Steve Payne
Should you team up with a contractor referral service?
Canadian Contractor Business Service"Overall, I feel we are improved from these relationships," writes Robert Sloan of Langstaff & Sloan. "And I would recommend them to others who are willing to improve."
Last week, we asked the question, “Should you team up with a contractor referral service”? We were referring to our news items on the termination of the (Mike) Holmes Referred Contractor program and the growth of the Baeumler Approved contractor referral service. Six weeks ago, we also covered the demise of Sears Home Services, and the continued fallout over that. We asked for your feedback on these types of alliances. Are they worth it to you? Here is one reply from Robert Sloan, Langstaff & Sloan, an electrical firm in Toronto.
“We have represented Toronto Hydro, Sears, Home Service and a few other lesser-known names over the years. It definitely provides more opportunity and often quality opportunity (clients who are more careful or had had bad experiences and are now willing to pay more for good service), but it also makes your price more expensive. None of them do it for free. You will tend to develop a skill set to defend higher prices, better explain options, write better proposals, and most importantly provide higher quality installations with better customer service too. You see, you now have big brother to answer to. But make no mistake, clients will treat you differently. We are all guilty of it. Last week I was a complete jerk to the call centre at Telus, yet a perfect gentleman to the lady at the Telus kiosk at the mall. I don’t have a split personality, honest! Some of these “Big Brothers” also provide business coaching/clear expectations and, let’s face it, a lot of contractors need help here. Overall, I feel we are improved from these relationships and would recommend them to others who are willing to improve.”
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I don’t know a lot about this contractor referral system. Anyone out there able to explain it?
Thanks.
The contractor referral service operates on the premise that most homeowners will look for contractors on the internet. And if recognized Brands like Mike Homes or Bryan Baeumler build a trusted referral network people will be attracted to them and call those trades. I have tried using the ‘Handy Canadian’ site (now Trusted Pros) and ‘Baeumler Approved’ for about a year. I have also been on ‘HomeStars’ for about 2 years. A lot depends on the type of contract work you do and who your customer base is because I have found each service has produced differences in the type of leads and the quantity of leads you get. The leads I got through the Handy Canadian and the Baeumler Approved site were few and far between as well as the clients seemed to be more ‘tire kickers’ and people looking for help doing it themselves. Where as the HomeStars leads have been much more consistent and of better quality. I think the reason is because you need to look at these sites from a customers perspective and H.S. have fashioned their site to be more ‘for the homeowner, by the homeowner’ because the contractors page (if you decide to purchase one) is focused on reviews and scores populated by the clients. So there is a degree of separation between marketing and actual feedback from clients. It by no means is a perfect system but it is arguably the best one out there. Keep in mind to be listed near the top of your category takes a good deal of effort and diligence but once you are there it is a site that is worth the investment.
I was doing pretty good without any type of outside lead generation when a landscaper friend of mine told me about his lead generation service and even referred some customers the had had served. I found the quality of his clients to be high so I decided to sign up with his service. After about a year using 2 different lead generation services these are my observations.
The common sales pitch begins with; Our clients expect to pay a little more and we only give the lead to 3 contractors.
The reseller’s team of “owner representatives” send out the leads to several contractors and take the first 3 who bite, then they’ll usually collect the submissions and present them all to the client for a decision!
The companies I’ve dealt with are paid two different ways but either way you’re better to re-qualifing every lead to get the whole picture.
Flat fee leads have been between $5-$50, refunds were available if the lead is non responsive or the contract has been given before you establish contact.
Commission leads are paid only if you convert the lead but a commission is expected for any future work for the life of lead.
Pros:
No effort leads in the inbox.
Cons:
1. Flat fee leads have been generally dubious in quality but there were some pearls in the ruff.
2. Commissioned leads can cost up to 10% on smaller jobs!
3. Commissions continue to all future work requested by the “owners” client
4. A few “owner representatives” are competent and nice to work with but others either don’t know how to qualify prospects and submissions properly let alone distinguish who’s best suited for the work or simply dont care because they’re making a commission on the job no matter which contractor gets it!
The client’s are not all properly vetted and it can seem a lot like the dumb leading the blind when an inexperienced owner representative mismanages a lead (apologies to anyone who’s offended by my lack of political sensitivity!)
5. I insist on doing my own presentations but I’ve found many of the clients who need the most care are reluctant to make decisions without their “owner representative”. (re-read 3-4!)
6. All the contractors are supposed to be vetted but I calculated the winning bids from a few different jobs requiring specific license categories and trades certifications to discover they were beneath cost on labour and material even before adding cost of sales and mark up, which leaves serious questions as to the qualifications and techniques of the winning “contractor”.
In the end many lead re-sellers are ok for a handy man looking for a few bucks but not so good if you’re a professional contractor with long term perspective. I like to give back to my clients so I find it crowded whenever a third partie’s cost constantly overshadows the cultivation of a longterm client relationship way beyond the initial work.
I think there’s room for professional lead re-sellers and I’m fine purchasing a lead for either a one time fee or a single reasonable commission but looking ahead I’m concerned that high cost of sales being paid to a non construction third party is creating an industry monster thats going to damage contractors and job quality, so far I’ve seen nothing to convince me otherwise. The increasing costcotization of renovation services by large marketing contractors who resemble telemarketers more than building professionals and the number of renovators who accept the terms without a thought to the destitution of their markups and subsequent ability to give back to the client and build their business is nothing more than a smoke screen and money taken out of the clients budget for basically nothing in return.
The end is a predictable; front line contractors becoming disposable products with no claim on the relationships they’ve built with clients in a continual servitude to the marketing “contractor”
In conclusion, most of what I’ve experienced from lead marketers is what I wanted to get away from before I started my company in the first place! Renovation marketers slice the renovation pie a lot thinner for the most important people at the table, the client and the construction professionals. It’s by far better that renovation and construction business owners invest the cost of sales money into proprietary marketing and lead generation because once the client relationship is established both renovator and client will benefit far more together without the constant financial servicing of a bloated elephant overshadowing the room!
From a consumer point of view, I would say that this kind of contract referral program, or more accurately, celebrity endorsement in the case of “Baeumler Approved” is absolutely worthless. We paid Baeumler Quality Construction approximately $300,00.00 for a home renovation/extension that resulted in major destruction to our backyard. We were prepared for that, and were very satisfied with their work on our home so we asked them to recommend a landscape company who could repair and re-landscape the backyard. They naturally recommended a “Baeumler Approved” company, namely Aura Landscaping from St. Catharines, On. While we blame ourselves for not more thoroughly vetting this company and seeking competing bids, we went with them, solely on the base of their Baeumler Approved status and we have been regretting it ever since. Not only did the project get totally out of control in terms of time and expense, this landscaper was totally unscrupulous in the way he treated us, and our detailed complaint to “Beaumler Approved” in the form of a six page letter resulted in a brief voice-mail saying they would put it in his file. Despite the fact that the “Baeumler Approved” website states that a member will be removed if they have contravened their code of conduct, or a good faith effort will be made, nothing was done for us to even slightly provide customer satisfaction, regardless of the irrefutable documentation provided to support our claim of egregious treatment, breach of contract and attempted fraud in the form of falsified invoices.
In my experience, these third party celebrity endorsements are a “cash cow” for the well known figure, and a “toothless tiger” for the unwitting consumer.
Recently, I posted a comment that referred to a representative from “Aura Landscaping” as being “totally unscrupulous”. I feel I must apologize and retract that statement and corresponding characterization as being purely subjective since it could be unfairly damaging to this company’s reputation. Nevertheless, I remain deeply disappointed and dissatisfied by this landscape company’s work on our residential property, and though I have the greatest respect and admiration for “Baeumler Quality Construction”, I cannot say the same for the “Baeumler Approved Program” which grants trustworthy status to those who are willing to pay for the honour, when in my opinion, it may not be merited.