New idea for lead generation services, Job Generation instead - Contractor Talk - Professional Construction and Remodeling Forum

MOTB · 05-14-2009, 12:25 PM

Perhaps other contractors can offer an opinion as to agree or disagree with the idea, and then some of the lead generation folk can chime in with their opinions. Sorry about the length of this post.

It seems that there is an overwhelming amount of negativity when it comes to this topic, but there also seems to be enough of a demand for so many companies to be in the business of selling leads.

Your comments are as equally important to my goals, as hopefully they are to lead generation services to provide a better relationship with contractors, and for contractors to get more jobs.

All work begins with a lead. Leads comes from many sources including existing customers, contractor to subcontractor relationships, Yellow Pages, advertising on the truck, handing out cards, having a website with Search Engine Optimization and Lead Generation Services. A smart business person will ensure to be well rounded and not rely on any one method to get work.

I am sure a debate can come from website companies who would prefer to focus on Search Engine Optimization (SEO) for contractors as opposed to contractors paying for leads from a lead service that is in fact optimizing and purchasing the same key words for the contractor’s trade and territory.
Every contractor should at least have a basic website that says what they do, the regions they work (including every location identifier from State, City, Counties and Towns). There are many ways to optimize this, and you can try on your own or you can pay someone else. But to not have a website, at least a one page starter site, is a shame since the price is so reasonable. You can always take it to the next level with multiple pages including examples of what you have done, testimonials, etc., but none of that matters if people do not find you. So no matter what, include Search Engines Optimization so that you can be found by a new prospect who will definitely also bump into many of the Lead Generation Services.

Lead Generation Services aggressively market to the consumer for their attention when searching for a contractor. Assuming the contractor has a website with SEO then it will then become a battle for who captures the eyes of the homeowner first. No website then it doesn’t matter since you are going to struggle anyway. So what is it worth to you, the contractor, if the Lead Generation Service has the lead to go whomever they choose? What is it worth to you, the Lead Generation Service to get it to the right contractor?

I continue on the next post. Brian

MOTB · 05-14-2009, 12:26 PM

Lead Generation Services are going through a transformation. The reason is simple, there are more contractors that are tech savvy and this is changing the game. The homeowner is already online and their sheer volume brings the activity to the door and now it needs to be debated on how best to get it to the contractor. I view this as a shift from DOS to Windows to the Internet. Many issues remain the same but the solution needs to change with the times.

When I started in the industry, I was focusing on how contractors can pass work to subcontractors. It then hit us to include the philosophy of how Lead Generation Services can pass work to contractors. It really shouldn’t matter what software a contractor uses, it should be the same with a generic interface.

Let me paraphrase this. I use Outlook and others use other calendar tools. I can send a meeting request to anyone person, or multiple people. Inside this meeting request is information that can be accepted into many other calendar systems. The recipient then has their own copy and can do whatever they want. The recipient’s system will remind them that they are connected to Brian whenever moving-changing-deleting the information that Brian sent them. Can’t this be done with job requests?

Job sharing systems allow a users to pass job requests to one another, reject and accept then and then be tied to the job. The subcontractor is happy because there are no financial issues since they did not pay for the job, and the general contractor is happy since he deployed the work more efficiently. The process is the same as a Lead Generation Service (acting like a General Contractor) providing leads to subcontractors. But then is the money factor, which is a fair topic for the Lead Generation Service.

We did a study (in late 2006) with a few hundred contractors who said that would pay for jobs.
93% said that they would pay a fee for a new job (NOT a lead)
72% of these people said they would prefer to pay a Fixed Fee while the remaining
28% said they would prefer to pay a Percentage

So if money is a factor, and contractors are willing to pay for jobs, then what is the problem? It probably has a lot to do with technology and trust. Sure, the lead generation services can charge more for less volume to the contractor with better quality. But how can they be guaranteed to be paid. eBay and Payal come to mind as a comparison. Millions of people are buying and selling all day and Paypal collects the money after two people agree. It works.

I propose having a common API (Application Programming Interface) where software application users opt-in to a service. For example, a software user would accept a lead from a Lead Generation Service and the user would agree that this information is shared back with the Lead Generation Service and can never be deleted. They also agree to pay a certain fee is the lead becomes a job. The job price MUST be higher than a traditional lead price since they are only paying if it becomes a job. This helps offset the lost business for the lead service providing less activity for the same lead and also has incentive to make it quality for all parties.

Further, if done right, users of any competitive software application could opt-in to receiving Jobs so there would not be a restriction to the tool that is used to run one’s business.

There are a few challenges:
What is the minimum fixed fee per industry classification?
How would percentages work (if that is acceptable for certain trades)?
Ensuring the lead generation service gets paid no matter what, including the contractor being in a dispute but not impacting the money that the lead generation service deserves

For what it is worth, I have had conversations with many of the Lead Generation Service providers over the years. Some have given this a good thought, some are already trying to head in a similar direction, some are technically stuck in the past that they have to rip apart the business model to make it work, and a few others really do not think highly of the very customers they are selling leads to. They are making enough money selling a few times to the new start-ups and just want to ride it out for as long as possible.

I think everyone here already posted enough opinions where it is better to just see what the future holds for this part of the business process – at least from your all’s perspective.

My vote sticks with the business savvy, tech savvy contractor who wants think for the year 2010 and beyond and enough with doing and complaining about the old ways of doing business. Service providers either adapt to your future requirements or are toast.

So, any comments for paying for jobs (not leads)? On paying more money for less volume and better quality? On creating interfaces that can work with various software companies? On a model similar to eBay-Paypal but not for product but for service leads?

Handymanservice · 05-14-2009, 04:01 PM

I can appreciate the concept for sure.
How are the "jobs" awarded? Who bids them?
How are they assigned?
Do we say "I'll pay 4% of this job" and the
next guy says "I'll pay 5%".

What if the LGS bid the job,
sold the job a d assigned the job?
Sort of a "National GC if you will".

The LGS could be paid andassign the contractor
that has been approved the work. They keep their
cut and pay the balance to assignee. That is off
the top of my head, it is definitely rough.

I like the way you're thinking, what else can be
done to improve, let's hear it.

rbsremodeling · 05-14-2009, 04:28 PM

I have seen the system you describe in action for over 6 years. Local companies while not perfect it is close to it.

Small jobs are a flat fee if awarded.

large projects are a percentage with a cap on the fee.

Contractors are well screened

Homeowners are extremely well screened

**Ed the Roofer** · 05-14-2009, 04:35 PM

What stop gaps would ever be put in that would assure the contractors that the "Ethical" Lead Generation Company does not sling those leads out to an affiliate LGC for the guaranteed revenue?

A study that I just read done by a major college, stated that most home owners who are clicking on LGC sites, typically submit to about 5 different ones as an average.

5 of the LGC companies X 3 Contractors per LGC, then the Home Owner gets bombarded from 15 different contractors all at once.

Now, when an LGC Rep "May" follow up with a Home Owner to see how the submission request went and discovers that the job has not yet been awarded and done, I have heard that it once again can get re-submitted via the Rep, who now gets an additional slough of fresh contractors to invite to "Bid" the job, unbeknownst to them, that this is a re-hashed tired and possibly dead lead.

Ed

rbsremodeling · 05-14-2009, 04:37 PM

In the model i have seen the LGC company does not get a dime from the contractor unless he is awarded the job.

They also want a cut of any future work that may come up as a result of the first connection and change orders as well.

I think this model would only work in major cities.

MOTB · 05-15-2009, 09:10 AM

Quote:

Originally Posted by Handymanservice

I can appreciate the concept for sure.
How are the "jobs" awarded? Who bids them?
How are they assigned?

What I meant is that two people can agree to an exchange, and then, people only pay AFTER the exchange is agreed upon. The homeowner would not be involved in the process since the Lead Generation Service would have the Lead. The EXCHANGE is between the contractor and the lead generation service.

The bidding idea topic was not on my mind when expressing myself, but it is a good concept to throw on the table. Thanks, Brian

MOTB · 05-15-2009, 09:16 AM

Quote:

Originally Posted by Ed the Roofer

What stop gaps would ever be put in that would assure the contractors that the "Ethical" Lead Generation Company does not sling those leads out to an affiliate LGC for the guaranteed revenue?

Ed, this is an excellent statement, and one that I forgot to address when originally posting. Similar to eBay that allows both parties to rate one another on a transaction by transactio basis, there should be a way for you to say you are happy or not. Technically the person who pays (and there should only be one person) for a job should be happy for the price they paid for a specific job. No one else should be unhappy if they did not pay. Sort of like bidding on an item on eBay and you loose. You loose just some time, but not any money. It all comes down to what you paid and what you got for it. I believe you would be happier if you paid a little more for less jobs, but only for jobs, not for leads.

Am I explaining myself OK?

MOTB · 05-15-2009, 09:20 AM

Quote:

Originally Posted by rbsremodeling

In the model i have seen the LGC company does not get a dime from the contractor unless he is awarded the job.

They also want a cut of any future work that may come up as a result of the first connection and change orders as well.

I think this model would only work in major cities.

Yes, this I also forgot to mention in my original post. I had contractors tell us that they are willing to pay full price for the 1st job, then a reduced percentage for the repeat job (50% was mentioned many times), and then nothing for the next job since they will have earned the client by then. The 50% is an added bonus that lead service providers have not be able to touch in the current models. I beleive this only works if the lead generation service has a stratefic connection to software suppliers so that they can be tied to esitmates-invoices. Brian

PGD · 05-30-2009, 06:46 PM

I can't believe you forgot to mention anything but the kitchen sink in those original posts!

I think your right on the money, with your statements, however, companies like SM are making money hand over fist, as far as they're concerned they have perfected the right strategy. SM now just buys up their competition and overwhelms any other lead generation service.

I wasn't gonna post until I heard back from corporate but I found a site that matches contractors to homeowners without selling leads, it allows visitors to be specific and choose the size of their project, location, industry, trade and specialty and then serves up results from their data base and the HO can then choose to call the contractor direct, I like this new business strategy, but it's gonna take a long time for it to catch on (if ever).

It's new and very empty, so it's free right now, so I called our corporate office to see if it would be OK for me to set up a profile and advertise with these guys, explained the site to the company's V.P and I was told to wait until they see if the website would take all 70 locations for a discounted rate or if the free offer applies. Our Veep sounded pretty interested in the free offer! LOL!

As a franchise we have pretty strict marketing rules and cannot infringe on our stores areas, even if it's through Internet marketing. I can't even post my URL for fear that it will show up in a search and I couldn't make certain comments.

I'll let you guys know how it goes, send me a PM if you want the domain name to the site.

Kowboy · 05-30-2009, 07:41 PM

Quote:

Originally Posted by MOTB

So, any comments for paying for jobs (not leads)?

MOTB:

Part of the challenge and satisfaction I get from my work is closing sales. I close sales because I'm good at it and people like doing business with me.

Paying for jobs instead of leads eliminates this. It also eliminates my opportunity to separate myself from the competition. It eliminates my ability to screen out customers I don't want.

As a very satisfied servicemagic customer, no thanks.

Kowboy

P.S.:

I'd link you to my servicemagic post, but I don't have 15 posts here yet.

rbsremodeling · 05-30-2009, 07:47 PM

Quote:

Originally Posted by Kowboy

MOTB:

Part of the challenge and satisfaction I get from my work is closing sales. I close sales because I'm good at it and people like doing business with me.

Paying for jobs instead of leads eliminates this. It also eliminates my opportunity to separate myself from the competition. It eliminates my ability to screen out customers I don't want.

As a very satisfied servicemagic customer, no thanks.

Kowboy

P.S.:

I'd link you to my servicemagic post, but I don't have 15 posts here yet.

This makes no sense

kirbymurphy · 06-12-2009, 10:08 AM

Quote:

Originally Posted by MOTB

So if money is a factor, and contractors are willing to pay for jobs, then what is the problem? It probably has a lot to do with technology and trust. Sure, the lead generation services can charge more for less volume to the contractor with better quality. But how can they be guaranteed to be paid. eBay and Payal come to mind as a comparison. Millions of people are buying and selling all day and Paypal collects the money after two people agree.

If I was the Lead Generator, I would be more worried about IF I was paid than how I was paid. There has to be a mechanism for the LG to know that the job was sold and not rely on the honesty, bookkeeping, or memory of the contractor.

I suppose periodic follwup with each lead is possible. If done on a smaller, local basis, follow-up wouldn't be so tough, but on a regional or national scale it becomes difficult to find out what lead sold.

My SiL was telemarketing for a mortgage broker and got min wage for the calls, then a bonus on each funding. She later found out that the TM staff was getting paid on only about 1/2 of the fundings due to the owner's greed.