Why Contractors Can’t Depend on Lead Services

Lead generation services make big promises about connecting you with prospective clients, which is why leads for contractors is so tough. Unfortunately, it is a promise that they can’t usually deliver on consistently. If you are depending on a lead service for your business, you may need to restructure your construction marketing strategy. While some great jobs can come from these services, they come at a high cost, and your dollars may be better spent elsewhere.

Calculate the real cost

If you have decided to try a lead service, it is important to go into the arrangement with eyes wide open. Know that the types of leads that you will receive, even if you are paying premium amounts, are going to be for people who are shopping around looking for the lowest price above all.

Their name has likely been sent to half a dozen other contractors, and competition will be fierce. You may feel that your company is structured well to cope with this type of battle. If so, good for you. Give it a try.

When buying leads remember to calculate the true cost of each job that you actually receive from following up on them. For example, it would be easy to say that you paid $50 for the lead and made a sale that included $2000 profit. That sounds worthwhile. However, if it took 3 leads before one panned out and you spend 5 hours quoting and making follow up calls on each of them, your profit dwindles to nothing and your time has been wasted.

Don’t give your lead service false justification for the amount that they charge or credit your leads with more success than they really created. If you are still earning a healthy return on investment when you include all of the costs involved in lead generation and follow up, by all means continue to use it.

Could you better use your resources?

Even a construction lead service that provides you with a decent return is going to require your time and a portion of your marketing budget. Could they both be better spent elsewhere?

It is common knowledge that the best marketing tool a contractor has is word of mouth, but you can’t always count on that to be enough. Therefore, it makes sense to allocate a reasonable amount of resources to maintaining relationships with your past clients.

But, if the energy required by chasing leads is leaving you not able to do this, it may be time to reprioritize

Recommendations from your past customers create better leads for your company for at least two reasons.; first, these new client relationships will have a built-in element of trust. Since they trust the person who recommended you, they trust you. This removes an important step from the relationship building process.

Second, people who value a good recommendation are putting trust and quality before price, while leads provided by a service are often simply looking for the lowest price. If you tend to have the lowest price, that’s great, but you do not want to have to start reducing quality in order to fill under-quoted work. Do not change the way you do business for the sake of generated leads. Make them work for you or don’t use them.

Making the most of purchased leads

It can be tempting to give Yelp, Houzz, or something similar a try, so here are a few tips for making the most of a lead service.

Know what you are paying for. Are the leads you are receiving being sent to other contractors? If so, how many? Be aware of what kind of competition you are setting yourself up for. If a lead is sent to six contractors at the same time, you are not likely to have much success, especially if you know that time constraints will keep you from getting to a lead for more than a day.

Understand the payment structure. Does the service you have chosen charge a minimum monthly fee or a charge per lead? What if the lead is a dud? Some services offer credits for leads that don’t pan out, but others do not. Make sure you understand how your bill will be calculated.

Stand by your business plan. Construction leads gained through these means will most likely be budget shoppers looking for the lowest price. Refuse to lower your quality or level of customer service to gain these jobs. Once you start discounting, you will find that it is difficult to maintain the name that you have built for yourself. If these buyers are not right for you, be prepared to let them move on.

Be prepared to quickly respond to leads. If you do not have resources in place to respond to leads within a few hours of receiving them, these types of services may not be for you. Since the same names will probably be sent out to several other contractors, you will be ineffective if you are not among the first to contact them. Decide before signing up if you are willing to designate resources to this purpose.

Don’t depend on lead services. You may find that you gain enough from lead services to make them worthwhile. Despite the negative aspects, if the return on investment is there then you can build it into your marketing strategy. It is essential that your business does not depend upon these leads. Recommendation from past clients will almost always be your best source of new work, so continue to maintain those relationships regardless of how many good leads you have coming in.

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