Why We Require Pre-Payment From New Clients

Many of our prospective clients are quite intrigued by our promise of real time, exclusive, high converting leads. But after learning about our pre-payment policy, they instantly dial back their interest level.

Even though we’ve attempted to clarify how different our service is from the large national home improvement lead companies throughout our services page and FAQ page, I’d like to greatly expand on this, along with how we completely eliminate all risk for new clients nonetheless.

Shared Lead Companies Have Put a VERY Bad Taste In Your Mouth

Like I stated in my last post, I’m very familiar with these lead companies, their practices, their weak ad campaigns (details below), and most importantly, how pathetic their leads are as a result. I’ve read the negative posts about these companies on contractor forums like Contractor Talk. I’ve seen firsthand how their reputation has suffered greatly, to the point where the largest of them has recently changed their name. Granted, some customers of theirs with great sales funnels and follow up systems can make the leads work, the majority of contractors and home improvement businesses need a better quality lead to produce a great ROI. My point is, I totally understand your reluctance to pre-pay for leads.

It’s unfortunate that industry standard lead quality is so low. But one of the whole reasons we moved to a performance based, pay-per-call compensation structure is because I see an opportunity to work with select businesses across the country we can form great relationships with and provide a ton of value for, along with dramatically improving our positioning in the marketing services space.

That brings me to the reason why home improvement business owners are reluctant to pay in advance for leads. They’ve purchased leads from too many providers that sell low quality, low production cost leads, and as a result are skeptical of ALL lead providers. With low quality, low production cost leads, advance payment isn’t necessary before starting to fulfill leads to buyers. Let me tell you, if we spent as little time and effort producing generic, shared leads like most companies, we wouldn’t require advance payment from new clients either.

How Shared Lead Companies Produce Leads

shared lead provider adwords ad

Shared lead AdWords Ad

Again, you can see the long version of how shared lead companies develop leads from the post I linked to above, but for the purpose of differentiating our service, let’s review again real quick.

Shared lead companies advertise the opportunity for home owners to receive multiple bids from local contractors on whatever project they need done for their home. See the Google Adwords ad (shown above), and the landing page prospects arrive at after clicking the ad (shown below).

shared lead company landing page ad

Shared lead company landing page ad

After the home owner completes the above form (which of course doesn’t pre-sell or pre-qualify to any meaningful extent), the data is sold to 4 – 5 service companies who want leads in the home owner’s geographic area, and who offer the service they need. Next, the lead buyer must win the project over the other 3 – 4 competitors who also bought the same lead. I’ve heard leads are sold to an average of 4 service companies, but in a few forums out there, it’s been said they are sometimes sold to 8 – 10, depending on area demand. This is about as minimally as you can possibly qualify a lead, resulting in very low lead conversions and ROI for most businesses.

Our Lead Campaign Development Process

A lead, is a lead, is a lead, right? Wrong.

In simplest form, we provide the same service as these shared lead companies, but upon closer inspection, our program is a completely different animal! Let’s get into how that is…

Comparatively, for us to produce real-time, 100% exclusive, high-converting leads requires a completely different commitment to the customer, and a much higher time and money expense to develop the campaign. And of course, being exclusive data, the payoff for us is much less. We’re effectively making about 20% of the per-lead ROI of shared lead companies, considering they are only sold once vs 4 – 5 times—in addition to—the more expensive and time consuming campaign development.

So let’s review our campaign development process so you can get an eye-opening glimpse at how much work is involved to develop pre-qualified leads that convert at a high percentage.

Geographic and Competitive Research
After being contacted by a lead prospect by phone, or via our leads request form, our first goal is to assess the business owner’s needs and expectations. I know there’s a 90 – 100 percent chance they’ve bought leads from the shared providers, and so I like to build rapport by chatting (mostly them venting) about their previous lead buying experiences.

The first question prospects ask is always about what kind of leads we provide and what our program offers, followed by how much they cost. Apparently, they don’t have time to read our FAQ page. As I’m writing this we just received a call from someone who went right to the cost question, to which I quoted $75 for bathroom remodeling, and he said, “OK thanks” and hung up. But, according to the fee schedule of the top shared lead provider, they charge $65 per lead which is shared with 3 – 4 competing businesses. Let me think… $75 for real-time, exclusive leads from us versus $65 for non-real-time shared leads with 4 – 5 competitors…. hmmm, tough decision…

Are you beginning to see our perspective?

After that, we collect as much info as possible about the prospect’s business operations, how they get customers, lead volume requirements, goals, and much more. This conversation can be quite long or short, depending on how well we connect, which is highly dependent on how open-minded the prospect is about alternatives for growing their business. This is a very consultative conversation, much like the inspection and estimate process contractors go through with their prospective customers.

As we’ve gotten more and more inquiries for our lead gen program, it’s required more and more time processing leads, so we’ve been asking prospects to complete an 18 question “client interview” form to weed out the looky-loos from the serious business owners. It’s worked very well. I actually like getting much fewer inquiries, because this automates the qualifying process and only puts me in contact with highly motivated, ambitious prospects. Yes, you can qualify prospects for your service to ANY level through your marketing funnel, which is the whole point of this post. We don’t like the churn and burn business model that attempts to serve everyone very little value, like the shared lead companies—at least not for our business.

After the initial interview, we devote about 2 hours researching the prospect’s area and competition. The competitive analysis is done partly with a manual process, partly through an internal software program, and is usually focused on finding out which competitors have the best online visibility and positioning. With the sophistication of Google and other search engines these days, the most visible businesses online are usually the busiest and most successful. This isn’t always the case, but generally, there is a high correlation between the level of success and online visibility. This is why we specialize in search marketing, but that’s a topic for another post.

Keyword Research
The next step in our client setup process is keyword research, which is essentially finding out which keywords consumers are typing into search engines and other online properties to find our client’s service. You may think this is easy, but usually the most obvious keywords are not the ones that convert into leads the best.

Offer and Ad Development (Conversions)
This is one of the two highest value skills we offer and include in our lead gen campaign development process. The other is traffic generation (discussed below). 99% of home improvement service businesses that have a website know absolutely nothing about getting online traffic and conversions, the two most critical portions of any online marketing campaign. This tends to make them discount the importance of online marketing, and they give up. Well to be honest, unless one wants to take up a new vocation, it’s best to just use exclusive lead gen service like ours, or hire the services of a skilled online marketing consultant.

We go to great lengths to develop the best offer in the marketplace for each lead gen client. A great offer serves several purposes. It attracts more prospects, it separates and distinguishes you from the competition, it increases revenues through increased market share, and it further increases revenues through re-marketing to a larger customer base. While front end profits on a per customer basis may be lower, these aforementioned benefits of advertising a good offer more than make up for it. An example of a good offer is NOT a certain number percentage off. First of all, everyone advertises that, so prospects are blind to it. Secondarily, prospects are smarter than we give them credit for, and they know the service provider could be simply building a percentage off figure into their project estimates.

A tangible offer works much better. A great example for a window installation company would be—buy 3 windows get one free, buy 6 windows get 2 free, or buy 10 windows get 3 free. The perceived value is much higher with tangible product savings, instead of some nebulous price decrease that could easily be faked. Granted, a free tangible product as part of an offer could also be built into the price quote, however, it isn’t as questionable for consumers.

Website Development
We don’t just whip us some generic over-simplified web page like the one you see above. We build a full blown custom site for WordPress, which is far and away the best website platform available in our extremely biassed view. Thesis is not a pre-designed template like most WordPress themes, which is what you will get hiring a typical marketing consultant or web developer.

Each of our lead gen client sites are one-off, custom developed sites, including professional copy written content, a blog for ongoing content marketing and SEO, social media properties, social sharing… the works. But most importantly, our sites are highly focused on conversion—easily the most important aspect of any online marketing campaign. If you’d like, feel free to search for custom Thesis developers (who aren’t offshore) and you’ll be quoted no less than $2,000 for custom thesis development, but more likely in the $3,000 – $5,000 range.

Most of our clients have no knowledge or reference for what the difference between a poor performing site vs a very well performing site is. But when it comes to online marketing, websites in the $3,000+ price range, are far and away better for not only visitor experience and conversions, but also with organic search rankings. Believe it or not, Google identifies high quality and authoritative web properties very efficiently, and rewards them through higher organic search rankings for relevant keywords.

I would show a screenshot of one of our lead gen sites, but that’s reserved for active clients who receive all the calls from that site…

Website Promotion (SEO)
After the site for our client campaigns is built out, promotion begins. We promote our client sites with 100% white hat SEO and link building strategies for long term search engine ranking sustainability and authority.

Again, much like standard marketing consultants, most SEO services take shortcuts by building low quality, automated links on article directories, web directories, blog networks, and the like. We take great care in which external web properties we link back to our client sites on, and always make sure that Google will view the link as high quality, natural, and created by hand – not automated.

Not only that, but we know the best percentage of anchor text should be keyword rich, vs non-keyword rich, which makes a world of difference after the latest Panda, Penguin and Hummingbird Google algorithm updates of 2012 and 2013.

Obviously we’re getting into some territory that’s way over the heads of most home improvement service companies that we develop leads for. But the point is, we flat out don’t take shortcuts with ANYTHING we do. The fact of the matter is, when our interests are directly aligned with those of our clients because we work on a performance only basis, we don’t want our client campaigns compromised by future Google algorithm updates focused on quality, or anything else for that matter.

Non-Paying Clients

We’ve driven leads to our fair share of clients who appeared to be very trustworthy, but as it turned out, just wanted all the leads and customers they could get before being invoiced. Unbelievably, there are ripoffs who want to shoot themselves in the foot and kill the goose that lays the golden eggs.

Without naming names, we had an appliance repair company out of Brooklyn contact us who specialized in commercial refrigeration repair and maintenance, and who claimed to have an “unlimited” budget for leads. They wanted 50 more leads a week than their current volume. Refrigeration was a new market for us to service at the time, so we spent a good two weeks including multiple lengthy phone conversations getting to know the client and their business, researching the market, the local competition, the major refrigeration vendors, keywords, the client’s sales proposition, warranty, sales funnel… the whole campaign dev process discussed above basically…

We then built a custom website with landing pages for each Adwords ad group, launched the Adwords campaign, sent them several very good leads—we record all calls, which is how I know— and the client closed ALL of them. Two of the leads actually called our tracking number back to thank the client for the job they did, and judging by the conversations with the other callers, I’m 98% positive they were closed too.

Since this was a new client we invoiced him rather quickly, especially since we incurred AdWords expenses to produce his leads, and we wanted to test his trustworthiness—a common practice of ours. What happened? The client just didn’t pay!! Normally we’d think he wasn’t profiting enough, or something along those lines, but with a $98 service charge, plus labor charges he made, he definitely would have profited very well on an ongoing basis with the $25/lead fee we were charging (not bad for mixed residential and commercial refrigeration leads). However, after multiple unanswered collection calls to follow up on the invoice, and never hearing back, we determined he was simply trying to get as many free leads and jobs as possible. We paused his campaign and shop it out to another appliance repair company in the area. That’s another great benefit to working on a performance only basis—it’s easy to fire a client if necessary and quickly replace them. So it wasn’t much of a loss, but in today’s difficult economic environment, I’m encountering more and more prospects that want handouts, or who have unrealistic expectations on many fronts.

Anyway, this post is now approaching 2500 words, so I’ll save other similar stories of non-paying clients for another time. But the point is, the only effective way for us to eliminate this issue is to require pre-payment for new customers. Since we’re not a high client turnover operation like the other construction lead aggregators, that’s fine with us. I’d rather have fewer clients that we have a symbiotic, mutually beneficial relationship with, who we can work very closely with and do exceptional work for. Once a relationship is in place with a newer client, and a few months of invoices have been paid in full and in a timely manner, then alternative payment terms can be discussed on a client by client basis.

If you’ve read this far, I’d encourage you to comment below about your experience with leads for home improvement in the past, or anything else you’d like to mention.

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