Hot and Bothered
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Remodelers, what do you think about lead-generating companies – speaking broadly, the multimillion-dollar industry of the likes of ServiceMagic, Angie’s List, and so many others that claim to (and often do, say many remodelers) match “qualified” and/or “pre-screened” homeowners with contractors, usually at a cost to the latter?
A) Indispensable marketing tools;
B) Shams that take advantage of homeowners and contractors alike;
C) Something in between, depending on the type of work you do, the type of leads you want, the LGCs you use, and how aggressively you go after the leads they deliver.
Lately, the topic of LGCs has been steaming up the remodeling discussion boards on professional networking sites. Most remodelers that have used the services do seem to have pretty strong opinions about them. For instance, of the 266 comments (so far) in a LinkedIn thread about “the unscrupulous tactics of lead generation companies,” here are a few excerpts:
I can’t say that there’s one easy answer to my question above. I’ve written about LGCs in the past, and it’s a topic that is sprawling and may be virtually inexhaustible. (Anyone have a good friend at 60 Minutes who can give the industry full investigative scrutiny?) In the meantime…
Ringing Off the Wrong Hook
One remodeler who IS frustrated by LGCs, for a few reasons, told me some of his experiences using them. Two anecdotes:
1. Fairly affluent older homeowners, a doctor and his wife, began their major remodeling project with a large LGC. Using the automated system, the couple checked most of the "boxes" for the different types of projects for which the service provides leads – bathrooms, kitchen, addition, countertops, cabinets – because their big project would encompass all those types of work.
“Within 24 hours, they were getting hundreds of calls” from contractors that the LGC had sold their lead to, my source told me. “They couldn’t answer their phone for a month.” That poor couple, the remodeler speculated, probably generated up to $5,000 in leads (paid by those scrambling contractors) for the LGC.
2. Curious about how much screening LGCs really do, this same remodeler pretended to be a homeowner in need of a remodeler. He contacted a large LGC (one that his own company had signed up to receive leads from) with “a bad lead, something like $20,000 for a second-story addition.”
Within a half-hour, his remodeling company got a call from that very same LGC about that very same impossibly unqualified lead. “I think they sold it to seven to nine other contractors too,” he said.
Investing in Education
This remodeler doesn’t much care for the LGCs with which he’s dealt, clearly, but he feels that in this economy he needs to have as many feelers out as possible. His experiences make a reasonable case for all remodelers to closely examine how and whether to invest marketing dollars in the services.
Some remodelers say poor LGC results are just a risk of bargaining for good LGC results. And that LGCs are simply better-suited to specialty contractors and small projects than to full-service and/or design/build companies.
And others say the solution is to invest more effort and marketing dollars in doing really good work for your existing client base, educating them about the value of your service, and asking them for referrals, to the extent that your excellent professional relationship perpetuates personal referrals, community-wide goodwill, and a steady book of business.
Take this comment, from another remodeler on that LinkedIn thread:
Remodelers should learn “how to build healthy companies with solid referral bases so they don't even need to acknowledge the existence of [LGSs]. Stay true to the mission: Education, education, education…. Lead generation companies hardly register in my consciousness....never used 'em...never will.”
Said another, in an email to me yesterday:
"In my mind, if we educate people and they make an informed choice, unless they are prone to self-mutilation, they should make the best choice for themselves."
What about you, remodelers? What’s your advice to other remodelers on using LGCs cost-effectively in these marketing-critical times? Or on getting really good referrals the old-fashioned way? Be constructive on this public forum, please. What's worked for you?
Post your comments here. Or email me directly at lthayer@hanleywood.com.
Leah Thayer, senior editor
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