I’m always cautious about programs and services which offer a solution to contractors’ biggest business challenges, especially if the offer is for possible forward business opportunities in exchange for any sort of up-front fee. Most of us have heard less-than-enthusiastic stories about residential contractor leads services. (Things aren’t so bad in the business-to-business and business-to-government space, but I’m always troubled that contractors still rely on external services instead of having internal lead-development, marketing and proper business-development systems.)
Accordingly, Alex Nowak representing contractorconnect.net, based in the Chicago, Illinois area, put himself into the hot seat when he approached me for some promotional considerations in support of his U.S. nationwide business-development service. He connected with me through the rapidly growing LinkedIn Construction Marketing Ideas group, which now has more than 6,000 members and is growing at 10 to 15 new members daily. He has challenges in attracting enough interest and traffic to his website to expand his business. These issues are compounded by another organization with a similar trade name, some business-model similarity, and a perhaps easier-to-remember search engine domain. (I was fooled, even, when researching this posting.)
(Alex says the competitor owned the relevant domain name before he started his site, but only started promoting the business –which focuses purely on insurance restoration opportunities, after he had set up contractorconnect.net. Frustrating, indeed.)
Nevertheless, I’m satisfied Nowak is for real, and his service may be valuable to as a top-up to your residential contracting busness, provided that you have realistic (and modest) expectations.
Lets look at the numbers:
- Contractorconnect.net‘s basic registration is free and Nowak says he has about 5,000 members nation-wide in the system. However, he also says in the video interview that most leads he receives go to a special preferred network, with a one-time registration fee, which will only apply for qualified contractors, where “there must be a need and our program must be considerably active in their service area.”
- He says the regular one-time registration fee (for the preferred network) has been reduced from $249.00 to $99.00.
- Nowak says there are about 1,200 preferred members, paying the referral commission of five per cent of the work value after they win the contract. This lead-building rate is over five years. Last year, he says, his business generated about 250 contracts, and about 70 per cent of these went to preferred members. He said the median contract value is about $25,000.
- He says his work arises from negotiated deals with insurance companies, condominium associations, and direct marketing with residential owners. He says qualified contractors will be served by project manages, to ensure that the referrals are handled properly and that the deal goes through correctly.
- Once in the program, preferred contractors who receive at least $50,000 in work pay an annual recertification fee to maintain their status on a sliding scale (maximum $500) based on their overall revenue. However, contractors who have not received the $50,000 through the program do not need to pay the annual renewal fee until they reach the magic number. Nowak says contractors who receive enough business to need to pay the fee always renew — the extra cost is insignificant in comparison to the work they’ve actually won through the program. The business and leads are strongest in the Chicago area, where he is based, but he said significant lead volume occurs elsewhere including New York, Florida and Texas.
Note that I haven’t independently verified anything Nowak has told me in this interview, but you’ll notice that, while I give him the opportunity to express his commercial message, I insist that he quantify his assertions. You’ll discover how he fields the tougher questions in the interview’s final half.
After we went off air, I asked Nowak about the “why” of his business. He said his father is a Chicago-area contractor, and he set out to develop leads for the family business. With insurance and condo contracts, he soon had more business than he could handle internally, and so started the service. This isn’t a huge enterprise. He has an uphill challenge in achieving enough search engine presence to pull in consumer-based leads because, of course, he is working in a highly competitive niche.
Since the free registration is just that, I wouldn’t hesitate to sign up. In a follow-up communication, Nowak alleviated my concerns about the $99 registration fee, clarifying that he has a qualification process and would only charge the fee where contractors truly qualify for work in areas where “our program must be active in their area and show a competitive need for contractors.”
He also wrote:
I don’t want to make it seem like contractors throw away their money if they register as a Preferred Contractor within our network. When we introduce our program to a new city, we recruit multiple contractors in the area based on their expertise to make sure that we have a sound group of Preferred Contractors we can rely on. At the same time, we promote the program and preferred contractors extensively so that they can gain new business.
Our network isn’t huge, but we do a good job of helping our contractors get face-to-face appointments/estimates and allow them to pitch their services. The ultimate decision maker is still the homeowner, but our contractors have a competitive advantage in the bidding process because we serve homeowners in a consultative capacity. They are more willing to open up to us, communicate their concerns, show us their competing estimates, etc. This is all useful information that help our contractors win more jobs. The contractor, however, must do his part by gaining the homeowners trust and providing a competitive price to get the job. We are there to provide support to both sides during the bidding process.
Clearly, if you can win a job or two out of the program, it will be worthwhile. Nowak wins points for accepting that he cannot simply hype his program and he would need to answer questions about its real utility and value to contractors. So I’d say that, based on the total risk of about $100 (only in qualifying markets), you are okay to go for it.