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Contractor Leads 101 (The Best And The Cheapest)

How To Make $100,000 A Year

If you’re like most home improvement professionals these days then you’re constantly trying to hunt down new work, and this means getting involved in some sort of system for generating contractor leads.  Now there may be some among you who take great pride in your marketing skills and think that resorting to paying for leads is somehow a demonstration of failure, but this simply isn’t true.  No matter how skilled you are with advertising or how much you spend on flyers or newspaper ads, the truth of the matter is that there is a good chunk of the public that you simply will never reach with traditional advertising, and this is where paying for good leads comes into play.  Let’s take a look at some different methods of getting new business and how they compare.

The Best Leads For Contractors Come From Previous Customers

Contractor Leads

Getting customers is a numbers game - but you'll find that some contractor leads convert better than others depending on their origin.

In my experience the leads that cost me the least and convert the most often are those that come from previous customers.  Now you might say that this is technically a “referral” and not a “lead”, but instead of arguing semantics with you I’ll just say that this method for getting new business kicks butt.  Why? Because of trust.  People trust their neighbors, friends, and family members and will take their advice when it comes to contractor referrals, often times without so much as getting a second or third price estimate.  Do good work for someone and you have an “in” with their whole network of people for years to come.  If you’re smart you’ll make it worth their while, too.  You could set up a formal referral plan where you pay a certain amount per referral or you could just have a general understanding with someone that for every lead or job they send you you’ll mail them a gift card to their favorite store or restaurant.  You might be surprised how much more people will talk up your business for a measly $25 gift card to Chili’s.

The Next Best Contractor Leads Come From Other Contractors

I can’t tell you how many times I’ve been finishing up a job at someone’s home and they approach me to ask if I can recommend any contractors for other projects they have around the house.  I’ll almost always have a name or two to give them for their particular need, and for whatever reason these recommendations tend to be given great weight by homeowners.  I guess people think that since I’m a contractor I’ll have the “inside scoop” on who the qualified players are in my city for other industries, and they probably also know that I’m not going to recommend someone who does poor work because it would reflect poorly on me.

How does this apply to you?  Simple.  Network with as many other contractors and service providers as possible and let them know that you will pay for leads.  Imagine how much work you would have if you told every painting contractor in your city (most big cities have hundreds if not thousands of them) that you’d pay them $200 for every roofing lead they sent your way that resulted in a new roof. You would literally be inundated with new jobs.  And the beauty of this system is that you only pay when actual work results, unlike traditional advertising where there’s no guarantee that $1000 spent on mailers will result in even one new job.

You could even take this a step further and create a formal city-wide network of contractors who pay a yearly fee for membership.  Each member would understand that they are only to recommend contractors who are paying members of the group.  Your network would include the city’s best painter, the city’s best plumber, the city’s best electrician, the city’s best remodeling company, etc.  You could call it the “Elite Home Services Network of (enter city name here)” or something similar.  The point is that if you’re not working out lead generating relationships with the thousands of other contractors in your region then you’re missing out on a HUGE untapped reservoir of new business.

Internet Contractor Leads Can Pay Off Huge If Done Correctly

If you’ve spent any amount of time on this site then you know how much I like using the web to expose my business to consumers.  There are as many ways to spread the word on the internet as there are grains of sand in the Sahara, and you should be aware that some of them will be amazingly successful while others will be an utter waste of time and money.  Ultimately, a lot of it will come down to trial and error (create a spreadsheet to track how much each converting lead is costing you on average per service and slowly weed out the non-performers), but I can give you a general break-down of my own personal views.

  • Get to know Google.  They currently have total domination in the search space (I think something like every 7 or 8 out of 10 searches done on the net is done with Google).  Make sure you’ve created a listing in their Local Business Center (free) so that your business comes up in the maps section for local search results.  Also get a professionally designed website and either hire someone to get it optimized for the search engines or teach yourself how to do this.  If you can achieve a #1 ranking in Google’s organic listing for your local keywords then you can generate a TON of business.  These rankings are great because once you’ve got them you’re set to get unlimited free construction leads in the future (unless some other SEO-savvy business owner comes along and knocks you off your perch).  Also consider using Google Adwords to advertise your business in the ad sections of search results (these are the ads you see along the top and in the sidebar when you do a search).  This will cost you some dough but in my experience is definitely worth every penny.
  • Get listed with Angie’s List and other free contractor review sites.  Okay, so you can’t list yourself on Angie’s List but if you do good work it’s just a matter of time before one of your happy customers posts a positive review on their site.  Once you’re in you should see a remarkable uptick in calls as a result.  These leads are so effective and convert so often because they’re based on that magic word that we talked about before: TRUST.  Best of all, they’re totally free!
  • Finally, there are loads of lead generation services on the internet for contractors that will promise you everything under the sun.  Many of them are worthwhile while others could be a disappointment, but again just keep track of your cost-per-lead and weed out the duds.  I’ve heard good things about ServiceMagic, for example, but the results will differ for different industries and regions.  You’ll find that some of these services attract homeowners that are merely “tire-kickers” while others will find you more serious prospects, and it really just comes down to trying a few out and seeing what works.  If you’ve shelled out $500 to one service for leads and only landed one or two small projects then dump it and move on to the next one.  I think it would be a mistake to completely write these services off, however.

Swallow Your Pride And Shell Out The Money For Leads

I hate to harp on this but some guys (and gals) have a hard time paying for leads because they think it somehow reflects badly on either their marketing abilities or their trade skills.  If you’re one of these people then you need to get over it.  I don’t care how good a painter you are or how perfect a tilesetter you’ve become, your talents as a contractor will only take your business so far.  At some point you just need to take the plunge and open yourself up to the idea of dropping a little bit of cash in exchange for a lot more projects.

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{ 4 comments… add one }
  • john szeles June 5, 2013, 11:21 am

    business used to be so easy, bids were everywhere, money was flowing, life was good. at 27 i built my first house for my wife and i. thats a huge accomplishment, especially in nj. i cant pay my bills now. this is the worst time of my 18 year carreer and im more talented and capable at 36 than ever before. im not sure what we are doing wrong but we need a change and fast. we have a website, we are marketing on google and all the major searches, we have quality cards, we are established and we have tried a bunch of lead companies. whats wrong with this picture. my carreer is unfolding before my eyes and i can barely look at myself in the mirror. help.

    • Scott January 23, 2014, 8:02 pm

      John,

      I’m sorry to hear that things are not going well. Yes, 10 or 15 years ago things were really booming and it was just easier to be successful and make money. Times have changed. It’s a different economy. People are still nervous about spending money on things like home remodeling. But it’s slowly getting better. If you can just hang in there a little bit longer I think things will start to get easier again soon. In the meantime, are there adaptations that you can make to survive for the time being? Could you offer additional services? Is there a way to scale back costs? Perhaps reach out to other contractors in your area who are in different trades than you and offer to swap leads or pay for them. Try to think outside the box for new ideas. Also check out my post about free construction leads: http://www.richcontractor.com/my_weblog/2009/08/free-construction-leads-for-the-taking.html
      Hang in there, man. Things will get better.

  • Norma October 24, 2013, 1:18 pm

    Fantastic site! Thanks for all your expertise and ideas Scott! I wanted to ask your opinion on a few things. I am in Canada in a city of just about 600,000! We have many seniors in our area and the last year has been an increase in contractors taking advantage of not only them but other people ie. taking deposits for jobs and then never showing up. I think our community has a need for a referral network as the closest one to us is over an hour away. Now my questions, I have been writing and asking a few other referral places in the USA some questions to help guide me but nobody has replied. So on we go. 1) I am trying to not only market the homeowners but also small businesses who need a contractor and came up with a tag line of “Contractor Referral Network of Durham” but feel this is not really relaying my message about what we do; any suggestions? 2) How do you know what fees to charge contractors for our service?! This has me very stumped. 3) Advertising – I have used some of your tips on here but any suggestions as to my type of business? I have had a tremendous response from contractors who want to get on board so that is good! PLUS we are only using and working with contractors in our community. That is my niche…to try and build our own city and help businesses.

    Thanks Scott!!! You rock!!

    • Scott January 23, 2014, 8:14 pm

      Thank you, Norma. I actually like the tagline you picked. Very descriptive. Or maybe something like “Durham Contractor Link”? As for fees, I think that the 10-15% range might be good. 10-15% of the total pretax earnings on a job…assuming contractors only pay for jobs they land, of course. As for advertising, you need to get a website and start marketing on the major search engines, especially google. Google’s CPC program is very good. I would also set up a facebook page and update it regularly. You could also contact local media outlets and see if any of them will interview you on a slow news day. Tell them the story you just told me about locals being duped by bad people and how you have created a service to help prevent such issues. Best of luck…thanks for the comment!

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