Tuesday, January 29, 2013 | Edited by Daniel Moores
||Remodeling Rebounding Along with the Economy
If you've put off redoing that kitchen or adding a deck while waiting for the economy to perk up, welcome to the club.
Like the rest of the housing market, home improvements and remodeling plunged during the recession as consumers hunkered down.
But now that economic conditions are improving, the forecast for home fix-ups is looking up, too.
"Future market indicators, which have been lagging a little bit, have jumped up," said Paul Emrath, a research vice president with the National Association of Home Builders. "Calls for bids and appointments for remodeling proposals are increasing significantly.
"They are basically as high as they have ever been," Emrath told builders meeting for the industry's annual exposition last week in Las Vegas.
The outlook for home remodeling in the year ahead is the best it's been in almost a decade, based on the most recent remodeling industry surveys by the homebuilders' association.
Home improvement expenditures are forecast to rise by almost a third from the worst of the market in early 2011 to late this year.
Remodeling fell by about 30 percent during the recession.
"That's not as big as the decline in housing starts, which was closer to 80 percent," Emrath said. "Our forecast is for slow and steady increases going forward.
"There is still pent-up activity waiting to be released," he said. "We had a lot of projects put off as we went through the decline."
Nationwide, the most popular home remodeling jobs, based on total expenditures, include kitchen remodels, bathroom upgrades and bedroom add-ons, according to a new study released by the Joint Center for Housing Studies of Harvard University.
"There is pent-up demand and stuff that has been put off," said Harvard housing researcher Kermit Baker.
Baker said Americans have spent big dollars repairing and remodeling formerly foreclosed and distressed homes, about $10 billion in 2011.
Researchers are also predicting a surge in home retrofitting to improve energy efficiency. "We still think there is a lot of opportunity for greening up the housing stock," Baker said.
Houston remodeler Bill Shaw said many homeowners get sticker shock when they finally decide to remodel.
"They still want new kitchens; they still want new baths," said Shaw, who's been in business for 30 years. "All the ingredients for growth are there, until they find out how much it is going to cost."
Shaw said during the recession when remodeling business lagged, his industry saw new competition from traditional builders.
"We've seen a tremendous increase in custom builders getting into remodeling," he said.
And unlike in previous downturns, many of these builders have decided to stay in the home improvement business even as home starts increase, Shaw said. Home value declines in many markets during the last few years also made it tougher for remodelers. Lenders and appraisers wouldn't OK expensive home improvements in neighborhoods where home prices fell sharply.
"As the equity and housing values increase, I think we will get back to more larger projects," said Bob Hanbury, a remodeler from New England.
He said homeowners are more frugal when it comes to redos. "It doesn't have as many of the bells and whistles; people are picking and choosing what they want," Hanbury said. “You can't provide them all the great features as in the past because their budget isn't big enough."
Where the Money Goes
Top U.S. remodeling, repair and upgrade projects, ranked by annual expenditures, in billions:
Roofing -- $21.62
Heating, air conditioning -- $16.25
Flooring -- $15.38
Major kitchen remodel -- $13.96
Windows and doors -- $11.83
Major bath remodel -- $9.18
Siding -- $5.06
Driveways and walkways -- $4.79
Patios and decks -- $4.65
Bedroom addition -- $4.56
SOURCE: Joint Center for Housing Studies of Harvard University
(Source: The Dallas Morning News, 01/24/13)
||Cost-Cutting Banks Seek Smartphone Customers
Strapped for new revenue and pressed into waves of cost cuts, the country's largest banks are trying to keep the customers they have, woo the ones they don't and do it all for less.
In recent months, they have increasingly found one solution to all of those problems: the smartphones that can let customers deposit checks, pay bills and check their balances without ever stepping into a bank branch.
"It's critically important. We have to be there," says Tracey Weber, Citigroup's managing director of consumer Internet and mobile banking for North America. "We find that once customers try mobile banking, it's a very delightful, high-customer-satisfaction experience."
It's also a cheap one. Bank of America Chief Executive Brian Moynihan, who is trying to cut $8 billion in costs, has promised that mobile and online technology will help the bank grow business while shrinking everything else. The price tag for that technology has been a relatively modest $500 million "over the past few years," Moynihan said in December.
Better mobile technology is also shaping the strategy of new Citigroup CEO Michael Corbat, who is already closing down 44 U.S. branches as part of sweeping cost cuts. Now executives are debating even more drastic shrinkage of Citigroup's branch network, according to a person familiar with the discussions, who spoke on condition of anonymity.
Citigroup spokeswoman Catherine Pulley declined to comment but pointed out that the bank has also opened five new branches recently.
Banks can potentially reach almost half of their customers with mobile banking: 45% of Americans own a smartphone like an iPhone or an Android, and 25% own a tablet like a Kindle or an iPad, according to Pew Research Centers. These potential customers tend to be young, and less wedded to sprawling bank branches with expensive tellers and empty lobbies.
PNC Financial Services CEO James Rohr made the tradeoff explicit in September, telling investors that the bank would be able to lay off 40 to 45 tellers since it was booking 7,000 mobile transactions daily.
Banks are also trying to win the intensifying war for desirable customers, as the economy sluggishly recovers and appetite for new loans remains small. The biggest banks, including JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, have all spent years developing mobile banking applications, in the hopes that their investment in that technology will eventually pay off.
"We are seeing a lot of customers starting to use mobile as their primary channel, and I think we'll see that trend increasing," says Ravi Acharya, senior vice president of digital services for JPMorgan's consumer bank. "The power of digital is that for the first time, we're able to improve the customer experience while being able to potentially reduce the cost."
JPMorgan was one of the first big banks to unveil many mobile features, including the popular remote-deposit technology that allows customers to deposit checks by snapping digital photos of them. While some of these features still have the occasional glitch, they are increasingly popular with bank customers and available now at several banks, including smaller, regional companies.
Mobile banking boosts customer satisfaction, which translates into longer relationships and more sales to existing customers, Acharya says.
"Mobile customers are more engaged and tend to stay longer," he says. "People underestimate the value of keeping the customer...but customers who stay longer tend to be more profitable, they're more engaged, they tend to buy more services from us."
These are customers whom the banks want to keep. People who use mobile banking "tend to be younger and richer than the typical consumer," and about 45% of them have at least $50,000 in investible assets with their banks, according to a November report from Javelin Strategy & Research, a unit of Greenwich Associates. The report also found that 43% of people using mobile banking earn at least $75,000 per year.
Mobile technology is increasingly popular with banks' existing customers. Wells Fargo's Armin Ajami calls the bank's offerings "the fastest-growing channel in the history of the bank" and says that mobile banking usage has grown "twice as fast as online banking in the same time period, in the first five years" of its existence. The San Francisco bank saw a growth rate of about 30% in 2012, he adds.
"This opens up new conversations with the customer," says Ajami, a senior product manager for Wells Fargo's mobile banking. "Retaining customers is really key, and as you move forward, you're deepening the relationship. Then you can have the conversation" when customers want more financial products.
Wells Fargo now has more than 9 million customers using mobile banking, while Bank of America and JPMorgan have about 12 million each. Citigroup would not provide specific customer numbers, but Weber called mobile "our fastest-growing channel" and said that mobile banking usage grew 81% year over year in 2012.
Mobile banking is available beyond the four largest banks; many industry members named U.S. Bancorp and USAA as two of the more pioneering banks in the mobile-banking industry, and regionals including PNC and KeyCorp have also emphasized mobile banking in the past year.
But Bank of America has been the loudest convert to mobile in recent months, as Moynihan tries to convince investors that the bank has a future beyond retrenchment. This month he tied the bank's 31% year-over-year growth in mobile banking customers to its branch closures, telling investors that the bank has "optimized" its branch network as "online and mobile banking numbers continue to increase."
There are signs that this strategy is working. Bank of America was the most successful at wooing customers away from other banks last year, followed by JPMorgan, Wells Fargo and U.S. Bancorp, according to the consulting firm AlixPartners. Its June survey also found high adoption of mobile banking by customers who switched to B of A.
The past two years have been "a turning point" in the bank's multiyear efforts to build up mobile, says David Godsman, head of online and mobile solutions at Bank of America.
"We believe that mobile's growth will eventually transcend online banking's use in the not-so-distant future," he says.
He adds that customers who use mobile "interact with us more frequently, viewing transactions, banking on the fly. Our customers like banking with us more, and it drives increased customer satisfaction."
JPMorgan's Acharya says that beyond increased customer retention and greater cross-sales, "as we move forward, we're going to start to see (customer) acquisition increase."
Customers are not yet leaving banks because they lack mobile features -- but when they decided to switch banks for other reasons, mobile banking is a must-have at their new financial homes, executives and consultants say.
"The customers who are changing banks, they're looking for what could really differentiate the next bank...and mobile can really make a difference," says Bob Hedges, a managing director at AlixPartners. "It's less that people are saying, 'I'm going to change banks to get mobile,' but when they change banks for the traditional reasons, what's attracting them in their next decision is the mobile capabilities of the banks out there."
Analyst Mary Monahan of Javelin agrees: "Mobile services are important to the overall perception of a bank. It's becoming an increasingly important criteria. It helps you create a distinct identity," she says.
As a result, advertising what mobile features banks offer is almost more important than developing them in the first place. Banks including Capital One have increasingly emphasized mobile in their marketing.
"It's clear there's an acquiring war. There's a success formula. It's about setting the dials to really promote mobile as something you're doing," Hedges says. "The advertising investment is probably more than the technology investment."
None of the bankers interviewed would discuss specific spending, but they agreed that marketing mobile banking is crucial. Citigroup has invested in advertising its mobile features, Weber says, because "we think (they are) really important in how customers decide who they bank with and how they bank."
JPMorgan's Acharya agreed that "marketing for us is super important." But execution also matters: "One of the big things is not just what we tell customers, but what customers tell their friends," he says.
(Source: American Banker, 01/25/13)
||Consumers in the Mood to Celebrate Super Bowl
The biggest game of the NFL season is fast approaching and the teams facing off, the Baltimore Ravens and the San Francisco 49ers, are not the only ones prepping for Super Bowl XLVII in New Orleans.
According to a survey by the Retail Advertising and Marketing Association -- a division of the National Retail Federation (NRF) -- conducted by BIGinsight, more than 179.1 million people will watch the game on Sunday, Feb. 3. The expected viewership is the most in the survey's nine-year history and up from an estimated 172.5 million last year.
More importantly for retailers, the average game watcher will spend $68.54 on new televisions for viewing parties, snacks, décor and athletic apparel, up from $63.87 last year. Total Super Bowl spending is expected to reach nearly $12.3 billion.
"Gathering with friends and family for the Super Bowl is an American tradition, and this year it seems consumers are in the mood to celebrate, which is good news for retailers who typically see slower online and foot traffic during these months," said NRF Senior Vice President Bill Thorne. "As one of the biggest weekends of the year for sports fanatics, we expect to see a variety of promotions in the coming days surrounding appetizers and drinks at restaurants, football décor, athletic apparel and of course, new TVs."
The survey found most people intend to buy food and beverages to celebrate the game: nearly three-quarters (74.0%) of those watching the game will buy wings, pizza, chips, soda and more for themselves and/or their guests.
Additionally, 3.9 million households will buy new furniture items, such as entertainment centers, chairs and couches, and 7.5 million will buy decorations. Given the popularity of the teams this year, a whopping 17.0 million fans will buy team apparel or accessories to support their team, up from 14.8 million last year.
Retailers planning promotions on televisions are in for a treat. According to the survey, of those planning to watch the Super Bowl, more than 7.5 million households (7.1%) will buy a new television, compared to 5.1 million last year. Young adults (ages 18-24) are the most likely to purchase new televisions; of those planning to watch the game, 15.6 percent will watch it on a new high-definition TV, the highest of any age group.
When it comes to soirees, there will be no shortage of party-goers this year: the survey found 39.4 million people (16.6%) will throw a party, and another 59.9 million (25.2%) will attend a party. More than 10.1 million (4.3%) people will watch the game at a restaurant or a bar.
"With planned viewership rising this year, it appears that an increasing number of people are finding Super Bowl Sunday the perfect excuse to get together, show off that new TV, try a new recipe, or simply shake off the winter blues for a night," said BIGinsight Consumer Insights Director Pam Goodfellow. "Ever wary of their budgets, consumers will be on the lookout for those hard-to-beat deals on TVs, food, and other Super Bowl-related items that they've come to expect from retailers as they plan their gatherings this year."
Consumers of all ages enjoy the Super Bowl for different reasons, and the commercials are increasingly becoming a primary form of entertainment. More than three-quarters of viewers (76.6%) say they see the commercials as entertainment, up from 73.0 percent last year. Overall, when asked what they thought was the most important part of the Super Bowl, 45.3 percent of viewers said it is the game, and more than one-quarter (26.2%) agreed it is the commercials. Additionally, 18.8 percent say they like getting together with friends and 9.6 percent say the Halftime Show is what matters most to them.
For advertisers, commercials are more than entertainment, they are a way to increase awareness of a brand or service, and they've got an unusually captive audience. The survey found 19.5 percent say the commercials make them aware of the advertisers' brand and another 10.5 percent say the commercials influence them to buy products from advertisers -- the highest percentage reported in the survey's history.
To access the complete results of the Super Bowl survey, click here.
(Source: National Retail Federation, 01/24/13)
Daily Sales Tip: Your Voice
The single most important thing you can do to be a more effective salesperson is to have a powerful, commanding voice. Like a firm handshake, an impressive vocal presence subcommunicates power and leadership and will cause prospects to be much more willing to buy from you.
Practice speaking louder in your everyday communications. You don't want to yell or strain; instead, focus on speaking from your core, your abdomen, which will result in the commanding voice you need to have to be effective.
Imagine a general who speaks powerfully, but without yelling or straining. This is what you should strive for. I achieved this by simply talking that way all the time. An added benefit is that you will automatically become an excellent public speaker by having this talent, which you can then leverage into more sales by volunteering to speak at networking events, chamber of commerce meetings, and other "target-rich" environments.
It will also be a necessary skill should you wish to go into sales training or public speaking later in your career, a choice that is available to all successful salespeople.
Source: Best-selling author Frank J. Rumbauskas, Jr.