Rules of Engagement
New Technologies and Tactics Form the Basis
of Success for One Replacement Business
by Ellen Rogers
Located in the small, rural town of Canfield, Ohio, population around
7,000, and nestled on the second floor of a two-story, brick, office
park building, is a company much bigger than what it may seem. Having
acquired the operations of Window Depot late last fall, the companies
are 100-percent vinyl replacement.
“That type of window is the center of our platform, says Ed Kalaher,
CEO. “We have doors, siding and potentially a higher-end window in
our pipeline, but we want to get all of our partners across the country
really entrenched in our systems, in our technology and marketing
systems and really solid before we introduce those products.”
The companies sell a number of brands, including Vista Windows, MI
Windows and Simonton.
Through the acquisition Clear Choice now supports two brands (and
is keeping the Window Depot name), but Kalaher says “collectively
it’s just one chunk of business and as that grows we have more leverage
in every regard. Also it’s a good brand and name [and a] good reputation.”
Every industry has a few secrets. But Ed Kalaher, president
and CEO of Clear Choice USA can’t keep a secret secret.
“This is the dirty little secret of the window business: is there a big
discrepancy between the cost to make [a $500 window and a $1200 window]?
No. It’s that people buy windows once or twice in a lifetime so they are
dependent on that [sales] person to educate them and unfortunately there
are still a ton of companies that … prey upon that.”
Kalaher calls it as he sees it. The brunt of his career has been spent
on the manufacturing side, including 10 years with Vista Window Co., and
two as its president. So it may have been a surprise to some when, a little
more than a year ago, he decided it was time for a change. In January
2011 he left the manufacturing side and stepped into the replacement segment
as president and CEO of Clear Choice USA in Canfield, Ohio.
Clear Choice itself is also a young company, having started around 2004,
but still one with a bit of history. Kalaher explains both it and Window
Depot (also started around 2004) were franchise-type businesses modeled
after Window World. But around 2010, Clear Choice [which was then headquartered
in Atlanta], the central entity, made some errors in judgment, which ultimately
lead to a bankruptcy, explains Kalaher.
“All the partners in the field were independently run businesses so they
did not know what would happen. During the course of the bankruptcy an
investment group purchased the company and I came on board to run it,”
he says. “That’s when we rebuilt the staff, relocated the headquarters
and began actively rebuilding the company.”
"It’s our partners in the field.
They are the ones who had to fight the hardest. They’re the ones on
the front lines; if they don’t sell a window then I don’t have a job."
president, Clear Choice
Less than a year into the job, Kalaher made his first major
move with the acquisition of Little Rock, Ark.-based Window Depot last
November (see sidebar at top for more on the companies).
“They were a similar company that wasn’t in distress, it was just a really
good strategic fit to add dealers to our group and take them in the direction
that we are now taking the Clear Choice group,” says Kalaher.
And that direction is similar to the traditional franchise model (i.e.,
Window World). But Kalaher says what he and his team are doing is like
nothing what the industry has seen before.
“The reason I got involved in this company is because I think franchise
companies are here to stay and I think they will dominate our industry
on the retail-retro side,” says Kalaher. “But I think the Window World
type of model is completely unsustainable.” He says when he came on board
at Clear Choice he set out to build a certain staff, provide certain services,
and take the company in a direction he believes will be sustainable, will
keep up with technology and the rules of doing business with people and
provide a fair value to the consumer and an adequate margin to the franchise
so that they are there for the long term.
“When we talk about history, Clear Choice and Window Depot were both born
of that mentality that Window World became famous for, but our aim is
significantly different than the price-only/volume-only approach.”
Seven people are responsible for the corporate activities of Clear Choice
USA, which are spread across to nearly 90 individual locations throughout
the United States. Kalaher estimates the company’s retail sales volume
ranges between $20 million-$40 million.
While the business may have been born of the franchise model, Kalaher
stresses the individual locations are all actually licensed operators.
“It’s technically a license program. [The businesses] license our trademarks,
our support services, everything we produce for them, from training to
collateral, and they buy the product we specify for that [area],” says
Kalaher. “I use the word ‘franchise’ because people are familiar with
that word, but [these shops] are very much independently owned businesses.”
Depending on a variety of factors, such as whether the company is a fresh
start up or if it’s a company already in the business now seeking to partner
with Clear Choice, the start up costs can vary. Kalaher says there have
been those that start up with a $20,000 investment and others that start
with a $100,000 investment.
“It varies market by market and partner by partner,” he says.
With a licensing program, Kalaher says there are a number of differences
compared to a franchise.
“By licensing our trademarks and support we require they conduct their
businesses in a manner that protects them, but we do not have access to
their customer records or control their business in any way,” he says.
“We have no ownership stake or any operating purview. We just require
that they conduct their business in a way that maintains the integrity
of the trademark.”
Kalaher explains that in a franchise operation there is typically more
control over how the individual locations operate, but he believes that
model does not work for home improvement.
“Home improvement is not a one-size-fits-all product and a licensing business
model makes more sense in this industry,” he says
“This allows individual businesses to operate in a manner that best satisfies
their local markets.”
Kalaher adds, “We don’t want field stores owned by us centrally. We want
good people in that area who know it [the area].
“As cliché as it sounds, we have to find the right people. You
need a good product, but if you don’t have a person with your logo on
a truck in that driveway—a good and honest person who wants to conduct
business and have good craftsmanship, ethically—you can’t do anything
in this business. The product doesn’t carry you through,” he says. “If
you have an unethical local McDonald’s operator, as long as he’s making
a great Big Mac it’s gonna carry him through. Not in our business. You
need good people.”
Easier said than done.
“It’s tough because there is so much skepticism and I think that’s one
of the big reasons I wanted to come to the retail side,” he says. “There
are so many good people but our industry is very behind, particularly
on the technology side. There are those who are great craftsmen, great
salespeople, great at making that local customer happy and having pride
in local business, but they may not be quite up to speed on what it takes
to generate leads … in 10 years or what it takes to have a customer relationship
through technology and that’s very much [our] focus.”
That difficulty, according to Kalaher, ties into the persona surrounding
a certain idea that many already have about franchises.
“Skepticism grew out of the fact that in our industry the only real franchises—or
at least those known—are very much traditionally based: ‘here’s an ad
slick, here’s two days of training, the bigger we get the more we can
do for you on maybe a price or advertising,’ and that was about it,” says
Ad slicks and flyers may be the norm for some, but not for Clear Choice.
The company instead has an eye on what’s happening now, what consumers
are looking at and what they need to purchase replacement windows. This
includes everything from Facebook to You Tube. These efforts, Kalaher
says, are providing tangible value and service support, as well as technology
“There is no smoke and mirrors. Our staff is working on stuff that 99.9
percent of the home improvement contractors in this country are not working
on. If they’re not working on it they are thinking about it and these
are things that are critical; things that if you’re a home improvement
professional and you’re not working on these to some degree you will be
left behind,” he says.
Daniel McCarthy, CEO of Vista Window Co., says, yes, technology has always
been a big focus area for Kalaher.
“Ed always had a passion for supporting Vista dealers with retail endeavors,
especially on the technology front, so I would assume he is doing those
same things with [Clear Choice],” says McCarthy. “[He] had a passion for
technology and a knack for staying on the forefront in that arena.”
Some of these technology areas include social media, a polished online
presence filled with content and message delivery to the homeowner through
becoming more and more educated because of the Internet and I think
the days of salesmen going to the house [to sell a window] will die
previous owner, Window Depot
“We provide our partners with local websites, we maintain
two or three central sites here, [we provide] blogging and article marketing,
as well as search marketing with local directories,” says Kalaher. “All
of that complements [traditional marketing] the local business is doing.
But it’s quickly not going to be the complement; it will be what dominates.”
Jeremy Ryan, owner of Clear Choice USA of SE Wisconsin, has been a part
of the organization for about three years and has experienced first-hand
the benefits of these resources. Ryan had been on board with Clear Choice
prior to the bankruptcy and acquisition and says what they had then compared
to now is “like hot air compared to real ideas with substance.”
As Ryan explains, “One of the things they did was recommend we have our
customers do reviews on the Yahoo and Google search engines. So we went
back and contacted our last 12 customers and asked them to go online and
give us reviews. Within just a couple of weeks we were contacted by a
large investment firm to bid a job for one of their locations and if we
get it, it will be our largest project to date,” he says. “But when [that
firm] contacted us they said specifically it was because we had good ratings
with the Better Business Bureau and because of the reviews we had on Yahoo.”
Jim Venable, who was the previous owner of Window Depot and now serves
on an advisory board, agrees that Kalaher’s business philosophy is the
wave of the future.
"For the industry, I think flat
will be awesome and I think flat will absolutely happen. Everybody will
be fine with flat."
president, Clear Choice
“Consumers are becoming more and more educated because of
the Internet and I think the days of sales“Consumers are becoming more
and more educated because of the Internet and I think the days of salesmen
going to the house [to sell a window] will die out,” says Venable. “The
program of being able to market a high-end, high quality product at a
competitive price that’s available to everyone is the future.”
While social media may be here to stay, there’s still an even bigger matter
that’s engaged the attention of so many: the economy. Speaking of the
last three years, Kalaher doesn’t hold back. “It’s been an atomic bomb
on our business,” he says. “I think every single player in our business
is down 30-40 percent … it’s the worse they’ve ever seen.”
Surviving the tough economy, though, has been anything but easy, and a
lot of credit goes to the branches throughout the country.
“It’s our partners in the field. They are the ones who had to fight the
hardest. They’re the ones on the front lines; if they don’t sell a window
then I don’t have a job,” says Kalaher.
And a decent-priced window has helped, too.
In fact, Kalaher says both Clear Choice and Window Depot have always sold
a product that is attractively priced to the homeowner—even a little bit
beyond fair, he admits.
“When you do that you always have a chance to stay in the game and get
business as the wallets tighten up,” he says.
But it takes more than a fair price to make it.
“My goal is to provide [our owners] with the tools, training and support,
education, brainstorming … out of this office that will get them through
it. There are ways to have better margins in your products, to forecast
better, to run budgets in your business—these are things that a lot of
home improvement contractors never had to pay attention to, let alone
can they or will they.”
Some will tell you the energy-efficiency tax credit was a saving grace
for the window industry. Kalaher is not one of them.
“The tax credit was a crutch,” he says.
So how do you sell energy efficiency to a homeowner?
“You sell it on facts and what’s real. You go back to what sold replacement
windows before there was a tax credit. Back then it was still a booming
business that grew every year because there was a real, tangible benefit—you
absolutely saved on your heating and cooling costs.”
Kalaher points out that energy efficiency is nothing new for the replacement
window industry; the tax credit simply allowed consumers to buy windows
basically for half price.
“That meant salespeople did not have to sell and companies did not have
to educate,” says Kalaher. “I want to get back to homeowners wanting to
buy a product from a company that’s going to educate them, give them a
fair price, and be there to service them. If it’s just about a tax credit
anyone can compete.”
But Kalaher explains that when a homeowner decides it’s time for a remodel,
everyone, from the window supplier to the kitchen remodeler, is working
to convince the homeowner to go with their product over another. It brings
the consumer’s decision down to a matter of want versus need.
“Windows, at the right price, there is no comparison on cost value [to
granite countertops, for example],” says Kalaher. “When you replace windows,
you’re replacing, say, 12 windows that were cold before or hot before
and you’ve picked up 12 windows times 20 square feet of living space where
no one ever wanted to sit before. WIndows are a great product; they are
the most important energy-saving appliance in your home.”
It’s been more than a year since Kalaher stepped away from life on the
manufacturing side and entered the replacement market. It’s not necessarily
been an easy trip thus far, given the state of the economy, but things
are looking up.
“For the industry, I think flat will be awesome and I think flat will
absolutely happen. Everybody will be fine with flat,” he says.
That’s the industry. It’s a different view, though, of what he expects
for his company.
“I expect explosive growth and that’s not a wish list,” he says. This
is due to all the many things they are tackling from that small office
in Canfield, Ohio. From social media to video commercials to simply growing
an online presence, all of this, he says, will help with that growth.
But the most important detail still goes back the franchise model, which
believes will dominate the industry.
“But what Clear Choice and Window Depot represent is a far cry from the
perception [people] might have,” he says.
Ellen Rogers is the assistant editor of DWM/Shelter magazine.
© Copyright 2012 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.