts — including its TV campaigns — is to get consumers into the hands of the company’s sales center customer service experts.
“Our sales center is a massive part of our business — it’s half of our company’s staff,” Downey says. “Consumers often are faced with different contractors, tight deadlines, different manufacturers. They want to make sure everything works together. If you look at our competitors: Lowe’s routes your call to the nearest store; Home Depot sends you to a sales center, but their customer service ratings aren’t great; and you can’t call Amazon. Our sales center is empowered to take care of every customer. Whatever they need to do to make it right for the customer, that’s what they do.”
Downey contends Build.com’s sales center has become a marketing tool. “We’re not shy about including references to the sales center in our marketing,” he says. “In our catalogs, for instance, we include employee favorites and buying guides — think, ‘How to choose a sink.’ It’s a real opportunity to leverage that expertise without using that worn-out customer service image of a smiling person in a headset.”
Never Stop Learning — or Testing
Build.com’s transition into the print marketing space has been eased by one of its most important vendors, according to Downey.
“MSC, which was recently acquired by Valid USA, is our mail house and service bureau,” he says. “We work with a lot of vendors, and I must say that we’ve gotten more value from them than any of our others. They’re old-school print and catalog people, and it’s been very valuable to learn from their wisdom. Build.com is a very young culture. There are a lot of us coming directly out of Chico State. We’re hungry and ambitious — and it’s an atmosphere I thrive in. But in print mail, with a six-to-nine-month learning cycle, MSC has been unbelievably helpful in setting expectations. They help us prioritize at the right pace and steer the ship in the right direction.”
While MSC has provided strong guidance for Downey and his team, those are not the only lessons the Build.com direct marketing team has learned during the past five years. Downey is circumspect about how each marketing initiative — from email to print to TV — allows him to grow his base of knowledge and improve on Build.com’s marketing efforts.
“I spent some time running our TV media buying,” he recalls. “TV is a different choice for an online-only, performance-based marketing organization — it was interesting to seek out the different ways we could measure its success. When a commercial airs, there is, of course, an immediate spike in site visits — more people will come than any other one-minute period any other time. But that’s just a starting point.”
How did Build.com try to measure more deeply? “We could layer in average traffic for a one-hour period before and after the airing, assume what level of visitors came because of the commercial, and arrive at a cost-per-visitor metric,” Downey says. “That helped us learning what networks worked and what networks didn’t.”
There were, of course, surprises. “One network we thought was going to be a home run because of its alignment with our offering just wasn’t,” he says. “It was a big moment. Overall, our cost-per-impression for TV was great, but our analytics struggled with understanding the value brand awareness. Everyone wants that magic formula, but it takes time to learn.”
One belief Downey has acquired through his experience with all of Build.com’s different marketing efforts is that knowing what success looks like before you start is crucial. It’s something that he’s using today — and something that will benefit Build.com in the years to come.
“Having a performance plan with a pro forma or outcome objectives before starting is crucial,” Downey says. “We used to have a ‘test-everything’ mindset. For a time, we adopted a ‘We’ll know success when we see it’ mindset — and it didn’t work. Objectives allow you to know what you’re measuring. It doesn’t have to be complicated, but if your objectives are clear, at the end of the process, you’re debating the model and measurement results — not some amorphous idea of whether it worked.” ■