We all know the importance of targeting the right customer, at the right time, to sell your services. However, are you aware that more than 70% of customers are relying less on traditional marketing methods, such as Yellow Pages, newspaper, radio or television advertisements and are focusing on the Internet as their primary source to find local services and businesses?
In the course of the year, we work directly with thousands of contractors nationwide. It is obvious that the majority of them are not properly utilizing technology as a profitable source of providing not only customers, but better, more targeted customer leads.
According to The Kelsey Group, a research and consulting firm, local commercial searches will grow from approximately 15% to 25% by 2010 (including online searches for residential contractors). Therefore, online marketing will become increasingly important for RSI's readers. Yet, many contractors are lagging far behind in their ability to take advantage of this new form of marketing. Online marketing can cut costs and produce targeted leads--ones that your competition will never know existed.
It's all about positioning
If fewer prospective customers are using traditional methods to find contractors, why would you want to spend your hard-earned dollars on those marketing vehicles? You shouldn't. Instead, you should focus your interest on those vehicles that are attracting the customer's attention--namely, the Internet.
Most businesses discover that their road to profitability is paved with sales resulting from marketing their business where the best customers are located. But that means studying the trends and listening to what is going on in your targeted markets.
Here are some simple facts that might shock you, but may also help you improve your marketing efforts:
* Less than 50% of small businesses have a Web site.
* More than $4 billion of Yellow Page advertising is moving online by 2008.
* More than 70% of adults in the U.S. use the Internet as their information source when shopping for local services.
* The Kelsey Group estimates that local online commercial searches will increase from 15% to 25% by 2010 (this includes online searches for local home service professionals).
All of this research points to a trend for which you, as a business owner, should be taking note. It means that things are changing, and if you do not want to become a relic of days gone by, you must change your thinking about online marketing.
Am I telling you to run out and invest money in setting up a Web site? Absolutely not. Here are some things all small to medium size contractors should consider before investing in a Web site.
* The cost to establish a Web site that actually produces targeted leads can cost thousands of dollars. There is a science to making a Web site produce sales, and it is entirely different than what the average person thinks will work. Just hiring a Web site designer to design your site is unlikely to result in a site that will attract sales.
* The cost of optimizing your site for search engines, so people can find it when they type in keywords, requires time, research and money. First, your site has to be loaded with keywords and Mega tags that the search engines (like Google and Yahoo!) are indexing. The problem is that search engines are constantly changing their algorithms, so your site may become outdated before it even gets started. However, even if the search engine finds your site, there is no guarantee where you will end up in the result listing (maybe even at the end!).
Being in the first few pages of search results is critical, and that is difficult to achieve.
* The cost of pay-per-click advertising (PPC) is another method for small businesses that want to market their services online. This method involves selecting keywords that would result in your online advertisement appearing within search results (these are the shaded blue ads above or on the right-hand-side of search results). You pay for the keyword and each time a person clicks on your ad.
There are a few problems with PPC. The first being that your competition can raise the ante by bidding a higher amount for the keyword you have selected, resulting in their online ad being placed above yours. The second reason is that you pay each time someone clicks through to your Web site, whether or not they become a customer lead.
So what is the best way to position yourself online and realize a return for your online marketing efforts? Find a method that doesn't cost a lot and provides targeted leads.
We looked into multiple online marketing services to recommend to our clients. Some of the things we looked at include:
How much does the service cost? Is it a pay-per-lead model or do you pay monthly fees? How do they generate traffic to their Web site? How many people visit the site and how many customers does it actually generate? How does the service present you to the customer? How old is the company--fly-by-night Internet company, or established and trusted?
There are several services out there that promise to deliver targeted online customer leads, but not all do. Based on our findings, we believe that ServiceMagic Inc. (www.servicemagic.com) is the most comprehensive, targeted and cost-effective online marketing solution for residential contractors.
ServiceMagic has created a way for you to get broad Internet exposure without having to pay huge up-front fees or become a search engine marketing guru--it does your online marketing for you so you can focus on doing your job and benefit from an increase in targeted customer leads.
There were a few other reasons we chose to give ServiceMagic our winning recommendation.
* More than two million people go to the site every month, resulting in over 150,000 customer service requests.
* It covers more than 500 home improvement tasks. So customers keep coming back to ServiceMagic for needs that range from finding a maid, remodeling their kitchen, fixing leaky faucets, installing air conditioners, and much more.
* More than 40,000 residential contractors use the service.
* It has been operating since 1999 and recently launched in Canada. (Not a fly-by-night company.)
* It is a pay-per-lead model, so you only pay for the leads you receive.
* The company requires customers to complete a three-page interview detailing project specifics and providing their complete contact information--so the leads are targeted.
* It creates a Web page for you and takes care of the search engine optimization and your pay-per-click campaigns so you appear in the top results. Remember, you only pay for the lead--not the click.
* One of the reasons we think it tops the list is the fact that its member businesses can collect past customer ratings and reviews. What other marketing service provides this instant third-party credibility as soon as a customer is presented with your information?
The Internet is not going away, but if you do not start marketing your business online, you might not be around. If you have the time to dedicate to creating a targeted and cost-effective online marketing campaign, go for it.
A word of advice though: if you think managing a direct mail campaign is hard, it is a piece of cake compared to creating an online marketing program. Make it easy for yourself: find someone who has the knowledge and expertise to do it for you, so you can do what you do best--your job!
RELATED ARTICLE: Measuring marketing determines real return.
Unfortunately, many businesses invest in anything that seems to make sense, without regard for the results. It never ceases to amaze us how many contractors never track their marketing efforts to see what is working and what isn't. Money is spent, and it is assumed that it has worked or not by uncalculated guess work, and no facts or figures to back up the return. This is simply wasted money.
The cost of Yellow Page advertising depends on the size and placement of the ad, and if you are advertising in multiple books. But few people track where their lead came from and fewer determine the cost to acquire the lead generated from their advertisements. These are two essential facts that are necessary in order to determine what is generating your best leads.
I worked with a contractor who "assumed" his Yellow Page ads were the best bang for his marketing dollars. I asked him to track where his leads were coming from and after a year, he found that it was actually costing him more for the ad than the ad was producing in sales.
The typical response for most marketing vehicles is low--usually in the low single digits--for an outstanding promotional piece, when the average piece will more than likely pull 0.5%. That means that an astute business owner will be selective in choosing the right marketing vehicle, so his cost to acquire the customer will be effectively low, not outrageously high.
To put this in real numbers, if an RSI contractor decides to use a direct mailing piece to a list of 18,000 potential customers, the cost could be anywhere from $0.60 to $1 per piece. That means, he would be spending somewhere around $10,800 to $18,000 for the promotion alone for a one-time use. Of course, this further reduces the lead generating capabilities of the program, since multiple or repeat promotions to the same list is needed to increase response rates).
With a one-time use of the promotional piece, we could likely expect a response rate of one or two leads; or a cost to acquire the lead of up to $9,000 to $18,000 per lead! If the contractor's average job is anything less than that $18,000, that contractor is in a losing situation.
The idea here is to generate "targeted" leads at the cheapest cost to your company. If you could generate these leads for a sum of $20, $10, $1 or $0.50 cents each, the return-on-investment is to your advantage.
Henry Goudreau, C.S.L. has more than 30 years of experience working in construction and is CEO of HG & Associates Inc., a business coaching company for contractors. His Golden Hard Hat business coaching program is enabling contractors to average a 22% net profit margin with an average increase of $96,000 in net profit during the first year. He writes for more than 20 trade publications and speaks to thousands of contractors every year. For more information, visit http://www.hgassociates.com.
