Beware Of Lead Generation Companies

HomeAdvisor was getting sued by a group of eight home-improvement companies. Here are just two of the several allegations:

  • The leads sold to the companies are “overwhelmingly bogus” and “illusory.” They are often “over distributed” or contain, among other things, disconnected phone numbers, people who are not homeowners or contacts for nonexistent residences.
  • When companies cancel their HomeAdvisor membership, HomeAdvisor leaves their company profile page on its website and sells the information (entered by individuals who attempt to contact the company) to other Home Advisor members.

The city of San Francisco was also suing HomeAdvisor for making false or misleading claims regarding background checks on contractors.
You might be thinking that buying leads from Angie’s List might be a safer bet. Think again. Angie’s List was acquired by HomeAdvisor in October 2017, and faces its own legal challenges. Angie’s List settled a class-action lawsuit for $1.4 Million for manipulating search results and reviews.

Buying Leads

None of this is surprising to me. Over the last ten years, I’ve spoken with many floor dealers who bought leads from various lead generation companies—including HomeAdvisor and Angie’s List—and the results are rarely good.

For example, one dealer I spoke with was spending $6,000 per month buying leads. Twelve months and $72,000 later, he wound up getting mostly price shoppers. He didn’t even break even — $72,000 down the drain. Unfortunately, I’ve heard various versions of his story from many other dealers.

I’ve been saying for years that instead of buying leads from lead generation companies, you’d be better off heaping your money into a pile, setting it on fire and roasting marshmallows over it. That way you’d at least get some use out of your hard-earned dollars.

The conduct of HomeAdvisor and Angie’s List angers me, and it should you. Dealers are working hard, trying to build their businesses; trying to compete against boxes and other billion-dollar, multi-national corporations who want to put them out of business.

Poor Results

Many dealers are working 60+ hours a week to put food on the table and support their families. Then these lead-gen sales vampires come along and promise dealers lots of leads, then suck them dry with their monthly fees and zero accountability while delivering little-to-nothing in return.

And the problems don’t stop there. Here are some others you need to be aware of if you are tempted to work with lead generation services:

  1. You have no control over the types or quality of the leads.
  2. You have no control over how the leads get generated.
  3. Buying leads does not foster long-term relationships with prospects.
  4. Leads sold to you also get sold to your competitors.

Lead-gen companies are essentially putting you into a bidding war with every lead you buy. Because your competitors are buying the same leads as you, you have to call the leads back very quickly or you’ll lose them. However, you pay for them regardless.

Price Come-Ons

Another significant problem is that lead companies will often generate leads using cheap-price come-ons. For example, “Why pay more? Get new floors for up to 25% less!

Any leads generated by that method are people predisposed to shop for the cheapest price. So even if you make a mad dash to call every lead immediately, many of them will wait to get estimates from your competitors. That makes dealing with purchased leads a depressing, slogging, time-suck.

In spite of all this, you need leads to grow your business, right? So, if buying leads isn’t the solution, what is? That’s what I’ll reveal in my next column.

 

To Tons Of Customers!
Jim Augustus Armstrong is The “Coach”

Jim Augustus Armstrong is the President of Flooring Success Systems, a program that equips dealers to double their profits, cut their work hours in half and beat the boxes! Many dealers have totally transformed their businesses and their lives for the better after joining Flooring Success Systems.
See what real, live dealers are saying!

By |2019-04-23T15:54:14-06:00April 25th, 2019|