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Sunday, August 12, 2007

Thoughts about leads services

I'm intrigued by this agreement between (also owning the URL and, the online media portal of the CanWest group, which owns newspapers and broadcast outlets in most major Canadian cities. combines a localized online directory with a lead development/referral service and has packaged a variety of other programs, including a pixel-based "trade show" offer for industry suppliers. (You pay $1.00 per pixel, minimum 100 pixels) to advertise on the site. I might just spend $100 to list here and see what happens -- though it looks like, if the company paid cash for the deal, a supply business based in Toronto paid several thousands of dollars for its space.

Obviously, the challenge with all of this is measuring results and whether the package offered by is worthy, compared to other offers on the Internet. Generally, posters to the forums on are very skeptical of these services -- in fact they are downright hostile about their business practices; but on the other hand, the valid complaints from contractors (saying they are required to pay for 'bad leads') are offset to some extent if you look at things from the lead service operator's perspective -- not establishing strict rules regarding the business relationship invites much gamesmanship as contractors weasel out of paying for any leads that are not 'perfect' (that is, lead to a highly profitable sale with virtually no work or effort.)

The construction business has always been unusual in that much marketing is developed through leads services rather than the individual effort of the contractor. I don't know of too many industries that support so many services generating and sending leads to businesses -- these have been around for decades, of course, for example, you can trace the beginnings of McGraw-Hill's success in the construction market with the long-established F.W. Dodge service.

The interesting thing here is that leads services should, in theory, make this business very simple. You sign up for the various services, tailor your requirements and criteria as much a s possible, set up a tracking and follow-through program, and then go about converting the leads to profitable business. If the leads service(s) don't work, you either change, or stop using them. Your marketing budget then becomes largely a leads services budget.

There are two big weaknesses with this argument.

First, the best and most profitable jobs never find their way to the leads services (or worse, as I will explain soon). the prospective client through previous business relationships or direct referral trusts in your ability to get the job done, and is happy f or you to do it. But informed consumers and businesses still like to have additional feedback, so they go to the leads service, post the project, and review -- without seriously considering -- the competitive quotes. The information these quotes allows the client to negotiate with you, perhaps get a price reduction or some additional service. The one thing the client is NOT going to do is give business to anyone from the leads service who took t he time and effort (and paid for the lead) to steal your business.

The second is you are abrogating control of a very important element of your business to outside organizations, who set the rules, and force you to pay for an intermediary when, with some resourcefulness, common sense and management, you can get the results you are seeking yourself.

Nevertheless, I won't argue against the intelligent use of leads services. The reason is they allow you to systematize your processes, measure and track your results, and (within the competitive framework of the different services) establish your own benchmarks and cost-per-leads.

I would like to conduct an effective survey to measure the value/effectiveness and utility of the different services, and build a reader feedback/response and measuring tool to allow contractors to compare the services' effectiveness. This however, is a project that won't happen quickly. In the meantime, if you have comments or observations about leads services, please email me or use the comment function on this blog (anonymous comments are accepted subject to moderation).

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