An impromptu Twitter discussion from May still has me thinking.
@ppcbz: Has everyone given up on local seo yet? What’s the next big guru circle jerk gonna be about?
@smaxor:
@ppcbz local leadgen is a nightmare. Saw that coming a mile away. I’ve got “Barman’s Magic Inside Secrets” coming soon. Hope you don’t mind.
I reply
@smaxor @ppcbz IANAG (I am not a guru)- but I will say local SEO/ lead gen is a stable, consistent income stream. It’s just not scalable.
@adhustler replies to me
@phillian its scaleable but you need to form an entire company…look at reachlocal… I believe they are going public.
@smaxor replies to
@adhustler going public isn’t always what its cracked up to either. Have 2 partners that said its the worst thing they ever did. ;)
I reply to both of them
@smaxor @adhustler re local- even though it’s reliable (and thus hard to move away from) it’s still trading hours for dollars. Even if its not me doing the work, but an Odesker or an employee, overhead still walks around on 2 legs.
@smaxor responds
@phillian I’ll make a leadgen to create local clients for you. And everyone one else that wants to do it. Aggregate and post data then scale. I’ll sell you the lead then you can do all the work and deal with clients :P
Then he starts getting into the good stuff.
When it comes to local lead gen I think a way better way to go is niche specialty over many areas. Chiropractors for example. Then start local and keep adding more and more cities. Become a leadgen aggregator for the chiropractic niche.
That’s a very scalable business.
Look at something at 1-800-dentist. Working in 20 different niches in a local area really seems to be like starting from scratch each time with a whole new business to learn how to market and deliver a message people have to act on. Much easier to develop a message then grow to man markets.
It’s a whole new business to learn how to market and deliver a message people have to act on. Much easier to develop a message then grow to man markets.
The other nice part is to get 20 chiropractors in a zip and then have them bid up the lead price so you keep your cost the same and increase your return.
B2C is what I’d stick to if you’re making a margin as there will be more volume then B2B.
Pest control would probably be a good one to start. Realtors, mechanics… Who’s got other ideas? Gardeners?
Any real life continuity service would probably be good, house keepers. Or high cost service, remodels.
The mold, flood cleanup guys is a great niche. Talk about a scam it’s like 10k to have them dry your carpets. But its paid by insurance companies.
To which I add
Mold / asbestos remediation is becoming a hot-button certification issue in some states. Here in PA it’s still wide open though. but – you could upsell asbestos remediation lead gen on mesothelioma attorneys.
And @smaxor replies
All the better reason to be an aggregator :) sell the leads 3 times let the cleanup guys bid, then do the same to atty’s.
When people compete you win right? :P
I still believe there are tremendous barriers to entry to take a local lead generation business from comfortable (which I define by replicating the income I would have had if I were still working a job as an IP paralegal, somewhere between 85-95k with overtime) to seriously scalable profit (2-3x “comfortable” and growing).
What Jason Akatiff (Ads4Dough and @smaxor from above) was talking about, however, is the conglomeratization of effort by creating systems. Letting the work work for you rather than replicating that work in new industries or niches. I revisited this discussion recently because that is the direction I’ve decided to head with my local lead generation business.
I’ve worked and had clients in about a dozen different industries, mostly B2C in the blue collar trades. There are some big scaling problems with clients like this:
- More education. This client base is going to need a lot of bringing-up-to-speed to understand what you are talking about when you pitch them. That means you are frontloading a lot of effort in the pitch that may not result in profit.
- Rapid lead cap. You can only scale your business at the rate with which they can scale theirs. If you have a major Philadelphia plumber, no matter how many broken toilets you can find in the city for him to fix, his resources (trucks, employees) will only allow him to get to so many, at which point you have to turn off the valves on your traffic. And your profit.
- Squeaky wheels. Because your profit is limited per client, you have to engage with a much larger volume of clients to increase profit margins… and with an increase in volume comes the inevitable increase in squeaky wheel clients; the kind who will call you in the middle of the night to ask why your day-parted ads aren’t running.
So I am reorganizing this business to be more streamlined and effective going forward.
- Niche selection. I’m choosing industries that I already have a working knowledge of and sticking to no more than 3 at a time while I build out…
- Systems. Creating and testing best practices for lead generation within those niches that can be moved to a variety of locations. This minimizes the opportunity cost and effort I have to put out to be profitable. From there, I want to investigate…
- Data Sales. Specifically finding a way to multiply the monetization of every collected lead either through aggregate data sales or upsells (with highly-targeted, applicable affiliate marketing programs). There are some ethical questions involved here so I’m not yet 100% sold on this idea. (For more information, check out More Money, Same Traffic: List Building and Paths)
What do you think?
Is Local Lead Gen a scalable business, yes or no? Any recommendations for increasing profit per lead?
Although it’s not really a direction i’ve gone – the concept of picking a niche and reselling the same leads to multiple clients is a scalable business model. It is how most of the largest lead sellers especially in certain industries have made all of their money. The only problem becomes lead quality.
Also get rid of squeaky wheels – they are almost never worth the effort.
One last thing, as part of your systems; take credit cards to pay for the leads so you don’t have to chase the payment. :)
Lead quality, and ethics, are a foremost concern for me. I have a really hard time reselling the same info, but can’t deny that it’s a scalable business model.
Actually Chad (CDFnetworks.com) mentioned a few automation tools in his ebook that I’m experimenting with now and hope to do a case study on in the future. But you are absolutely right, foremost among all tools is the ability to take credit cards. Without them you leave a lot of potential clients behind.
Scalable? Yes, but I think there are only two ways to scale it.
1. Hammer one niche like the chiro example and scale by expanding the coverage area.
2. Own an area for a bunch of related niches (ala Serv1ceMag1c). This is more my style.
In other words try to turn one customer into many leads for different but related services that are traditionally done at the same time, in for instance the home remodeling process.
Let’s take a bathroom remodel for example. Whether the person filling out the form knows it or not they’re gonna need a carpenter, a plumber, a tile guy, a painter, etc… to get the job done. They’re also going to need materials like plumbing fixtures, cabinets, vanities, tile, glass and mirrors and probably a roll-off dumpster too.
So if your network can handle the leads along the chain, you can turn one bathroom remodeling lead into maybe half a dozen leads with the right approach.
Local lead gen in general: IMHO the hardest part of LLG on the hyperlocal level is finding closers to take leads. Here’s an example, I sent out a few major home improvement leads to three different remodeling contractors.
Two of them dropped the ball and missed the value. The third guy has plans being drawn up and bids on all of the jobs. He is a hustler and I work on commission with him. So a dormer addition for example will net me about $1500.
I also have a wholesale window supplier, so I tell the remodeler to use my window guy and both of us get greased on that part of it. The incentives for the remodeler in this example make him want to keep the customers in our network. What goes around comes around.
My area is kind of unique in that most of the online leads come from second homeowners that live elsewhere for most of the year. So we try to operate the network kind of like a syndicate if you will. We joke around about it being the redneck network. ;)
Many of the leads I do locally are commission based on a percentage of the job. One off services like dumpster rentals, junk removal, maid service or carpet cleaning for example are mostly flat fee per lead/call deals.
With new clients, I always offer a few leads up front and follow up with them to see what happened with the leads. If the provider is a closer and got his foot in the door, I’ll pitch them on a commission based fee because they obviously see the value in it.
If they aren’t a closer, I’ll only do CPL that way win or lose I win, even if only a little bit. Providers that are not closers (squeaky wheels) will never see the value, will not be good LLG clients and will not contribute to the “keep it in the network” game.
I think you are absolutely right re this:
“So if your network can handle the leads along the chain, you can turn one bathroom remodeling lead into maybe half a dozen leads with the right approach.”
It’s definitely a more ethical approach to reselling the same lead, at the same cost, for maximal profit. Not to mention preserving the lead for your own company rather than reselling the data.
Not having a closer on the clients’ side is a real killer and I don’t think there is a good way to fix that. Leads get stale after 24 hours, and are really only optimal while the customer is in “buy” mode. But trying to convince the average blue collar tradesman to give someone a call within an hour – much less monitor their phone / email consistently- is an uphill battle.
Bigger ticket items (like a complete home renovation) make sense to use a commission-based model. Do you find you have to negotiate harder for that in the pitch than flat fee clients? Or are they generally receptive to it?
Before I started on the internet I was heavily involved in the trades around here, so I know how it works locally. Most of the local trades people refer each other for kickbacks or favors and have been doing so for years.
So yes, in alot of cases they are almost more receptive to commission over CPL. I think it has to do with the kind of consumers that we get around here (out of staters that don’t have many local connections). These homeowners only local connections are usually through someone they hired previously. The landscaper refers the tree service, tree guy refers the roofer, roofer refers the carpenter, etc…
However I am very choosy in who I do commission based leads with. The trust factor is huge for many reasons.
Based on the service provided, how the initial fronted leads went, the provider’s rep and my confidence/trust level in them, I will pitch either CPL or commission.
With the larger jobs, like remodels it takes so long to get a bid together, draw plans, get permits, etc… that my remodeling guys would rather go on commission than CPL. For example on a remodeling lead, the contractor might not get the first payment or deposit for six months after they get the lead from me. So they’d rather gamble that they get the job and just factor my fee in, which is fine with me as long as I make sure I deal with people that can actually land the jobs and will pay me. So far it hasn’t been a problem.
With potential clients that I’m leery of (non-closers) I’ll just offer monthly ad sponsorships. This way I can still monetize them while protecting the consumer’s lead info and my rep.
The way things are lately, just about everybody around here needs work, so I try not to leave anybody hanging.
Interesting article. On a side note, I have been trying to debate on the topic of applying the concept of horizontal and vertical scaling on Lead Generation. Does it make sense to evaluate a Lead Generation System on the basis of Horizontal and Vertical Scaling? And if it does, how do you even define Horizontal and Vertical Scaling in Lead Generation? I have tried to capture my thoughts here: http://tinyurl.com/3wynl5d
What do you think?
Thanks,
GT
How are you currently scaling your local lead gen biz?
prospecting to cold biz and closing and then doing the same on a different niche on your city selling exclusive leads?