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Friday, May 15, 2009

Lead generation services: Some further observations

Mark Paskell has posted this comment on a National Association for the Remodeling Industry (NARI) group thread, which is worthy of republishing here:

LinkedIn Groups Group: National Association of the Remodeling Industry (NARI)

Subject: New comment (140) on "Should NARI lead the charge to expose the unscrupulous tactics of lead generation companies to protect the rights of contractors?"

Hello Everyone

Thanks again for sharing. I think maybe its time to conclude this thread. I would like to share some observations.

I think most agree that the relationship between contractors and LGC's is seriously strained.

This thread did not receive any participation from the trade publications that sell their magazines to contractors. Maybe they don't want to risk their advertising revenue that they get from LGC's.

There were no happy contractors sharing their stories about how satisfied they are with services provided by LGC's. One would think that the LGC's would ask some of their happy clients to come and counter the comments made by so many contractors.

We learned that NARI is not a partner with SM and has allowed them to join as a national member.

We learned that many NARI members are concerned that some LGC's may be in conflict with the code of ethics. Specifically bait and switch tactics, misleading advertising and claims about the service provided by LGC's.

We also learned from SM that they can't provide qualified leads because they don't know the needs of their contractor clients. See the following quote from SM

"A lead generation company can't qualify your leads. They don't know enough about your business. A LGC provides an introduction, where a homeowner who wants some help leaves their contact information. While there is a place on the service request to list budget and timing, most homeowners don't know the answers to these questions. They want help and direction, and they go online to try and find that help.

"What LGC can do, however, is provide you with the contact information for homeowners in targeted areas that match the demographics of your best customers. You may not know their budget, their timing might be unrealistic, or they might just be window shopping. But you do collect their contact information so that you can follow-up in the future. If you can demonstrate that you are an expert in what you do, provide project pictures, and helpful tips and checklists, you have an opportunity to make them a customer.

As Robin said, a LGC is an add-on to a company's marketing program. Build a database of potential customers, and over time, some of that potential will convert into sales." (Dave Lupberger, Service Magic)

We learned that if someone wants to complain officially to NARI that they have to file a grievance in writing. Otherwise NARI cannot do anything officially. One would think from reading the posts that there is a preponderance of evidence to support a grievance. Maybe no one wants to be the bad guy.

Finally, we learned that the if you want good qualified leads you are probably better off generating leads yourself through methods not including LGC's.
The observation that lead generation services provide information that can be integrated into your own marketing and relationship-building strategies is probably the most important consideration in using Lead Generation Services. Too many contractors dream that the commercial, high volume services, will provide highly qualified leads that will convert into sales in one or two calls -- and many are disappointed with the results, especially contractors who have relied primarily on repeat and referral clients and are unfamiliar with effective marketing practices.

(There are exceptions, usually local services where the individual operating the LGS has an intimate understanding of the market and contractor clients. Here, fees are significantly higher -- sometimes upwards of 10 per cent of contract value -- but contractors report the leads are relevant and problems are quickly corrected, and often the leads service provider only expects commission payment when the lead converts to a meaningful order.)

I've applied to join the Contractor Lead Generation Forum group.


mark the coach said...

Mark you are correct that the smaller services are providing better quality lead than the major commercial lead services. Many contractors who have contacted me since the post on the NARI site, are telling me they would rather pay more for a qualified lead. Qualified would mean that the lead is actually spoken to by a live human being who understands what to ask and verify. Other huge points are that the contractors are actually screened, not rubber stamped, leads are only sold to 3 or 4 contractors total, and the lead is someone who is looking for the same type of work that the contractor has signed up for.

mark the coach

Construction Marketing Ideas said...

Mark, I agree this is the definition of a perfect lead service. It is probably also uneconomical to sell this excep at a relatively high lead cost (perhaps 10 per cent of sales value) and really hard to do well except as a hands-on local provider. In other words, I haven't seen how you can scale the service up to serve enough clients to provide a really widespread solution.
I think a better approach is to help contractors understand how to develop and find their own leads -- and in the process, they may learn how to set up their own 'bird dogs' (or informal, local leads services) as part of their working environment.
Reyling on leads services is much like (but probably worse than) relying on referrals and recommendations: You are giving control of an essential element of your business -- marketing -- to another organization. This is usually not wise.