Learn the pros and cons of using lead services for contractors
When it comes to marketing your home services company online, many contractors turn to HomeAdvisor to generate leads for new customers. As the industry leader in the online marketplace, HomeAdvisor opens a door for contractors to grow their brand.
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Sites such as HomeAdvisor help homeowners find your home services company when they need a plumber, HVAC tech or electrician, often marketing their services as a free, easy and convenient way for busy people to find a contractor.
Websites like HomeAdvisor also market lead services for contractors for a fee, but do they work?
Homeowners say they use companies like HomeAdvisor because the service is free to use and it takes the hassle out of hiring a contractor and checking references.
Contractors, on the other hand, must pay a fee for each new lead, which they say often don’t turn into jobs because the customer was simply price-shopping or the lead got shared with one of several local competitors who called the customer first. If online reviews are any indication, more contractors dislike HomeAdvisor than sing its praises.
At ServiceTitan, we’ve made it our mission to help professional home service companies grow their businesses, increase job leads, and make the most out of every marketing dollar they spend. We understand everyone’s hungry for more business. We just think buying leads should be your last resort.
Here, we take a look at how HomeAdvisor works, how HomeAdvisor competitors stack up, and how other contracting marketing ideas can generate better leads for your business.
What is HomeAdvisor?
HomeAdvisor is an online home service directory that allows homeowners to search for electricians, plumbers, landscapers, and other contractors to hire. Free sites like HomeAdvisor help homeowners match a particular job with available contractors in their specific locale.
Previously known as ServiceMagic, HomeAdvisor started more than 20 years ago and is now one of the biggest players in the online home improvement marketplace. InterActiveCorp (IAC), based in New York City, bought the company in 2004 and changed its name to HomeAdvisor. IAC also acquired top-competitor Angie’s List in 2017, merging the two companies to create the ANGI Homeservices brand.
The two companies operate separately but with a similar mission: To provide peer-based recommendations and reviews for homeowners, and lead generation for contractors. HomeAdvisor claims 11 million users; Angie’s List reported 5 million users at the time of its acquisition.
How does HomeAdvisor work?
With so much information available at your fingertips in today’s digital world, it’s no wonder the HomeAdvisor cost-estimating tool attracts homeowners. It breaks down costs for any type of home improvement project, based on real dollars others paid for a similar project in the area.
In addition to providing a cost estimate, HomeAdvisor collects data from the homeowner about a particular project and uses its patented ProFinder technology to find the best match for contractors based on availability, service type and location preferences. HomeAdvisor then sends the job lead to multiple contractors.
For the homeowner, HomeAdvisor appears to be free, easy and convenient. They can find local contractors quickly and schedule appointments online, and eliminate the hassle of trying to compare multiple estimates or check a company’s references. Both HomeAdvisor and Angie’s List claim to vet contractors through license verification and criminal background checks.
To understand how HomeAdvisor works (or doesn’t work) for contractors, one must peel back the layers of the onion, so to speak.
Contractors who sign up to receive leads from HomeAdvisor not only pay an annual listing fee, they also pay a fee for each new lead, usually ranging from $15 to $50 per lead up to as high as $80 to $100 per lead in some markets.
HomeAdvisor sends each job lead to multiple contractors in the designated area, so unless you’re constantly monitoring your account and calling consumers back immediately, it’s likely a competitor will snatch up that lead before you do. Each contractor still pays for the lead, even if it never resulted in an actual job.
Hundreds of contractors in multiple states reportedly have joined a class-action lawsuit accusing HomeAdvisor of fraud. The lawsuit claims the company distributed bogus leads, blatantly disregarded contractors’ lead budgets, and adopted internal procedures to discourage refunds.
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How much does HomeAdvisor cost?
Homeowners often wonder ‘How much does it cost to join HomeAdvisor?’ The term “free” seems appealing, but it comes with a few caveats.
As soon as a homeowner signs up, their personal information gets sold as a potential lead to multiple contractors, who immediately start blowing up their phone or email inbox with offers to do the job. Homeowners complain about receiving too many calls from contractors, some of whom are not even in their local area.
Others claim HomeAdvisor sent contractors with criminal histories to work in their homes, despite the company’s claim all contractors listed on the online service directory pass criminal background checks.
For contractors who sign up to receive leads from HomeAdvisor, the cost of doing business often outweighs the benefits. To get listed on HomeAdvisor, contractors must pay an annual fee of about $350. Then comes the high cost tied to leads, which may result in thousands of dollars wasted each year on jobs that don’t pan out.
Tried and true marketing efforts, such as building a strong client base through word-of-mouth referrals, take time for any business to achieve. For new contracting businesses, digital marketing companies like HomeAdvisor can help you reach potential online customers not currently on your radar.
With more than 90 percent of consumers using the internet to find a local business in the last year, listing your company on a heavy-hitter website like HomeAdvisor offers advantages for helping your own home service brand rise to the top of organic Google searches. Just be sure to read the fine print before signing up.
When agreeing to HomeAdvisor’s terms of service, you allow HomeAdvisor to use any information provided in your company’s profile to direct links back to their own site. This essentially allows HomeAdvisor to promote itself using your company’s good name.
HomeAdvisor competitors offer lead services for contractors
In addition to Angie’s List, HomeAdvisor competitors joining the online home improvement marketplace include Houzz, Thumbtack, Porch, Google Local Services, among others.
Each offers its own advantages and disadvantages for the consumer and bidding contractors. Here are some of the pros and cons of each:
Pros for consumers: Free to sign up; background checks on contractors; long history of consumer reviews.
Pros for contractors: Leads from qualified customers; trusted brand with high visibility.
Cons for consumers: Must pay for add-on services; reports of poor customer service.
Cons for contractors: Must buy ads for higher search visibility; high competition and no guarantee for leads.
Pros for consumers: Free to browse contractors’ profiles and large catalog of photos; create and share idea boards; buy products from site.
Pros for contractors: Free to create company profiles with lots of photos and reviews; buy ads to boost profile on search results.
Cons for consumers: reports of poor customer service to return or exchange purchased items; negative reviews may be screened (not posted).
Cons for contractors: Buying ads doesn’t guarantee jobs; reports of poor customer service.
Pros for consumers: Free to use; can post your own project and choose which contractors’ bid to respond to.
Pros for contractors: Instantly send quotes to homeowners to bid on jobs; connections sometimes lead to profitable jobs.
Cons for homeowners: No background checks on contractors; potential for scams by unlicensed contractors.
Cons for contractors: Pay for communications, not leads; prices keep increasing; mostly handyman type jobs.
Pros for consumers: Free to use; can post projects, budget and timeline.
Pros for contractors: Choose which projects to pursue; pay to receive leads from local Lowes stores.
Cons for consumers: No guarantee of quality work; no guarantee of background check.
Cons for contractors: Difficult to cancel subscription; reports of poor customer service.
Google Local Services
Pros for consumers: Easy to search online to find contractors nearby; read reliable Google reviews.
Pros for contractors: Pay only for legitimate phone calls or leads; no need to buy ads; connect with consumers online at the time they are looking for your service.
Cons for consumers: May be difficult to maneuver if not internet-savvy.
Cons for contractors: Must have strong reviews on Google Local Listings; can’t buy ads to boost rankings.
Companies like HomeAdvisor try to help homeowners simplify the process of finding a home service company, but there’s no guarantee for quality work.
While other sites similar to HomeAdvisor allow contractors to pick and choose which leads to pursue, none seem to offer contractors the option to only pay for leads that turn into actual jobs.
HomeAdvisor alternatives to generate better marketing leads
Today’s consumers search online for home services, which is why sites like HomeAdvisor continue to grow. Big online companies with more marketing dollars to spend tend to rank higher when a consumer organically searches for “a plumber near me.”
Looking for an alternative to HomeAdvisor? Instead of paying for online leads, invest money in your own website’s search engine optimization (SEO) and manage your Google reviews to dramatically boost your company’s visibility and increase your ROI. Many highly successful home service companies agree this tactic works, especially when combined with automated marketing campaigns and targeted email marketing.
By optimizing your website to capture those same online leads that result from consumers searching online for who to hire, you’ll no longer be paying for dead-end jobs or depending on another company to boost your online reviews.
While contractors can’t pay Google to rank higher online, a company can boost its rankings with more 5-star customer reviews, quality website content with high-performing keywords, easy navigation, site speed, and other factors.
Is HomeAdvisor worth it for contractors?
For companies just starting out, sites like HomeAdvisor can help you get the word out and grow a loyal customer base. During slow seasons, they also help home service companies pick up additional work.
Just keep in mind companies like HomeAdvisor, Angie’s List, Porch, Thumbtack, and Houzz played a more important role when online marketing took off more than a decade ago. With so many online tools available to contractors today, there’s no reason not to rely on your own optimized website with honest reviews from real customers to generate leads.
Most consumers search online to find a home services company, but not every customer who needs a contractor uses HomeAdvisor or sites similar to HomeAdvisor. They simply use an internet search engine to find you, so make sure your mobile-friendly website stands out as a clear HomeAdvisor alternative in an ever-competitive online marketplace.
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