Paid Leads – Chasing the Dragon

I was nervous when I first moved my business to the big city.  How was I going to compete with all the other appliance repair service companies here?

I got some of my customers to write reviews for me and worked my way up to the first page of Google, but my website still hadn’t seasoned yet as far as search engines were concerned, and the phone was still quieter than I was happy with.

In my eagerness to get the phone ringing more, and fast, I decided to try a high-end paid lead generation service.

The way they work is this: they advertise all over the internet, capture a bunch of customers from my area, then refer them to me.

And because they didn’t have anyone else listed in my area, I was exclusive!  This was the break I had been looking for!

Well, the phone rang off the hook day and night.  It was like drinking from a fire hose.  My schedule was so full, I was running 6 calls a day 6 days a week, booking out into the following week, and barely had time to pick up my parts, let alone eat or sleep.

At first I was really happy the phone was finally ringing too much, which was a good thing, and excited that I was going to make a ton of money.  And I did…in gross receipts.  After a month of working my butt off, I sat down and analyzed what I was really paying per lead, and what I was netting per week.

The per lead charge was tolerable if I raised my rates to cover it on the calls that converted into repairs.  I also figured out with current gas prices, I was just about breaking even on my diagnostic calls where they opted not to repair.

But the real hidden cost was in the junk leads and the drop-offs.

I would get calls from “tire-kickers” researching price and trying to pick my brain for solutions they could do themselves.  And I still got charged.

Because I was so slammed, I would book a call two days out with someone who I could tell was barely committed, then call them the day of the appointment to say I was on my way and be told they already got it fixed by someone else.  And I still got charged.

Sure some of this had to do with city clientele, who demand same day service and can often get it by calling around until they find someone.  Back in the country I got spoiled because I was the only appliance repair service within 30 miles, and I converted nearly every lead I got, even though there were fewer to begin with.

But between paying for leads whether they converted or not, and maxing out the margin my market would bear, I realized after only a month that I was working for the lead generation service, and they were paying me a relatively small salary considering how hard I was going at it all day.

Even though they were responsible for the bulk of my business, somehow it drove me crazy that they were taking so much of my hard earned cash.  I had to choose between a quiet phone and having an unintentional business partner.  I decided to turn the service down to a trickle and see if I missed it.

So far, it has been a relief.  I had become so aggravated by the cost of the leads, I was not my old self on service calls.  I started getting less satisfaction from my customers because I was turning into that grizzled technician that has to charge high markup so he can make a profit despite his overhead.

I found a less expensive lead generation service, started working for home warranty companies, got more good reviews and some large commercial clients started calling.  Pretty soon I was able to drop paid lead generation entirely, but I’ll never forget those days – nothing is worse than the sound of a quiet phone.

9 Replies to “Paid Leads – Chasing the Dragon”

  1. Been going at this appliance repair thing for 5 years now. I feel you got to pick your poison when it comes to lead generation. Weather it’s Google, bing, yahoo or those rip off lead generation company’s we need someone. I’ve did subcontract warranty work with lowes, samsung And home warranty combines. Excited as I was to have a big name company like samsung and lowes behind me in the end it wasn’t worth it. They controlled the price and it limit my profits. I’m now gone hire me a Google partner to run my advertising campaign and see where that goes. I have a store front that generates business. I sell reconditioned appliances I repair for resale. I too sale new and used
    parts. I work hard everyday at this with little to no help. That’s another story though. If anyone know a great Google partner that can get my phone ringing send me thier contact info. Thank you

  2. Thinking about doing something similar and came across your blogs. Congrats on your success. Question on your paid lead gen services (like home advisor and the home warranty co’s): about how much were you paying for leads? I’m trying to do the same math you did re how ‘worth it’ these services are…how much I can afford to pay them for leads, etc. Thanks!

    1. Hi B.B. – Right, nothing is worse than a quiet telephone! When I was desperate for leads as long as I was making ANY profit I was happy, but it’s no fun sharing your profits with a middle man. When I was with Home Advisor (formerly Service Magic) they charged a flat fee per lead, but I had to jump on those because they sent them to multiple competitors. The good news is they were qualified leads, but they still did not always pan out. I used another company called ApplianceClick, and they sent their leads to me exclusively, but they charged $25 whether or not I converted the lead. After a couple of months, I figured out I was working half the time for them! Home warranty co’s are a better way to go in the beginning because they are free leads, the downside is you can’t charge too much or you won’t get any calls – you have to stay in the “sweet spot” of their pricing limits. Eventually you need to wean yourself off of paid leads by building a website, listing in free directories like Google, Bing, Yahoo, Yelp, and waiting for your business to “season” on the web. Get good customer reviews, and it will happen faster. I wish you prosperity in your business!

  3. Hi, I’m an uncle Harry student he is awesome been doing calls for about a month now. I just wanted to ask what was your best paid lead service you used ? i’m just not getting enough calls but i’am working and getting better everyday at this did all uncle harry told me to do in marketing…Google (SEO), Yahoo, Bing and 50 more directories and as many free advertising ect… thanks so much for this blog it is so cool. oh yea im going through the same things you had it seems.

    1. Hi Mark – Congratulations on choosing Harry, and looks like it’s paying off if you are already running service calls! Check out my reply to B.B. about the mixed bag world of paid leads. Harry is steering you right, but nothing is worse than a quiet telephone, so you might have to share the profits in the short term. Best of luck to you in your new business!

    1. Hi Vijay – Congratulations on starting your business – well done! I did pay per lead from a lead generation service to start with until I built up my business using a converting website and free online directories (i.e. Google, Yahoo, Yelp, Bing, etc.). I will be writing much more about this subject soon, however if you read through some of the other comments from startup owners, I make several specific suggestions about how to get the phone ringing. Best of luck and prosperity with your new company!

  4. I am already an experienced appliance technician and plan to go on my own in a few months. Im tired of working for the man. I am curious as to how it went when you slowed down your leads. Were you using adwords? I was planning on implementing this in the future to build up clients. Thanks for the great blog. Its really inspirational.

    1. Hi Mike – Good question! When I was starting out, I used a couple of different paid lead services, including Google AdWords, Appliance Appointment (Yext), and HomeAdvisor (formerly ServiceMagic). Actually, paid leads helped me sleep at night because nothing is worse than a quiet telephone! But I always knew I would need to wean myself off them eventually, so I concentrated on SEO for my website and good customer reviews, and got enough free leads to cancel all my paid lead services. You may also want to consider contacting home warranty companies – they can have restrictive parts markup policies, 30-45 day pay cycles, and a bit of paperwork, but it can be a steady source of leads and regular payments until you are established. So glad the blog has been helpful to you, and I wish you the very best of luck!

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