Web Service Portals: A Low-Cost Marketing Tool

April 12, 2002
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After the bottom fell out of the dot-com industry, service contractors had to look around and assess the damage. Did the websites offering a pot of gold at the end of the rainbow suddenly disappear? Were other websites left standing — those backed by a solid business model and a reputation for customer service?

The answer is yes to both questions. But for the purpose of this article, let’s discuss some portals that survived and continue to provide solid marketing services to hvacr contractors. The News contacted three leading service portals — ImproveNet.com, ServiceMagic .com, and HeatingHelp.com — as well as some of the hvacr contractors who are part of each portal’s service provider network. We found out that contractors are getting many good leads and, more importantly, many good jobs through their memberships.

IMPROVENET.COM

Nora DePalma, whose firm, Building Profits, Inc., represents ImproveNet.com, said the portal, www.improvenet.com, began as a regional referral service in the San Francisco Bay area in 1995 and was launched nationally in 1996.

“The founders believed there was a better way for homeowners to find reputable contractors than any of the current methods,” she said.

The Web portal has about 30,000 professionals in its network and has not advertised for new members in several months. “We are currently satisfied that we can meet consumer demands in most trades,” DePalma said. “Improve-Net has more than a half-million consumers in our database, most who submitted jobs for referrals over the last five years. Our contractors seemed to be pleased with the quality and quantity of the leads, but we are always looking for ways to cost-effectively increase demand from consumers.”

ImproveNet promotes its portal primarily by licensing “Find-A-Contractor” and its website content and tools to a wide variety of businesses as a “compelling e-business service.” As of late 2001, Improve-Net services were provided on more than 400 partner and affiliate sites, including MSN Home Advisor, Yahoo!, and Knight-Ridder’s Real Cities network.

It costs contractors $90 to join the service, plus referral fees. Members pay from $10 to $100 for a lead based on the job estimate, from a low of up to $2,499 to a high range of $50,000 and up. There is no win fee for jobs less than $2,500; for job contracts from $2,500 on up, there is a flat-rate win fee of 1% of the job contract.

Marketing services are made available to members, including online advertising, Smart Leads direct marketing, and contractor marketing on behalf of manufacturers and distributors to Improve-Net’s network of U.S. contractors.

Rick Agolli, owner of R.A. Mechanical Contractors Corp., Staten Island, NY, said that joining ImproveNet two years ago opened up a whole new business for him — and a new revenue stream.

“We were all commercial service until we hooked up with ImproveNet,” he said. “Then we started a residential service because of the homeowner leads. Now we have a residential crew and commercial crew. We never knew how much money we could make in residential service.”

SERVICEMAGIC.COM

Rodney Rice, co-founder and co-ceo of ServiceMagic.com, said starting his service portal (www.servicemagic.com) was a pretty logical move. “The business was founded in January 1999,” he said. “My partner and I saw a huge need within the home services segment of the economy.

“Homeowners have historically found it difficult to know what they need, who to hire, what to pay, and have had little ability to connect with prospective service providers ‘live.’ This is due to the field-based nature of their profession and inability to field inbound phone calls. We felt an Internet-based platform could efficiently deliver information regarding services and service providers as well as facilitate communication between prospective buyer and seller.”

ServiceMagic currently has over 11,000 service providers and plans to double its network over the next 12 months. The portal will process over 700,000 service requests in 2002, totaling over $2 billion in consumer spending.

Christopher Fancett, owner of Covenant Contract Service, Spring-field, OH, said that ServiceMagic has been a valuable resource for qualified leads. He agrees with the expansion plans of the portal in 2002, offering a different perspective on the reasons why.

“ServiceMagic must recruit new contractors quickly,” he said, “because the client base quickly builds into a self-referring client buildup, and requires that the contractor has less and less a need for the service as time goes on.

“I have had to rethink how large I wanted to become in my business, and had to seek extra help much sooner than I expected due to rapid sales growth.”

To say the least, Fancett has been impressed with Service-Magic. “The client base offered through ServiceMagic represents the highest potential of qualified buyers/clients for the dollar spent — greater than I have ever experienced through any form of advertising capital investment.

“Sales do not grow by themselves, but the resource of ServiceMagic is a very effective tool in expanding your company’s market penetration.”

Those are the words that Rice likes to hear from his members, contractors who pay a one-time $99 fee and also pay for accepted leads. “We will continue to grow both supply and demand, evolve the platform to better connect buyers and sellers and become the leading source of online homeowners for the most reputable contractors nationwide,” he said.

HEATINGHELP.COM’S FIND A CONTRACTOR

Dan Holohan is a familiar name to contractors in the hvacr and plumbing trades. The author, speaker, and “wet heat” expert has operated his own website, www.heatinghelp.com, for several years. In July 2001, he began offering a new service: Find a Contractor. This service is available to consumers and end users who make up the over 750,000 visitors to the website each year.

“Visitors [to the website] are looking for information and they are looking for pros who know what they’re doing,” said Holohan. “I think we have a group of contractors who are a cut above when it comes to technical knowledge.”

Holohan refers to the contractors who regularly post messages on “The Wall,” an Internet forum that is a popular feature on his website. “The homeowners and building owners lurk on The Wall and listen to the contractors,” he said. “Each Find a Contractor subscriber has an automatic link to his ad when he posts on The Wall. The consumer just has to click to find the contractor — and they do!

“To me it all seemed like a no-brainer.”

Holohan has been satisfied with the response from contractors thus far. “Most contractors think more like technicians than like business people, so I knew that not all of them would get it,” he says of the referral service. “Enough of them have, though, and they’re profiting by it.

“The contractor subscribers are giving me detailed feedback that’s letting me know they’re getting the solid leads and closing business they would not have been aware of if not for this service.”

The service costs $75 for a quarter and $275 for a full year, which Holohan points out “is far less than a Yellow Pages ad.”

John Gates, owner of JCG Burner Service, Maynard, MA, likes the return on his investment. “The morning after the advertisement went up I received an inquiry on upgrading a homeowner’s heating equipment,” he said. “Five days later, I landed an $8,000 boiler burner upgrade.

“It has been, by far, the most cost-effective advertising we have done.”

Dan Foley of Arlington Heating & A/C, Inc., Arlington, VA, said he is happy with Find a Contractor, noting he gets one or two calls a week.

“I have already sold several jobs from leads generated by the website,” Foley said. “One was a boiler replacement and a new a/c installation that totaled $17,000. I would say that was a nice return on our investment.”

Holohan vows to keep improving his service portal in the future. “We’re going to strive to find more and better ways to put professionals together with other professionals, and with potential customers,” he said. “We’ll continue to create situations where everyone involved wins.”

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