Everyone wants more quality leads and great customers but everyone is doing BASICALLY the same things to get them. Paid marketing and lead generation is ‘tried and true’ but most of it is a spray-and-pray approach without much in the way of targeting or focused outreach.
Targeted outreach is the next evolution of home service demand generation - You can get the customers to call you first by staying in front of the customer and targeting your ad spends, emails, and mailers. When you measure the return on your advertising spend (ROAS), target outreach lets you track the direct cost of customer acquisition to drive the most efficient channels to grow your revenue.
Paid Leads vs target Farming (the basics)
Paid leads are just what they sound like. You are paying for someone else to deliver you with opportunities that represent someone who is POTENTIALLY interested in your product or service. But unfortunately, someone filling out a form on Angi, Thumbtack, HomeAdvisor, or another service doesn’t mean they are in fact going to go through with a purchase - they may just be ‘kicking tires’ and costing you time (and money) when they have not intention of buying anything at this time.
Paid leads generally work by creating a marketplace for consumers to submit requests for service. These leads are then distributed to service providers (usually more than one) to follow up on. These can be high intent buyers but there is not much other qualification around the customers. Things like demographic information or property information can be severely lacking - as are other aspects about the potential customer like their Google review history or overall payment records with other vendors.
Costs vary a bit from platform to platform, i.e., Angis, Thumbtack, HomeAdvisor, but you can expect to pay $50 or even into the hundreds of dollars for a lead plus any monthly subscription requirement - It’s on you as the service provider to prioritize these leads, qualify these prospects, and book the business. Once the lead has been sent to you, it’s fully in your hands - and also the hands of several other businesses who are now all fighting over the same lead.
Target farming is an alternative where you are proactively reaching out to prospects that meet your ideal customer profile. Your goal is to create product/market awareness of your offering so that when there is a need the customer will reach out to you directly and you aren’t competing with other vendors to book the same lead.
When you are targeting prospects you get to set the criteria of who you are looking for and can select:
Geography to improve route density or leverage existing customer density
Home aspects like size, age, recent moves, construction types, and other things that impact your service
Income, credit ranges, and propensity to afford your offering
Consumer Google review history and average star ratings given
Once you’ve identified the customers/properties that you want to target, you need to unlock a way to get in front of them in several ways. Think about this as ‘circling’ the target with multiple touchpoints and tracking the eventual return from the outreach.
Email outreach is a very low cost way to build brand awareness - you can easily track views and clicks and the incremental cost for each touchpoint is nearly zero. The hardest part of this strategy is getting accurate emails for the properties you are targeting. Once you have these contacts, you can automate a bunch of the outreach.
Phone outreach can take the form of calls or text messages. Texting is becoming a more common form of outreach as spam call filters have become more effective and call connect rates have decreased.
Physical address for mailing or door knocking. Tried and true methods that is part of a 360-degree outreach strategy. These are both relatively expensive methods in time/materials - which means they benefit greatly from pre-screening to avoid spending on the wrong targets.
To target your ad spend, you need to pull consumer ‘mobile advertising IDs’ (MAIDs) - these are the device IDs for phones, tablets, etc… When you use these IDs to help target prospects, it lets you get in front of consumers at a much higher rate and maximize the value of your contact list.
*PRO TIP - Getting these IDs and loading them into Google/Meta ads isn’t something most people are going to be able to do on their own - but it can be a huge competitive advantage for you.
When you have individual targets inside your market, you can track their future return and value compared to what you spend to engage with the prospects. That lets you understand exactly what your conversion rates are, what channels work best to acquire new customers, and the overall performance of your targetted campaigns.
You can really summarize the difference between paid leads and target farming as building a recognized brand to create direct engagement, vs paying someone else to manage your lead creation and giving away ownership of the customer to someone else. Just like an actual farm, you need to water/feed your crops to make them grow, but you also get to decide what you want to plant and what you want to charge.
"Whether you get your business from paid lead sources, the marketplace, or target farming, how cool would it be to bolt on the most intelligent and intuitive platform to learn about the consumer (their behavior, persona, property insights), in order to better prioritize job assignments and conversion from lead to finished job?" - Industry Veteran & GlassHouse Advisor
Breakdown of Paid Leads vs Target Farming
Paid LeadsTarget FarmingAverage Cost/Lead~$50 Each & Sent to Multiple CompetitorsCan be as low as $3 on average - depending on ad/mailer spendsCustomer CostTypically high due to competitor involvementLimited to your outbound spend since you aren't paying a marketplace operatorCustomer ExpectationsUnknown and often highly price driven buyersMore likely to value quality of service over lowest price - due to targetingReview RiskUnclear - You may be accepting a significant risk of a poor reviewYou can filter by review history to limit your exposure to bad reviewsROI & SustainabilityCan be turned on quickly but will likely require a high cost to maintain the flowCreates a more sustainable growth path with an emphasis on building a trusted brand
Generally paid leads offer the ability to outsource your prospect creation but they do not build long-term or ‘durable’ relationships with consumers. Comparing and contrasting these two methods highlights the value of going after customers who have been identified as ‘ideal’ vs trying to qualify them after they are handed off to your team. The amount of time you may spend chasing down leads or quoting and following up with prospects who are not really a good fit can dramatically impact your overall efficiency and ultimately your profitability.
Making the Right Decision for Your Business
“You want to maximize the amplified efforts and conversion and the ROI on the brand you’ve already worked hard to build.” - Home Services Executive
Short-Term vs. Long-Term Goals
If immediate leads are needed to fill existing capacity, paid leads might be a good option for you. However, this is an endless hampster wheel as you are not creating inbound intent or brand awareness, so you will need to continue paying for these leads forever.
For a long term growth plan, creating an ever-green process to ‘farm leads’ will create lasting value, better operating margins, and a more durable brand ‘moat’ (which should help increase your company value).
We suggest you think about your current business growth stage and consider a ‘hybrid’ approach. Start doing a target farming campaign with 5-10% of your existing budget - not enough to break your existing lead generation processes but a big enough amount to start building a foundation. As you begin to see results from the ‘base’ you have created, you can move more budget over until you have created a balanced approach that gives you revenue diversification and can protect your business from any swings in a single channel.
Conclusion
As the home service industry continues to grow and evolve, being able to differentiate your customer acquisition strategy is likely to become more and more important. Target farming is a newer way for businesses to drive growth and improve their overall efficiency - making it a great part of your overall strategy and growth plan.
We encourage every business to think about how they are creating direct relationships with their customers and the market. As targeting abilities have improved, even a young business can now target ideal customers at a low cost and create a multi-channel strategy to acquire new customers and make the phone ring.
