Contracting businesses are run by people with a variety of skill sets. Some came up the ranks through sales and are natural networkers and comfortable with canvassing. Others started in the trades, and are more comfortable doing the work than selling it. Very few came up through marketing, and as a result, many owners and general managers are suspicious of the cost, and value of marketing investments. In our dealings with contractors we have found five common marketing misconceptions that need to be debunked.

1. Exclusive leads are the best leads
Every business wants customers where there’s no competition, right? But when it comes to purchasing leads, is it really possible to get “exclusive” leads? Lead generation companies charge a premium to put you in touch with a homeowner searching for a contractor, when they state that you’re the only one getting the information. However, it’s often the case that those leads are not truly exclusive, because most homeowners search extensively online in advance of their project. According to our latest Modernize Homeowner Index Report, 51% of homeowners research their project online, and nearly 30% of them spend more than 10 hours researching their project before connecting with contractors. During that research, homeowners are reaching out to contractors directly, filling out multiple forms online, and getting input from friends and family. So, while there’s a premium fee for “exclusive” homeowner leads, it’s likely that several contractors in your area already know about it through various sources.

2. Referrals and word of mouth are the best ways to build business
The recommendations of family and friends are among the most important factors for homeowners when they select a contractor. However, it’s hard to scale a business solely through referrals. Home improvement businesses need to create a balanced marketing “diet” in order to achieve predictable growth throughout the seasons.

Think of your marketing mix as a financial portfolio - While one stock may perform consistently well for you, market shifts and slow periods are inevitable. It’s wise to diversify your portfolio for the sake of consistency and increased growth. In your marketing mix, you should have a balanced diet consisting of referrals, print ads, digital marketing controlled by your business, and leads from third party providers.

3. If a lead doesn’t close, it’s dead
Many contractor sales people grow impatient with new business leads that don’t quickly turn into qualified prospects. Try changing your mindset, and stop using the impersonal label of a “lead.” Your prospects are living, breathing, people who own homes and are seeking services. These people often need time between when they start making inquiries to when a project is started. According to our research, 58% of homeowners pause their project because they found they weren’t financially ready for the complete project. That same research tells us that most homeowners are planning to begin their project more than 30 days after their inquiry (or form completion). Just because they need time does not mean they’re a dead or a bad “lead”. Many homeowners need nurturing, such as consistent follow ups via email drip campaigns, direct mail, and phone calls. It’s usually a good idea to help homeowners understand how they can financially plan for their project. Can you deliver financing options for them? Shifting your approach to being a helpful source of advice instead of the hard sales pitch can help gain the homeowner’s trust and respect.

4. Digital marketing doesn’t work
Contractors can easily get a bad taste in their mouth regarding marketing where the return on investment isn’t clear. And, most contractors haven’t “connected the dots” to show how contacts turn into leads, then meetings, then customers. When investing in digital marketing, it is fully possible to know the exact returns from that investment. What you need is a system for lead source tracking. Luckily, there are a wider variety of tools available to provide clear lead source tracking through your sales funnel such as CRMs, Google Analytics, and marketing automation tools.

Traditional advertising, including radio and billboard ads, TV commercials, and canvassing offer virtually no way of tracking the lead back to the source. That is, unless you ask the homeowner how they found you, and they remember the specifics. Yet many home improvement businesses still pour money into traditional ads because they’re afraid of change and they’re not tracking lead sources throughout the sales funnel. If you put a good lead source tracking process in place, you can hone in on the channels and campaigns that really work. Then you can turn the volume up on the winners, while dialing down the underperforming sources.

5. Purchased leads are too expensive
While every business owner knows they need to spend money to make money, many aren’t sure that investing in third party leads would provide a positive return. However, many contractors do find that, for every $1 they spend, they realize $10 in revenue. Of course, that depends on the quality of the leads and how well they’re optimized throughout the sales funnel. Sure, there will be some leads you purchase that will never turn into a sale. Look at the big picture: suppose you purchase 100 leads at $50 each, for a total pilot investment of $5000. If 20% of those leads turn into an appointment, you’re paying $250 per appointment. If 20% of appointments turn into a project, you’ve spent $1,250 per project. If the average project size is $12,500, you’ve generated $10 for every dollar spent.