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Most businesses tend to avoid lead purchasing — and for good reason. It gets expensive, and can be ineffective if not done well, wasting time and money. It’s far better to obtain a customer through your own advertising than to buy them from a software company who may not have high quality leads and will make you fight against other companies just for the chance to talk to a potential customer.
But, nevertheless, we’ll give you an overview of what lead purchasing is, and a few options you can utilize to make it worth your while. Let’s jump in.
What are pay per lead services?
With lead purchasing services, you’re paying a predetermined amount for every lead the service sends your way. If you’ve never used a lead purchasing service before and don’t know what you’re getting into, lead purchasing services can seem like they’re cheating you. Learn each system and play it by ear. For every rare person who makes millions from lead purchasing, there are hundreds of others who end up in the red, and we don’t want you to be one of them.
Remember: you’re not purchasing a job you can guarantee. You’re purchasing the chance to speak to have a conversation with a lead – and a cold one, at that, which means you have to fight for it. You’ll have to have a strong sales ability and the bandwidth to take calls on the spot to even stand a chance.
Are pay per lead services worth it?
Our heart says no (because there are so many easier, cheaper ways to get customers), but the real answer is: sometimes.
A lot of contractors will tell you lead purchasing services like Angi and HomeAdvisor don’t work. The reality is that they can work, often return high long-term ROI, and can be beneficial to fill in gaps when business is slow – but they’re probably the single most challenging way to obtain leads. For businesses who are just starting out in a new area or have massive gaps during the slow season that need customers and connections fast, you can get a decent amount of work quickly utilizing this type of service, and can use it to propel your other marketing efforts.
But lead purchasing services are expensive, highly competitive, and every service area is different. So, your cost can vary dramatically based on a lot of different factors. This can make it difficult to get any real idea of what you should be paying and the results you should expect without first dropping a hefty chunk of money (think $1000/month). And that’s not even touching on your close rates and ROI.
Unless you’re already profitable or have the working capital (you can learn more about getting business funding here), lead purchasing services probably aren’t for you.
In fact, unless you’re on the mid to higher side of pricing for your market, you’re probably going to lose money and have a 50% acquisition cost purchasing leads (instead of 20% or lower) – or worse, be in the red. Don’t get too disheartened though – there are still ways you might be able to lower that cost we’ll go over a little later.
In general, lead purchasing services’ customers are looking for professionals, so they expect to pay professional prices in the mid to high range. But that doesn’t mean the market on these sites will reflect it, and odds are you’re going to end up in a price war with other contractors. Any time a lead is sent to you on these services, it also goes out to 3 or 4 other contractors. Sometimes, that lead even gets sent out to contractors on other websites that purchase leads off one another.
So in actuality, you’re usually competing against 6-8+ other contractors for the same lead. HomeAdvisor and Angi in particular are notorious for this practice because they’re owned by the same parent company.
Nine out of ten times, the person who’s going to win the lead is often the person who can do the job for the cheapest price. Customers are trained by these sites to get as many quotes as possible so they get the best deal and price shop instead of doing their due diligence and vetting contractors.
The way profiles are set up doesn’t help either because it’s difficult to differentiate contractors. So, the guy who’s been in business for 20 years and has the reviews and portfolio to back them up is on the exact same playing field as a guy who started his business less than a year ago.
Additionally, it’s worth noting that your reviews on these sites often don’t belong to you. They’re owned by the service itself and don’t allow you to republish them unless you buy web hosting through them (ugh). But you’re still going to need to actively try and get reviews on these sites to lower your overall costs.
How to make pay per lead services work for you
Have A Killer Sales Strategy - And Test, Test, Test
Before you even consider signing up for a lead purchasing service, you’ll need to have a solid sales cycle in place so you know the most important parts of your sales pitch to hit on, and that you’re prepared to meet objections. Our Sales Playbook can give you a more in depth guide.
Link to sales scripts downloadable
A solid sales strategy will help you pinpoint which part of the sales cycle you’re losing customers and what you need to do to improve. If someone sends you a message on Yelp, then never sees it, it might mean you need to reach out sooner. If someone sees your reply and never responds, it might mean you need a stronger pitch or more enticing offer to get their attention, or that you simply need to keep following up.
Stick to One Site
As we mentioned previously, these companies are notorious for selling or sharing leads to multiple companies at the same time. About 30% of leads on Angi get kicked over to Homeadvisor. That means it’s not uncommon to get the same lead on both platforms and have to pay for it twice – or to get a lead who says they signed up on Angi even though you’re only advertising on HomeAdvisor.
How To Negotiate
- Sign up at the end of the month when sales reps are trying to boost their end of the month sales.
- Don’t be aggressive with sales reps. Be approachable and treat the negotiation process like a conversation instead of a threat; sales guys will often work harder to secure a good deal for you if you don’t give them a hard time.
- Do your research and go into the negotiation prepared with: 1) their competitors’ prices, 2) promotions they’re running – or have run in the past and deals other people were able to obtain, and 3) a full picture of how their pricing system works. Odds are, if you can point out specific deals competitors are running, they might price match it.
- And don’t be afraid to come back to the table after a few weeks or a month and tell them you’re thinking about leaving. It’s way cheaper for them to keep a customer than obtain a new one. So they’ll do a lot to keep you. Tell them you’re tight on money and looking to cut costs, keep going: I don’t know, that’s still a little outside of what I can afford until you’re within 5% of your desired range – or you get the impression the sales person can’t go any lower.
- If you don’t get the price you want, simply say you want to think about it and ask if they can save the current price you were offered as a note in their system. Then, call back and try again later that day or the next when that person’s shift is likely over.
Don’t Feel Obligated To Commit
Again, lead purchasing services are the single most expensive, most time-consuming way to get sales. That’s not a problem for businesses who already have a dedicated sales team. But for all those small businesses and one man shops that don’t have a sales team, as soon as they start getting a steady stream of work from their initial leads, they’ll stop having the time or resources to work leads properly. So, they end up wasting money in the long term. Especially if they’ve already committed to an annual plan, like Angi requires.
Instead, look for companies that offer more flexibility in how you manage and accept leads instead of forcing you to commit to a year and take leads as they come. HomeAdvisor is a particularly good option because you pay per lead and can pause your profile instead of being forced to take quotes as soon as they come in at all hours of the day.
Use It As Part Of Your Larger Marketing Strategy
When you add up the cost of purchasing leads, it can eat up a lot of your gross profit (even 75%+) when you’re not doing large or commercial projects. So, you’ll need to look at ways to lower your acquisition cost over time, like building your other marketing tactics around it. That way, for every lead you purchase on a site like HomeAdvisor, you’re getting three or more customers.
When you go out to a job in a neighborhood, take that opportunity to advertise. Offer the customer a discount to display a yard sign on their property. Go around the neighborhood introducing yourself and handing out flyers or business cards to get customers talking. Be aware that some neighborhoods have policies in place against solicitation. Then, stay top of mind by running ads in the area and sending out EDDM. Do your best to get on local forums and websites like NextDoor and Reddit and (with that customer’s permission), show off the work you just did.
HomeAdvisor and Angi both offer badges that are relatively simple to obtain, and you can list them on your site which will help boost your credibility in customers’ eyes simply because of the name recognition. And, if you explore the backend of HomeAdvisor’s Angi Leads site, you’ll see it also offers exclusive member discounts that can help off-set some of your marketing costs, like deals on print materials and other supplies, insurance, and even credits towards business services like Indeed hiring ads.
Target By Zipcode
If you’re working, you need to be prepared to stop everything you’re doing to work a lead or – at the very least, get their phone number so you can follow-up. Here’s some advice on how to streamline your pitching process.
Download the App
Prepare a Sales Script (and Tweak It With Personalizations)
When your phone notifies you with a new lead, you want to be one of the first people to reply – not waste 15-20 minutes crafting out the perfect message only for someone else to have swooped in and convinced the lead that they’re the best person for the job before you even hit send.
Take the time to tailor a set of messages aimed at different clients and different types of services with your value proposition and different price points and save them to the notes app on your phone. Then, you’ll be able to tweak them on the fly and send them to clients.
Get Clients On The Phone ASAP
Have an Excuse to Follow Up
Always give yourself an excuse to follow up through email, like telling them you’d like to send over an official estimate. That way, you can add them to your CRM and follow up on multiple fronts.
With FieldPulse, you can create detailed estimates, quotes, bids, and proposals on the spot with your phone, tablet, or computer and send them directly to clients through email. You can also offer customers tiered pricing options you can walk through with images and descriptions.
You’ll also be able to group services and products together with detailed descriptions for common jobs, and quickly adjust prices and other calculations on the fly.
Submit Refunds For Bad Leads
Become familiar with the site’s refund policy for fake leads. Sometimes people get confused using these sites, and submit themselves as a lead even though they’re not actively looking – just browsing through prices.
You may run into situations where you’ll call a lead, and it will be another contractor who was just browsing his competitors’ prices. Or, sometimes you might be matched with customers that aren’t local in neighborhoods you service, part of your industry, or who provided fake contact information.
At least once a month, you’ll need to go through your leads and pinpoint if any fall under this category, and then call the company or submit a form to get a refund. A good lead purchasing site, like HomeAdvisor, will refund you when that happens.
Be A Pest
Don’t give up on a lead – call back leads you can’t get responses from after 5-8 attempts over the course of the next two months, or until you decide a lead is dead. Even if you submit a refund credit for not being able to get in contact with a lead, it doesn’t mean that lead won’t ever pick up.
Often, buyers from lead purchasing services are still in the early research stage of the buying cycle, comparing quotes to get a sense of the price and aren’t ready to buy yet. But this doesn’t mean they’re not interested. Sales from these sources can come in as far out as 45 days out.
A good rule of thumb is to follow up until that customer tells you to stop.
If you can’t reach a customer because the platform didn’t provide their information, you can even try a quick Google search for their real phone number and email address instead of the call tracking/disguised one the platform usually provides. Approach it as you being helpful, trying to fix issues the platform has created by doing a quick search – don’t be a creep who combed the entire internet looking for their information.
Get The Most You Can From Every Sale
Don’t be afraid to ask for reviews and referrals – this way, you’re taking a sale that costs $200 and getting another job, so you can split the cost down for every additional sale you get through that customer. And a bonus? Those leads will be a lot warmer, so you won’t have to work as hard to sell them.
Upsell, as mentioned, these people are looking for a professional and expect a higher price point even if they’re price shopping. Sell them on the value, not the price. Try your best to make the customer a permanent one, so you’re only paying for the initial connection with them.
And always, always follow up with the customer directly year over year and month over month in less intrusive ways like retargeting ads, email, or the occasional physical mail like a quarterly newsletter or seasonal discounts.
Watch Your Budget
Often, these sites aren’t entirely clear about what you’re purchasing and how much you’ll be charged and when. It’s not uncommon to see people report they’ve canceled their service but still find themselves getting charged. While they’ll refund you, it’s a good idea to keep an eye on how much you’re spending and maybe even consider making a purchase through Privacy, an app that lets you decide who can charge your card, how much, how often, and set monthly limits.
Now that we’ve discussed the basics of lead purchasing services, let’s take a look at some of the most popular options you can choose from.
Where To Purchase Leads
Angi is arguably the largest, most popular lead generation service for contractors and pours millions into advertising their service. So, you’ll have no shortage of leads with exposure on a national level. Angi’s list works best for smaller projects and one-off jobs.
If you fit this description and have the time to work leads as soon as they get in, Angi’s probably going to be the best bang for your buck because you’re paying for a subscription, not per lead.
HomeAdvisor, meanwhile, works best for bigger, more expensive jobs or jobs with repeat business – which you’ll generally want to aim for regardless. After you join Angi Leads (formerly HomeAdvisor Pro), you can pay a monthly/annual fee to be listed and then pay for every individual lead generated by HomeAdvisor.
Like Angi, you’ll get a high volume of high quality leads. But, unlike Angi, you have a lot more flexibility and power over how you’re presented to leads and when you get leads.
Profiles are customizable, you can pick and choose which leads you want, and it’s easy to modify spend targets and pause leads so you don’t waste money during times when you don’t have the bandwidth to properly work leads. Homeadvisor is also usually pretty good about crediting unqualified leads.
If you want to purchase leads from Yelp, you’ll need lightning fast response times. Yelp doesn’t give you clients’ information, so there’s no way to follow up with customers unless they reply via messenger.
Plus, your response time is displayed on your profile, and customers will likely pick the business they believe they can get the quickest response from first. Have a script prepared that you can tweak, and try to get customers’ phone numbers ASAP by asking if you can call.
Also be aware that Yelp’s Request A Quote feature can be deceptive. If you have this feature turned on for your profile, you could also be sending traffic to your competitors. When a user finishes filling out information about their request, they’ll be presented with the option to ‘Get competing quotes’, which is selected by default.
Yelp also makes it incredibly difficult to get high quality reviews because of how their algorithm works.
On paper, Porch sounds good. They’re partnered with big name companies like Lowes, the BBB, and other retailers to find professionals to do home improvement projects. Their leads are cheap. You can pick and choose which leads you want, and you can even see how many other contractors received those leads before reaching out to them.
Unfortunately however, you won’t get a ton of leads from them – and they don’t always offer the best quality leads. Often, these leads are price shoppers who stumble upon Porch while price shopping deals. And what’s worse? Their credit system to refund bad leads isn’t always the best.
If their connection with big name companies like Lowes is appealing, you might want to cut out the middleman and look at companies like Home Depot’s and Lowes’ pro referral programs instead.
Thumbtack works a little differently than the aforementioned lead purchasing services. On Thumbtack, you get to pick the jobs you want, but it’s first come, first serve and only 5 people can bid on each project. So, you have to get in quick if you want to get the really good, big projects. Create multiple templates for messages to bid fast and use.
In these templates, you’ll want to greet the customer by name, tell them who you are (and if you have clients in their neighborhood), attach photos, and let people know the benefits of your service and what they’re getting. You can also send them to a landing page or booking form on your website – then you’ll be able to retarget them with ads!
What’s also cool about Thumbtack? The lead price gets discounted as it’s displayed to more and more companies and Thumbtack only charges you if a customer reaches out to you.
To increase your sense of trust among users, use a photograph of yourself in your icon instead of your logo and spend some time really bulking up your profile to make it robust and complete. Complete the background check. Create and post a video where clients can get to know you. Whatever helps make you feel like a real person.
Like Thumbtack, Bark handles the process of compiling project details and you can pick and choose which jobs you’re interested in. However, you’ll need to purchase credits in order to contact leads and submit proposals, and the cost of each proposal varies based on the service, job value, and competition.
There are a number of benefits to trying out the service though. If you don’t win business from your first purchase, Bark will refund you. Profiles are highly customizable. And you get customers’ phone numbers and email addresses to follow up.
There are a number of building leads websites out there, but of them, BuildZoom is the most interesting. Its results actually take expertise into account, like licensing, and it encourages you to meet clients in-person. While you’re charged 2.5% of your agreed upon price with clients, BuildZoom only charges you when you’re hired – which means you can technically generate leads for free.
Houzz is aimed more at residential businesses. Unlike the other options on this list, you don’t pay directly for leads. Instead, you have the option of purchasing their Ultimate Plan, which includes access to their lead generation program.
This gives you access to the Project Match feature where up to 5 pros are matched with homeowners based on a questionnaire homeowners fill out. Then, you and the homeowner receive either other’s information so you can explore working together.
Lula is a lead generation service that specializes in property managers and real estate investors. It charges a percent of every completed project, and can help you get your foot in the door with businesses with the best connections who also happen to offer long term work.
Same goes for Amazon. Amazon is now offering its own service selling platform. While you don’t have to pay for leads, you do have to pay for a portion of revenue off the service (20% of everything up to $1000, 15% of everything greater than $1000 or recurring appointments). You’ll also need to provide licensing and general liability insurance.
Congratulations! You’re now well prepared to utilize lead purchasing platforms, should you choose to use them. We’d recommend that you put more emphasis on your organic marketing efforts, but if lead purchasing fits well with your business model and budget, go ahead and give it a try. Remember, only utilize lead purchasing services when you have an ample amount of marketing budget stored up.
For more information on paid advertising, head back to our Sales Playbook.
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