RC: How do you determine the effectiveness of your Internet marketing?
GF: By benchmarking. In this industry, profitability starts by developing a good, cost-effective lead. Until you establish what the cost is for that, for you company, we really can’t move forward. Take PPC. Does the cost you pay per inquiry match your lead model cost? Every home improvement company has a different marketing model.
RC: Where do purchased-lead companies such as ServiceMagic and CalFinder fit in?
GF: I think purchased leads can be a viable part of your overall marketing mix. Many consumers use companies like these as a form of third-party validation. Among contractors, these types of companies sometimes get a bad rap. My own feeling is that, most of the time, if those leads are not productive it’s because the home improvement business doesn’t have the right internal processes to handle and follow up on the lead.
RC: How does your company follow up?
GF: We don’t assume that the ServiceMagic or CalFinder customer wants to buy windows now. What they’ve said by responding is that they’d like more information. So we call or e-mail them to find out their level of interest. And we take that data and put it in a CRM [customer relationship management] system. Even if you go out and present, and they don’t buy, that may have more to do with life than with the competition. I think a lot of contractors are missing out on those leads because they want to put them out right away as an issued appointment instead of managing that data over time.
RC: How does your organization handle an Internet lead?
GF: We respond in real time by e-mail. Or we call the [prospect]. You’ve got to get on them right away. The Internet customer measures things in minutes, not days. If there’s something on his or her mind, they want to know now ? as in the next half hour. The other thing is if they don’t respond to an e-mail or you don’t reach them by phone right away, you have to persevere. Chances are one phone call or e-mail is not going to do it.
RC: If my marketing budget is 10% of sales and my sales are $2 million, how much of that $200,000 should I spend on Internet marketing, whether on purchased leads or on search engine optimization/PPC for my own site?
GF: I committed 18% of my marketing budget to Internet marketing in the first years. But I wanted to start off and commit the kind of dollars I could scale. Remember that there’s a cumulative effect, if you’re building a database. Say we have a month where we’re buying $4,000 worth of purchased leads. We might get $40,000 worth of sales for that. But the following month we might get $80,000 worth of sales, still spending $4,000 but now including data that was purchased the month before. So it varies from month to month depending on how much, and how well, you’re working it.
RC: How should a contractor separate out the reputable Internet lead sellers from the fly-by-nights?
GF: The majority of the bigger players are intent on delivering a qualified lead. But there needs to be mutual trust. On their side, if they send you a name that is not valid information, they should be willing to credit you for that. On the contractor side, you have to be willing to build a relationship with them as your online partner. My experience is that if you have that kind of relationship, they will bend over backward to help you.
RC: At what rate should those leads convert to demos?
GF: We run about a 60% demo rate on Internet leads. And our definition of a demo is all owners, whoever they may be, are there. If we go in and it’s one party rather than two, then we massage it into a second appointment and don’t call it a demo.
RC: Why should home improvement contractors do Internet marketing?
GF: I have had people in Webinars from large operations who’ve said they didn’t think their customer was on the Internet. That’s just not reality in the marketplace of today. There are plenty of places where you can go and get research that will show you exactly how many people are on the Internet. It’s the fastest-growing medium. It’s not just 19-year-olds looking for songs.
RC: What should companies be prepared to spend to have an effective site that’s optimized?
GF: The minimum amount of money to get the maximum page ranking on organic search. But every market is different, so the costs will be different ? in some cases cheap and in some cases unaffordable.
RC: Do you advise companies to invest in pay-per-click advertising?
GF: That also depends on the market, and specifically the cost of the keywords. It also depends on the company culture. Is it a hard-lead culture, where they only want people in the final stage of the buying cycle, or are they looking for anyone collecting information or interested at some point in the product? Time of year is important as well. It’s a lot like buying TV [ads].
RC: In this recessionary climate, many companies have shifted to a face-to-face marketing strategy, i.e., shows, events, store leads, canvassing. Where does Internet marketing fit in there?
GF: [Internet marketing] has a broader, more comprehensive reach. Take canvassing. I think it can be very effective. And when you talk to companies that are very good at it, they’re always disciplined, with processes, procedures, and metrics. You can’t just round up three guys, start knocking on doors, and be successful. But say you knock on 30 doors before you get an appointment. How many of the 29 who didn’t set an appointment will start thinking about whatever your company sells and go online to find out more about you? Just because someone says “no” to an appointment doesn’t mean they’re not in search mode. You may have gotten them thinking about it for the first time. And the first place they’re going to go to find out more is the Internet.