Four years ago, Columbia, Mo., contractor Dan Kliethermes increased his marketing spending from 1% to 2% of the company's sales volume to 4% to 5%. This helped increase sales volume from $600,000 to almost $1.5 million, with the company doing more and larger jobs. Soon after increasing his marketing budget Kliethermes noticed that his clients were asking his painting subcontractor to return for additional work. “The painter was getting more jobs as a direct result of our marketing efforts,” he says. So he asked his painters to pay a referral fee to Kliethermes Homes & Remodeling to help cover some of the company's marketing costs.
Since then the painting contractor adds about 20% to the jobs he does for Kliethermes clients. Clients don't balk at the charge because if they asked the remodeling firm directly for painters, they would pay more. “The homeowner is getting a better price than if they ran it through us because our margin is higher than the painter's,” Kliethermes says.