The home improvement companies we serve tell us a week doesn’t go by in which they’re called by any of a number of new online lead generation platforms. You know their names: Porch, Thumbtack, RedBeacon, Handy…the list goes on.
According to a recent Tech Crunch article, competition is heating up further with Google, Facebook, and Nextdoor rolling out lead generation offerings for home improvement companies.
The article covers a good deal of ground, but there is one over-arching theme: these platforms need (and have struggled) to show the ROI that most home improvement pros need to make these platforms worthwhile. And while some have tried to make the ROI calculations easier, demonstrating a true return has been difficult for all involved.
Why ROI is Difficult to Measure?
Lead generation ROI is notoriously cloudy for home improvement companies for a couple reasons:
1) the online landscape is constantly changing and
2) if ROI was clear, home improvement companies would abandon certain lead gen platforms in droves (see: social media).
Therefore, many of the platforms have tried to obfuscate the results they deliver. How they do this is another matter, but here’s a quick view from ten thousand feet on online options for home improvement companies.
5 Things You Really Need To Know About ROI
Pay Per Click
Pay Per Click is the industry standard. It can work from a ROI standpoint if you have experts running the campaigns. But it’s complicated, and with the slightest hiccup, can make for expensive mistakes.
The antithesis of Pay Per Click is Pay Per Like or Pay Per Impression, both of which are very difficult to measure. There is no direct line between a “like” and ROI. Not yet, at least.
Pay Per Lead
Pay Per Lead is still going strong. Companies can easily track ROI with strong phone, appointment, and retention skills. HomeAdvisor is a good example of this. Even though the leads are shared, you can’t deny their volume.
Premium Listings (i.e. Angie’s List) can be great, or they can be completely fruitless. This makes evaluating their ROI difficult. We’ve heard mixed results from dozens of clients. You can continue to pay the monthly fee, but never reel in any fish. Or you can land some big ones. But it’s not clear – or a sure thing.
Pay Per Transaction
In this model, a platform connects you to a sold job. It’s usually their customer, so they get a percentage of the job’s revenue. ROI is manageable for smaller ticket items (TV installation, for example), but it’s unsustainable for larger jobs. Anyone who pays 25% in marketing costs for a window job isn’t going to be in the windows business long.
Discounts and Daily Deals
Web sites like Groupon advertise your services at rock bottom prices and take nearly half of the net revenue, which cancels out any ROI. Just stay away.
So, Google and Facebook are trying to corner the home improvement market with on-demand functionality. They want to make it easy for a potential customer to search, compare and solve their problem instantly.
What I don’t get is how these platform giants are going to serve the most profitable chunk of the industry. Some home improvement jobs simply don’t have on-demand clientele. Homeowners want to evaluate and court potential contractors. They don’t want to book their remodel right this moment. They want to find the right match.
That’s why Pay Per Click and Pay Per Lead are the winners for home improvement companies. Both depend on a company’s ability to court and sell the homeowner. Both have measurable ROI. And both are worth it, if you do it right.
So be careful before you go investing a lot of time and effort in one of these new platforms. They may make a great impression, but their real returns are murky at best.