LEAD GENERATION COMPANIES ARE A SCAM

If you’re in the Remodeling Industry, you’ve undoubtedly received calls from companies that promise to get you “more leads”, and therefore more business. Often the offer seems reasonable, you pay a small fee to be a member, and then they sell you the information of customers that are looking for an estimate. They may even be able to demonstrate that whatever you pay them is a little less expensive than paying for your own marketing. And this all sounds great, at first. But what they don’t tell you is how they really run their business.   

Eventually, after trying one of these services, you realize that they sold you a “bill of goods” and the “leads” they sell you, really only amount to you wasting even more time and money estimating for people that are never going to do business with you. But they’ve already got your money, and they never cared about the success of your business anyway.  

These companies are essentially predatory scams that rely on your goodwill to make a buck. Here are the top three reasons, in my opinion, these companies are not worth your time and money:  

1) Buying leads puts you in the worst position you can be: competitive bidding with other contractors  

What they don’t tell you is that the “lead” they sold you, was also sold to a number of other Contractors. In the absolute best case scenario, if you can get in front of the customer, assuming they’re actually qualified and not just kicking tires, you have about a 20% chance of closing the deal. Not everyone who wants an estimate is ready to sign a contract. If you paid $200 for that lead, those odds don’t seem too bad. But the part they often leave out is that the same lead was sold to other contractors - which drastically changes the odds of closing a deal.

   Lets say, under normal circumstances, you have a 20% chance of a project you estimate going to contract. That’s a 1 in 5 chance per “lead”. So, you would assume that if you paid for 5 qualified leads, you would get one closed job. But these companies don’t make money from you closing deals, they make money by selling leads. So what they do is sell that same lead, over and over to as many contractors as they can.   

If they sell the same lead to just 5 other contractors, your chances of closing the deal just went from 20% to 4%. At these percentages, to get just one closed deal, you would have to pay for 25 leads. If the lead is sold to you for $200, you would end up paying $5000 to get one closed deal.  

Not only that, but now you’re in a position where price is the most important thing to the customer. They have 5 contractors calling them, all offering to do the same thing. And according to the lead generation company, each contractor is highly qualified to perform the service. This leaves the customer in a position where price becomes the biggest factor. Because of this, jobs acquired through these companies (if you can even close them) are usually sold at a lower rate than you would have sold it for, had you generated the lead yourself.  

This almost guarantees the contractor will make less or lose money. And the “lead generation” company knows that! That “small fee” you paid for the “lead” they sold you seems a lot less appealing now. And they already took off with your money.   But because they’re big corporations with hundreds of millions of Dollars to throw around, they get away with it every day of the week!  

These companies are making millions of dollars on your efforts. It’s not right.  

2) The customer is told they pay nothing, while they pay everything.

As a homeowner, finding a good contractor can be difficult. There are so many horror stories, and no one wants to get swindled by a dishonest contractor. These “lead generation” companies prey upon that fear by offering to only connect you with “trusted professionals”. But as we saw above, there is absolutely no incentive for them to actually do that. They’ll recommend anyone that can fork up the cash.  

And what’s more, it’s “FREE”, which is technically true. The homeowner hands over their name, home address, phone number and email. Then the company then sells their information to strangers. But at least it doesn’t cost the homeowner anything to be paraded around like a prize pig. That seems fair, right? No. It’s not fair. It’s predatory on the goodwill established by actual good contractors. They use your hard work to peddle their scam. And no one wins but them.  

As a homeowner, how much is your personal information worth? What is the true cost of giving that over to a company that will use it for their profit? It’s difficult to define. But it certainly isn’t free.  

3) More “leads” will always mean more wasted time  

A 20% closing rate (1 in 5) is not too bad. You can make a living on that. But if we really examine what it takes to get that one closed job, the effort versus output can make it a daunting task.  

Contractors are not in business of providing free estimates, and yet that is what most of us spend our time doing. We focus on the 1 closed job, but what about the 4 you had to estimate for no return?  

We all know how it goes. You get a request for an estimate, set an appointment, drive out to see the potential customer, spend an hour or so talking over the project and gathering all the information you need to estimate the project, drive back to the office, put together the estimate, and then send it off. This entire process, on a good day, may take you 4 hours. If we look at a 1 in 5 closing rate, that means you spent 16 hours bidding the other 4 for no return.  

With a lead generation company, it’s even worse. Let’s be incredibly generous and assume that the lead you purchased was only sold to 2 other contractors. That would give you about a 7% chance of closing the deal. At this rate, you would need to purchase 14 leads to get one job. Lets again be generous and assume that you only paid $100 per lead, so it costs you $1400 to get that one job. This may not seem so bad, but if we look at how much time you had to invest, it clearly isn’t viable.  

If 13 of the 14 leads you purchased take 4 hours of your day each, only to never call you back, then you just spent 52 hours for absolutely no return. When you look at it this way, it makes absolutely no sense to pay these companies for leads.  

You’re better off generating your own leads. Financially, this makes more sense, but time wise it still doesn’t work out well for you. You’re still going to spend hours and hours every week on the 4 leads that will never call you back.  

But hey, that’s the industry right?  

Well, I’d like to change that.  

A Better Way of Doing Things  

It makes more sense to only focus on the people that actually want to work with you. But how can this be done? You have to see 5 people to get one closed deal. So, we all roll those dice every single week, and hope for the best.  

There is a better way of doing this. 

I created a program that can give anyone an accurate estimate for their Kitchen or Bathroom remodel, online in under 20 minutes. The pricing strategy is based on what it really costs, and is constantly updated. In a few minutes, without making a single phone call, someone can get an estimate that previously would have taken hours of their and some contractors time.  

So, now we’ve solved the problem of getting an estimate. But they still need to find a contractor that can deliver the service. Instead of harvesting and selling the customer information to contractors, we simply display the contractors to the customer and let them choose.  

When someone fills out our online form, along with their estimate, they get our recommendation for the top 5 contractors in their local area. Each contractor gets a dedicated page to their company on our website. The customer can review each contractor and then, only if they choose to, contact the contractor.  

When a contractor is contacted through our system, the customer already has an estimate, has already reviewed their company, and has already decided they want to work with them. All the contractor has to do is decide if they want to work with that customer. They don’t spend a single minute of their time on someone that hasn’t already got a price, and is reaching out to them to get on the schedule.  We don’t charge the customer anything for access to our system, and we don’t charge the contractors anything to be recommended.  

I’m going to say that again:   WE DO NOT CHARGE ANYTHING TO BE RECOMMENDED ON OUR WEBSITE  

What we offer is NOT a “lead”, it’s a customer that wants to work with you. And we charge absolutely nothing for it.   

So how do we do that?  

We do it by structuring our system so that we only make money, when you make money.

If you receive a request through our system, meet with the customer in person, review the work, decide you want to take on that project, and get a signed contract, only then do we make any money. Our cut is 10% of the cost of services. If the job, not including cabinets, counter tops, appliances, etc, comes to $30,000, we would collect $3,000 and the other $27,000 is all yours.  

Of course, ensuring that the project is priced correctly is incredibly important. So, we base our pricing on what you would sell it for, plus a mark-up. Then we give you the lion’s share. By doing it this way, we can guarantee that a job closed through our system will be sold for more than what you would sell it for. Not only that, but you don’t spend a single hour estimating, and you don’t pay a penny for any “leads”. We don’t harvest anyone's information and we don’t sell anything. Instead, we facilitate the relationship between homeowners and contractors in a way that actually benefits all involved.   

To me, this is the only ethical way of doing things. By structuring it so that we only make money when you do, your success is our success. I want to change this industry for the better; and this is how we can do it. 

Because we only make money when the contractor provides exactly what the customer is looking for, we are quite selective on who we will represent. We only recommend contractors with a proven record of providing excellent service. We choose to recommend 5 contractors per service zone to give the customer ample options in selecting a company to work with. But instead of price being the most important factor, service is the most important factor. Any of the 5 contractors we recommend can do the project for the quoted price. So now, it’s just a matter of finding the right fit. And the choice is the homeowners.  

This is a model in which everyone wins.  The homeowner gets an estimate in minutes and the contractor only gets requests from people interested in working with them. There are absolutely no out of pocket costs, and you make more money than if you had bid it yourself.  We don’t ask you to discontinue what you’re already doing. You can continue to generate all the leads you want on your own, and if you really enjoy estimating, then keep doing it. There is no obligation to work with anyone you don’t want to work with, and there is zero obligation to work through us exclusively.  

I firmly believe that online estimating without the contractor being involved is the way of the future. But that’s easy. The difficult part is connecting good people with good contractors. Through our system, we can achieve both.   

Everything that is currently “the way we’ve always done it” was at one point, a brand new idea. What we are doing is a brand new idea, but in a few years, I think it will be “the way everyone does it”. 

And hopefully the current model of “lead generation” , will be left in past where it belongs.

  -Yeager Bezuidenhout    

If you think you would be a good fit, and would like to apply to become one of our recommended contractors, please email daniel.bezden@probuildcreations.com