One customer acquisition model that has been revived from the dead in a big way is the pay per lead or introduction model.

If you enjoy pitching your services to interested clients then pay per lead (“PPL”) might work for you.

PPL offerings have grown in recent popularity as more and more individuals are going out and starting their own businesses on their own (thanks to lower marketing costs, lower legal setup fees, lower healthcare costs, mobilization of work).

For the most part you have to be more of a pro-active business owner to participate on these PPL platforms.  You – the business owner – can pay for direct access to a client who is in search for specific services that you specialize in. Then it’s up to you to close them!

The model isn’t new, but you’re seeing more platforms offering this PPL product.

 

What’s the deal?

HomeAdvisor is one of the originators of the PPL model at scale. It was founded in 1998, formerly known as ServiceMagic. ServiceMagic was a pureplay PPL platform allowing professionals of all types (musicians, handymen, therapists, you name it) to simply pay for incoming leads and pitch the business.

In 2012 the company changed its name to HomeAdvisor, and started to evolve its ad products and focus purely on home services.

As a professional on HomeAdvisor, you can sign up and pay to join the network (similar to Angie’s List it’s a “pay to get access” monthly / annual fee). Once you’re in, then one of the main offerings is being able to “turn on” leads. What that means is you set a budget and HomeAdvisor sends you new business that you can try to win.

That new business comes from clients submitting jobs. HomeAdvisor lets clients fill out detailed requests of the services they need. This runs the gamut of the type of home services needed (e.g., landscaping, remodeling, cleaning, plumbing, etc.), the timing of the service needed, the location and more.

You – as the service professional – will get notified of these job requests and it’s up to you to close the customer. You can call the client, email the client, text the client – do whatever you think will win you that business.

As you can imagine, this type of marketing platform can be ideal if you want clients immediately (like a new business owner) and are energetic enough to pitch for that business. I pulled a solid top 3 tips from a blog when using a PPL platform like HomeAdvisor in order to maximize your return on investment which I thought was very accurate:

            1) Call leads immediately

· “This is the single most important factor to making HA work for you, even more so than having good reviews.  I’ve found that 9 times out of 10, if I call within minutes of receiving the lead, I get the business.  Some customers have even told me that they always choose the first person that calls”

            2) Sign up for small job leads

· “Leads for big jobs are expensive at $50 and up.  With price shoppers all over the place, this can eat into your profits really fast.  Thats why I recommend only signing up for leads for jobs under $15.  You will still get your foot in the door and can bank on the return business.”

            3) Eliminate leads that don’t pay

· “After you’ve been using the service for a while, it’s a good idea to go back over your leads and see which categories pay off and which one’s provide mostly junk leads.”

So get a game plan in place so that when you do turn those customer leads ON, you are immediately ready to act and beat out the competition!

The platform has also invested in tools like Instant Booking and Instant Connect which allows clients to reach out to you directly if they like your profile and reviews. Still a small part of the platform activity but it’s growing.

How do I set it up?

Go to the “Pro” section of HomeAdvisor: https://pro.homeadvisor.com/how-it-works/

Watch the 2 mins video of how the ins and outs work. Then you can sign up for free.

The setup process is multiple steps, and you are asked to provide even references and background information.

HomeAdvisor is pretty thorough in terms of its screening process, so setting everything up takes a bit of time. You get a dedicated marketing consultant contact who will reach out and who you can call or email with questions throughout setup. Then you’ll be prompted to set up your subscription and set up how much you want to start paying for leads.

What are the risks?

In 2012, ServiceMagic changed its name to HomeAdvisor in an effort to re-brand itself. If you Google “ServiceMagic” you will see a laundry list of customer complaints about the quality of the professionals on its platform. Homeowners were complaining that the service providers who performed the jobs did terrible jobs. But more so are complaints from the providers themselves talking about how the leads coming to them were bogus in a lot of cases, and they spend all this money to pitch customers with no business coming to them. To shed this beaten down reputation, ServiceMagic brought in a new CEO in 2011 and changed its name to HomeAdvisor.

HomeAdvisor is also pretty expensive. It costs ~$250 per year to just be a part of the network, and then you’ll need to pay to get leads. We have heard feedback from participating professionals that you need to be careful turning your leads option ON, because if you don’t pay attention then HomeAdvisor can send you a bunch of leads in a short amount of time and start charging your card on file instantly…so you need to stay on top of your leads option and turn it OFF if you’re busy with work or taking some downtime.

Also, for a lot of business owners, this type of lead ad model is very tough to master. The risk is you spend a lot of money to get these leads with none of them panning out. Sometimes you were too slow to call the customer so they went with a competing provider. Other times your bid was simply too high. Or customers can always get cold feet and you call but they never pick up and you never know why.

Just be careful on that upfront spend – before you know it you could be in the hole hundreds of dollars without any clients, any clicks, any “likes”, any reviews.

 

What’s the deal?

The Thumbtack model is similar to HomeAdvisor. The 2 main differences being (1) there is no monthly or annual fee to join the network, and (2) the industries it services are not just limited to home improvement – but all types of services like dog walkers, lawyers, photographers, tutors and more.

Clients can go through the similar “concierge” flow, specifying their service needs, and then that job detail gets blasted to up to 5 professionals in that specific area of need.

Thumbtack sets the cost of opening up that client’s contact information for you to pitch – and the cost is in “credits”. Each credit costs $1.67 to buy and leads can go for anywhere from 2 to 9 credits (so $3.34 to $15.30 per lead). That’s another different between Thumbtack and HomeAdvisor – Thumbtack has more control over which leads you want to spend money on (based on limited information).

Once the credits are spent – then it’s up to you to close!

Another consumer use-case is if clients actually Google the specifics of the industry of service needs and the location, then Thumbtack’s page results actually pop up high on Google and is accessible directly by customers. For example if I Google “dog walkers in Seattle, WA”, one of the results in Google will be like the below link to Thumbtack’s list:

Clients are able to review your profile (like description, reviews, photos, etc.) and “Request a Quote” from you directly. Note that you – the professional – will still be required to pay credits to find out who requested said quote from you (as no website or phone # details are included on your profile for direct contact).

Converting first-time clients into recurring clients is crucial with Thumbtack as well. If it takes you multiple leads before closing one, then your initial return on investment might not be that great, but if you can convert that client to book with you in the future, then your ROI could look great.

How do I set it up?

You can join Thumbtack as a “pro” for free: https://www.thumbtack.com/pro

The setup process is pretty simple and straight forward. Along with setting up your profile, Thumbtack will give you a link to your specific profile – they encourage you to send this link to past clients to build you reviews. I would recommend doing this. More reviews and content on your profile will make their system think of you as more relevant (and higher quality) and will send you more leads for you to bid on.

What are the risks?

With Thumbtack being a similar PPL model as HomeAdvisor, similar risks around cold leads and tough bidding apply. You can wind up buying and using a ton of credits, and not get any new business when it is all said and done. There are some reports out there stating on average you win 16% of all leads you buy – in that case you need to make sure you are not spending a lot to buy said leads…or if you are you need to make sure the final payment you get from the customer is a lot more than the amount you spent on all the other lost leads.

Another risk is that the bidding and pitching system typically leads (a lot of the time) to a “lowest price wins” game. Meaning, the clients will often tend to accept the lowest priced service no matter how many professionals reach out to them. Thus, similar to discount platforms, this model attracts customers who are looking for price over quality, and the next time they need a service (the same service done again even), they will go back to the well for anyone who can give them bottom-barrel prices again.

 

What’s the deal?

TalkLocal has a bit of a twist. As a smaller company, it isn't technically a PPL company but more of a “Pay per conversation” type of platform. And just like how it sounds it takes a much more over the phone / conversational take to introducing a business to a potential customer.

As a professional, you can preview incoming customer leads for free over the phone (as in you get a call from TalkLocal and you can hear the information about the job request) and only pay when you actually opt-in and speak to a customer. It covers about 50 different service verticals, focusing around home improvement like plumbers, handymen, HVAC, and roofers.

Just like on Thumbtack, as a client you can go to TalkLocal and specify your location, the job or service details you are in need of, and contact (i.e., phone #) details. TalkLocal then blasts the most relevant service professionals in the area via automated phone call. When the pro picks up, they can opt in to accept the job over the phone, then TalkLocal immediate connects them to the client by calling the client’s phone. Once the client picks up, the business gets charged the “introduction” fee. Then it’s up to you, the business, to pitch your services over the phone.

How do I set it up?

Head to http://www.talklocal.com/claim/ to claim your business on the TalkLocal site. In addition to entering your business information, you select your job preferences, service area radius, and your desired call frequency/bid level all of which can be adjusted at any time.

Joining the Premium plan will send you a higher volume of leads, which the company says on average costs $16 per call introduction. The free plan only sends businesses jobs that member companies (like Yahoo! Local) have passed on.

What are the risks?

TalkLocal is small in size so the volume of client requests and introductions will be relatively small. Take this into consideration when you spend time setting up and learning the system…you should not spend hours of time with a platform that may or may not provide you a lot of new customer liquidity. But arguably it shouldn’t take you very long to get set up.

The company states that average cost of a new client introduction is $16. Keep in mind that this does not guarantee you will win this business. As soon as the call is connected, you are out $16. Arguably, if you are talking to the customer over the phone, the chances of converting that client to a paying customer is higher than sending them a simple bid through a platform like Thumbtack – it’s more personal to talk on the phone! But the jury is still out on that theory, so you need to do your own testing to see how convincing you are to win a customer at an average $16 per “opportunity”.

 

Overall Pay Per Lead Platform Thoughts

The PPL model is becoming more popular with a certain sect of consumers because it makes price shopping quite convenient for services. You tap a few buttons, and then in minutes you’ve got professionals calling and emailing you with specific quotes on cost of service as well as a nice little pitch to go along with it. It’s almost like a concierge service for the clients, all the while delivering clarity around pricing – and that means lowest price in most cases.

As a result, we’re starting to see the likes of Google enter the space with Google Home Services. They’ve started first in the San Francisco Bay Area (in beta), so if you’re a provider in that area I would sign up. Clients can “Send Requests” for a quote from you directly from Google (without doing any extra work like visiting another site):

Angie’s List is testing out its “Lead Feed” product offering even, which is again very similar to the PPL model.

Point being, you’ve got an increasing amount of options to play around with to test out if the PPL model is right for your business. I would get a game plan in place as to what your course of action is once a warm lead comes your way, then spend some money to see what it takes to convert leads to booking clients and also get a sense as to how many of these new clients you’re converting to lifelong customers.