El Nino isn’t the only major phenomenon that could disrupt your working life this winter.For most remodelers, online services—sites like Angie’s List, Houzz, Porch, and Pro.com—have been a minor boon or an irksome pest. But now these services are upping their game, and this time giants like Amazon and the big-box retailers are putting muscle behind the effort. By the time they finish flexing, it’s possible that the services you once regarded as friendly lead generators could make you feel as if you’ve become a cog in their machines.
These fresh web campaigns combine with societal trends to make it more important than ever for you to gauge how involved online you want to be. The Repair Wars have started. It’s time to pick a side.
Repairs on Demand
A promo web page for Pro.com’s new “Text-a-Pro” program neatly summarizes three new tricks in the online service repertoire: “flat-rate” pricing, quality guarantees, and automated scheduling. Customers start by sending a text message to Pro.com, providing a ZIP code and a request for a service to be performed. Pro.com will reply with one of what its website advertises as “pre-negotiated flat-rate prices on hundreds of the most common home projects. No surprises.”
If you accept, Pro.com then finds a remodeler from its list that it has vetted for licenses and “workmanship” and schedules that remodeler to visit the prospect at a mutually agreeable time. Should the job ultimately fall short in customer satisfaction, Pro.com offers a guarantee to resolve complaints.
Pro.com isn’t alone in making new offers. Among its competitors:
- In October, Angie’s List announced “fair price” and “service quality” guarantees. And for months, its TV ads have promoted a service that allows homeowners to purchase jobs directly from the site--but only smaller jobs like general repair or handyman work.
- Amazon’s home services program, available in 25 markets, lets homeowners describe the scope of a requested job and upload pictures, at which point Amazon makes that job available to its pro partners and gives them one business day to provide an estimate for the job.
- Porch is working on a service in which it plays matchmaker both on the project cost and the pro; a homeowner won’t speak to the contractor before the job at all. With basic jobs, homeowners “don’t want to spend time talking to multiple professionals,” CEO Matt Ehrlichman says. “They want to be able to see what it costs and push a button and have a great professional that Porch stands behind come over to their home.”
- Google Home Service Ads are currently testing in the San Francisco Bay Area. Similar to its AdWords program, contractors can purchase ad placement relating to searchable keywords. Google reviews, contact information, and location are all displayed. Homeowners can also send job queries through the search portal without opening or reloading a new webpage.
The Fine Print
Chris Forney, co-owner of All Construction Services in San Francisco, has taken a dozen jobs from Pro.com leads and reports he’s had a positive experience every time. But that may be in part because fine print in Pro.com’s service agreement makes the reality far different than the website promise.
What’s described as “pre-negotiated flat-rate prices” on the Pro.com promo page is rebranded as a “pre-estimate” on the site’s frequently asked questions, along with the warning that “a pre-estimate is not a bid.” The FAQ later adds: “Please feel free to share the pre-estimate directly with your pro to evaluate the projected cost of the work before it begins.”
In addition, that pre-estimate covers only labor, not materials. “In many cases, the final project cost will vary greatly depending on your selection of materials,” Pro.com notes. “Your final labor cost may be higher if your project has special circumstances. We call these circumstances ‘exclusions.’ ... Your pro will be able to inform you of any exclusions once they are on-site, and adjust price accordingly.”
Customers might regard all this as a bait-and-switch operation, given that a more prominent webpage for the service promises “no surprises.” Leo Duplessis, general manager at replacement contractor Yankee Home Improvement, a 2014 Big50 member, cites similar concerns as a reason he wouldn’t use a pre-estimate. The cost of even a fairly simple job like a window replacement involves multiple factors, he notes, adding that once numbers enter the picture, customers get easily frustrated if things change.
“If I pre-estimate [the] price and you decide you want a better window with a new construction install, I could be well over three times the price I quoted,” Duplessis says. “Then, no matter how much I explain the upcharges, customers are upset.”
But Forney says the pre-estimates have turned out to be fairly accurate for his market. Pro.com says its pre-estimates “are based on the experience of Pros across tens of thousands of completed jobs. ... Additionally, our comprehensive catalog of home services has over 100 factors on average that were collected and evaluated for each service. Pre-estimates also take into consideration local labor rates and seasonal variations for each service.”
There’s one other big reason why Forney hasn’t had trouble with Pro.com: So far, the company has been willing to adjust the 10% to 20% commission it charges on jobs if Forney’s estimate ended up going beyond the homeowner’s budget.
Forney still gets leads through the old ways of referrals and repeat customers, but he says a future where Pro.com provides all of his leads isn’t as far out as it may sound.
“They keep us loaded down with customers,” Forney says. “We need a week to catch up. Realistically, as a business owner, you don’t have time to deal with every aspect of the business. They’ve got the means and the people to be in the office.”
These types of instant estimates will give customers more transparency into variations in what gets charged for a job. Pro.com CEO Matt Williams thinks it also will lead to demand-based pricing.
“Over a decade or so of commoditization of services, between now and then you’ll have a preponderance of pros that have different pricing based on timing and availability and the pressure of other jobs,” Williams says. “In a good economy, they’re going to drive prices down. You’re always going to have fluctuations based on availability. Our goal is to monitor those fluctuations.”
But with lower prices and faster services, quality can suffer.
“You get what you pay for,” Bruce Case, president of Case Design/Build in Bethesda, Md., wrote in last month’s issue of Remodeling. “Easy and good, yes. Cheap and good? No.”
The consumer’s challenge is to distinguish between the two. In doing so, that consumer also must make guesses as to the real quality of the pros that the sites endorse. The vetting process is very similar across the board. Usually it involves three things: Checking if the contractor is licensed and bonded in the state they operate in; conducting a background check on the owner or owners for any criminal history; and measuring a pro’s quality, usually based on a check of reviews or social media accounts. Once the checks have been performed, the service provider typically can be listed as a “partner” or a “guaranteed professional,” which is usually indicated by a graphic badge on their page.
Some sites cover the work of these professionals under a quality guarantee. Porch.com and Pro.com both guarantee the completion or repair of a job up to $1,000. Angie’s List offers a “service quality” guarantee for any services purchased by premium members directly through the site marketplace under $100,000. Amazon offers a “happiness guarantee” that could reimburse the homeowner up to $2,500 of the original price.
As online sites enter version 2.0, many pros still are in the beta stage of converting to a new world in which digital leads trump word of mouth. One of the more advanced firms is West Chester DesignBuild, a 2014 Big50 member, where project manager Chris Payson estimates 80% of the company’s business comes from the internet.
“I don’t know where we would be without Houzz or Angie’s List,” Payson says. “Most contractors, it takes a lifetime to establish a reputation. With those review sites, you can establish a reputation in six months or a year. ... They’re sharing that same word of mouth [promotion] with thousands of people. Do you want one online review or do you want them to tell the guy in the lunch room to come to you?”
Given Payson’s argument, one would think that the biggest replacement contractors in the country would be the first to respond to these changes, But this year’s Remodeling 550 survey found that 59% of replacement contractors were still getting a majority of their business from return and referral customers while only 11% drew business primarily from online referral sites.
That’s sure to change, if only because a 2015 study by business technology researcher Software Advice found that 96% of customers find reviews to be at least moderately valuable. Of the review sites those surveyed listed, Angie’s List was the third most used site at just below 60% of respondents while Yelp was the most used at around 76%. The service most reviewed by those sites was plumbing, followed closely by electrical work.“I had an old-school contractor say to me a little while ago, ‘Oh, I’ve never had to advertise,’” Payson says. “And I thought, ‘Good for you man, but I want to build a business in five years, not 30.’”
And while Payson thinks the internet is key to managing and building successful relationships, jumping in before you’ve really thought it through could be the death-knell for your business. “It’s not for everybody,” he says. “It can ruin your business if you’re not prepared to handle the customer service. When that phone rings, what are you going to say? Are your proposals detailed enough? An OK review on Angie’s List is essentially an F.”
“Angie’s List, they’re a nightmare to do business with,” adds Mike Damora, general manager at K&B Home Remodelers and a frequent columnist on replacement contracting. “They’re horrible, absolutely horrible. However, the leads are great. As long as you know how to play the game, an Angie’s List lead is as high a quality lead as you’re going to get. It’s a very effective lead source—but it’s a love/hate relationship.”
Meanwhile, Matt Breyer with Big50 member Breyer Construction worries that the trend toward online transactions will erode customer loyalty. “We track all of our leads in and try to market to past clients,” he says, “and we’ve been stunned by the amount of past clients we market to that don’t notice or pay attention and go to one of our competitors. It’s a sign of the times. It’s almost like we’ve re-written how we think through things.”
Taking a Side
With all of these different sites out there, which should you partner with? That’s a loaded question, and the answer will be different for every contractor. One factor to consider is the partnerships already in place.
For instance, Angie’s List has a partnership with Masonite. If a contractor is a member of the Masonite Preferred Remodeler Program, that pro already has access to an Angie’s List support team. Not only does that offer a direct line to learn the best ways to utilize Angie’s List, but it continues a relationship with a manufacturer while establishing an online presence.
Home Depot’s RedBeacon is currently partnering with professionals that already use Home Depot services and loyalty programs for its site. “We’re not about max pro capacity,” said Jay Teresi, general manager at RedBeacon. “We have a long and varied relationship with the customers as Home Depot. The pro is the show. We are spending a lot of time with professionals in all verticals: repair, remodel, rebuild, maintenance.”
And the relationship between Home Depot and RedBeacon is only going to become more apparent, with RedBeacon drawing closer to its parent company and associates in-store getting trained on when to suggest RedBeacon.
If contractors don’t have any pre-existing relationships tied to the online sites, look at what each site offers. Porch.com and Houzz offer detailed online profiles where you can post pictures of finished projects and see reviews from customers. That type of visual medium works well for full-service remodelers, but isn’t as appealing for a replacement contractor. Angie’s List or Home-Advisor are good options for higher volumes of leads.
Regardless of how today’s remodelers respond, for the next generation of homeowners, the internet isn’t just a tool—it’s an essential facet of everyday life. According to the Pew Research Center, in 2015 alone, 85% of Americans used the internet, and 96% of 18-29 year olds were online. As those millennials buy their own homes, they’re going to look for remodelers and contractors the way they find new restaurants or buy clothes: They’ll go online.