If you’re serious about building a successful home services business, you can’t rely on word of mouth or even pay per lead companies like HomeAdvisor (formally known as Service Magic). You need multiple direct lead generation campaigns. By direct, we mean lead generation campaigns where the leads come directly to you vs. leads funneled through someone else – possibly to some of your competitors in addition to you!
You Can’t Rely on Referrals Alone for Your Home Service Company
All small business owners – especially new ones, like to brag that all their business comes from referrals. Join the crowd! Assuming you provide great service, word of mouth is always going to be one of your top growth strategies. The problem with waiting for referrals is that a) you’re waiting and b) it is difficult to influence.
Pay Per Lead Companies Aren’t Risk-Free Either
Pay per lead companies like HomeAdvisor are a low risk alternative to word of mouth marketing, but the low risk comes at a cost (in most cases). HomeAdvisor risks their money – not yours – to generate the leads, but they typically sell each lead to multiple home services companies.
How Pay Per Lead Services Work
I’m not AGAINST pay per lead companies. If your company is profitable and you have the capacity to take on more work, there’s nothing wrong with signing up for Angie’s List or buying leads from HomeAdvisor. But I think where contractors get burned—and why a lot of them have nothing but terrible things to say about these services (go ahead and search “HomeAdvisor scam”)—is simply not understanding what they’re signing up for.
Suppose you own an HVAC company providing residential repair and replacement services, it might sound attractive to buy repair leads for $15-$20 per. However, what do you think your lead-to-booked job conversion rate is going to be when the same lead you get goes to 2-3 of your competitors? If your normal lead-to-job conversion rate is 50%, it might drop by 50% or more. Expect an even steeper drop if you’re slow to respond – something that is surprisingly common with contractors – and/or you price your services on the higher end of the market.
My #1 Advertising Tip for Home Service Contractors
Make sure you set up (or hire a reputable online marketing company for home service contractors) multiple lead generation strategies of your own. At a minimum, you should invest in a content-centric contractor SEO campaign. Other strategies almost certainly worth testing include:
- Pay-per-click advertising
- Email marketing
- Social media
- Re-targeted display advertising
If you do it right, you should be able to create several lead generation campaigns of your own that match or beat the cost-per-job associated with the leading pay per lead campaigns. Plus, you won’t be SOL if the lead generation company decides to jack up the price per lead.
Above all else, remember to accurately track your advertising! Don’t rely on the metrics provided by Angie’s List, HomeAdvisor, or the Yellow Pages.