Technology: Tech Giants as Partners

Teaming up with technology giants like Google and Amazon to offer local home services is not for everyone. But given their overall power and potential for growth, it is certainly worth examining.

authors Patrick O'Toole 

Recent years have been very good ones for remodelers and home improvement companies. Demand for big and small projects has been strong, translating to higher revenues for firms in most parts of the country. In addition to strong demand, remodelers in recent years have also benefited from big advancements in business technology. These have created new efficiencies and profit opportunity as nearly all aspects of running a remodeling business have been positively impacted.

Think about it: Sales presentations are better and quicker via interactive project visualizations and online product selections. On-the-spot sales are enabled by quick, online financing approvals. Design software packages provide three-dimensional renderings with virtual-reality views of design solutions that were once much more laborious and two-dimensional. Siding and roofing estimates are measured and estimated without visiting jobsites due to zoom-able online mapping systems. And perhaps most significantly, today’s blindingly fast internet and communication technology has created new and better ways for homeowners to find remodelers and vice versa.

It starts with today’s highly engaging websites. They are extremely rich, visually engaging environments that tell the story of remodeling and home improvement firms in very detailed ways. They enable visitors to make inquiries and share their contact information 24 hours a day, seven days a week. Consumer ratings and reviews on Google as well as inspirational consumer platforms like Houzz.com have only grown in importance to online reputations.

In addition, carefully cultivated and maintained social-media feeds have enabled all types of industry players—from architects and designers to remodelers and home improvement pros—to push project images and videos to thousands of people who would have never heard of them otherwise. It is not uncommon today to hear of a kitchen designer in Grand Rapids land a project in New York or Florida based on her strong Instagram feed. Likewise, a Northern Illinois craftsman might pack his tools and help restore a barn in Kent, England. Both are extreme examples but have indeed happened and will continue to occur.

At the same time, local advertising has changed forever. Where once local print magazines, yellow pages and newspapers drove a big share of leads, today Google, Facebook, Instagram and Pinterest have replaced them with many new local advertising options. In addition, remodelers are making investments in search engine optimization (SEO) and pay per click (PPC), as well as enhanced listings in places where consumers find design inspiration.

It would be easy to assume that with all these new and better ways to reach prospects, the cost for qualified leads might have gone down in recent years. But the cost of leads, in fact, is rising. One survey of lead-cost information estimates an 8.5 percent increase for home improvement firms from 2018 to 2019.

Giants See an Opportunity

It was against this backdrop that Amazon, then Google, entered the local-services environment. Each tech giant came to our industry for different reasons, but both brought herculean power to move markets. Amazon Home Services was initially tested in several years ago in just a few markets. The goal was to support the online sale of items that are difficult to assemble or install—everything from garbage disposers to ceiling fans on up to plumbing fixtures.

Google, around the same time, entered select verticals—initially HVAC, electrical and plumbing—with the idea that it could grow its advertising revenue by generating leads for qualified firms on top of its already lucrative pay-per-click model. Significantly, today Google Local Services has scaled up to include bigger-ticket, large projects, offering roofing and window installation services in markets around the country.

Lead-generation expert Todd Bairstow, founder of Keyword Connects, says the Amazon model seems to work well for very small one- or two-person handyman operations, but not bigger operations that need to support significant overhead.

“Amazon wants to take some of that fear and trepidation away from the homeowner by saying they have somebody who will come and do it through Amazon Home Services,” Bairstow explains. “And from the perspective of the contractor or the service provider, it depends on the type of job that contractor is seeking. If you’re a handyman and are willing to take a job that will take you 45 minutes to complete and you get paid $50 or $60, that’s fine. But if you’re a larger home improvement company with some scale and serious overhead, it’s tough to make that a profitable venture in a lot of ways. Amazon Home Services was designed after seeing the success of companies like Task Rabbit and Thumbtack.”

Chris Behan, president of Socius, a leading marketing firm for scores of remodeling and home improvement firms around the country, says his firm has assisted many of its customers in applying for and getting approved as a Google-certified service provider, backed by the Google Guarantee. Socius, however, has not helped any of its clients get set up with Amazon. This, he explains, is not a reflection of the many benefits of the Amazon offering, but rather is a byproduct of the large-scale nature of most of his company’s clients.

“If you’re a window company or a bathroom company, in the scheme of things, you want to take up as much space on the Google search-engine results page as you possibly can,” Behan says. “Certainly, the Local Services Ad shows up at the top of the search engines. We think that Local Services Ads in combination with paid media, in combination with search-engine optimization, all of those things together can create a lift for a company’s total lead flow.”

Google Local Services, or Google Local Ads, really got the attention of Socius and other marketing consulting firms beginning two years ago when Google began testing bigger-ticket services, namely roofing and window repair and installation. According to Behan, they were concerned initially that the program could negatively impact a very effective pay-per-click system.

But as companies began to get listed, the lead-flow was not as large for roofs and windows as it was for electrical, HVAC and plumbing jobs. Behan surmises that the limited amount of information provided within a Local Services Ad is not enough for a shopper to make a decision on such a major purchase.

“In our opinion, the reason that you don’t see quite the same conversion rate is that when you engage with the ad, and you click on the ad to learn more about that company, you’re getting a very limited set of information about that company. By contrast, if a really, really good website experience converts at 10 percent, which is a great conversion rate, you’re going to see the conversion rate of an LSA ad be notably lower because in most people’s opinion, that experience is lacking,” Behan says.

“If I’m buying a service like a plumber or electrician, and I’m looking to have my drains unclogged or switch out my circuit breaker, I think there’s this general feeling that, well, as long as they’re an electrician and as long as they’re a plumber, they can do that work. However, If I’m going to spend $50,000 on replacing windows in my house, the experience that an LSA ad offers is weaker from a conversion standpoint.”

Very Different Deals

Amazon is the world’s largest retailer and Google leads the world in internet search; as a result the two tech giants come to home improvement and remodeling with different offers for pros. Because Amazon is supporting its retail efforts, it offers installation and improvement services with products it sells.

For those familiar with shopping on Amazon, installation services are simply added to a consumer’s “shopping cart.” Thus, the price is pre-determined. Amazon is contracting with the client and the contractor is subordinate to Amazon, which takes 10 to 25 percent of the price of a job for its fee.

Google’s offering is a lead-generation model. Once a pro is verified and approved by Google and backed by the Google Guarantee, they are assigned a special phone number by Google. All calls placed on this number are considered leads. Contractors are obligated to answer or follow-up with each call as well as each completed electronic inquiry form.

Approved contractors can specify their ideal or target job types as well as specific zip codes and geographies where they prefer to work. The contractor will pay Google a price for that lead based on demand, but generally that lead is under $100, which works to be less than it costs for clicks that convert to leads via Google’s pay-per-click program.

“You would expect to pay less for an LSA lead than you would for like a traditional Google ads lead through a pay-per-click program,” Behan says. “And it could be as much as 50 percent less.”

Both Amazon and Google conduct extensive background checks on companies before admitting them into their programs. These can be arduous hurdles, particularly in the case of Google, where background checks are required of everyone who comes in contact with customers, including installation staffers all the way down the chain of command from owners and managers.

Among the benefits of being approved by Amazon and Google is their implied endorsement as well as their own satisfaction guarantees, which can be a big inducement for some consumers. This is particularly true in an industry often rife with uncertified and unprofessional operators.

The Google Guarantee may cover claims up to the cost of the initial service, with a lifetime cap for coverage of $2,000 in the U.S. and Canada. It covers claims submitted within 30 days of the initial service completion date. It requires a receipt that clearly shows the amount paid and the provider’s business name.

It does not cover add-on or future services, damages to property, trip charges, diagnostic fees, dissatisfaction with price or responsiveness of the business, as well as cancellations.

Importantly, the Google Guarantee only applies when the contractor is sourced by the customer through the recorded Google phone number for each contractor, or through a Google Voice request.

Amazon backs approved contractors with its Happiness Guarantee. There is a very detailed protocol and set of rules for this guarantee but, ultimately, it is this: “If the service was not completed according to the final scope agreed through Amazon’s systems, or if your product or property was damaged as a direct result of the service, we’ll work with you and the pro to correct the problem, or we’ll give you your
money back.”

In today’s world where thousands of contractors go in and out of business each year, bona fide, established remodeling firms are often looking for key points of differentiation with their competitors. If the service offering and geographies match, these two tech giants can offer an important point of differentiation.


How Pros Qualify for Google Local Services Ads

To help pros feel confident when booking a provider through Local Services, Google requires all businesses advertising on their platform to undergo various levels of screening procedures. The screening process varies by type of service and whether the service provider advertises directly with Google or through one of its partner affiliates. These screening processes may include background checks, verification of insurance or licenses to the extent permitted by applicable laws.

How Google screens Local Services businesses that advertise directly on its platform

Local Services businesses that advertise directly with Google undergo the following screening procedures. Consumers will be able to recognize these providers because their profiles will have a note that says they have passed Google’s screening and qualification process for the particular category in which they’re advertising. This process varies by category but may include license, insurance and background checks.

Background checks

Business owners­—and in some cases, service professionals—at Local Services businesses that advertise directly with Google may undergo background checks by third-party risk management companies with which Google has partnered.

Depending on the type of service the business may undergo the following types of background checks:

  • Business-entity background check: This is a civil litigation history check of the business for evidence of negligent or substandard performance of services, such as judgments and liens from federal and state courts in the U.S.
  • Business-owner background check: This is background check for all owners of the business. This may include identity and criminal history checks, such as cross-checks against national sex offender, terrorist and sanctions registries in the U.S.
  • Service-professional background check: In an applicable category, every employee, independent contractor, temporary worker, contingent worker, vendor or other worker who will perform core services for the customer (service professionals) must complete a background check. Office managers, clerical workers, customer support representatives (or others who don’t visit customers) don’t need to complete background checks. This may include identity and criminal history checks, such as cross-checks against national sex offender, terrorist and sanctions registries in the U.S.

License checks

Google verifies that advertisers hold applicable state, provincial and/or country-level licenses for businesses and owners/managers, to the extent practical. The licenses Google has verified for each advertiser are displayed on its provider profile. Advertisers must also confirm that they hold applicable county, city and province-level licenses, and that all workers are appropriately licensed. In some cases where a business is on the border of two states, the provider may not be authorized to work in both states.

Google encourages consumers to review each provider’s profile to learn more about the licenses it has reviewed.

Insurance checks

Whenever applicable, each provider’s business must carry general liability insurance coverage for work performed.

Advanced verification

Advertisers in some business categories may need to undergo Google’s advanced verification screening. Advanced verification screening may include a review of the company’s Google Ads account, publicly available data and video interviews conducted by Google. The check may also include inquiries into business-registration validity and evidence of fraudulent or misleading behavior.

Other screening

Google also continues to collect ratings and reviews from people who hired Local Services providers. Serious or repeatedly negative customer feedback may result in lower rankings (including not showing at all). Source: Google


How Pros Work with Amazon

Selling Services on Amazon allows pros such as assemblers, house cleaners, handymen and electricians to sell professional services to Amazon customers in their area. With the selling services on the Amazon app, you can see every new job in your area and choose the ones that fit your schedule. It’s a great way to keep your business busy or to fill in the open gaps throughout your week.

Simply complete an application form. Amazon will review your business details and, if approved, provide pros with an activation code used to create an account.

Requirements

  • All Amazon Home Services providers are required to carry general liability insurance with a limit of $1 million per occurrence. Pros will be required to provide their insurance information upon registration.
  • If pros select a trade profession (Electrician, Plumber, General Contractor), they will be required to provide their license information.
  • Pros will not be approved to sell services on Amazon if they don’t meet the above requirements.

Amazon Benefits

  • Zero Upfront Cost: There are no startup fees, no monthly subscription fees and no advertisement fees. Contractors only pay for a revenue share for completed jobs based on the service type and final service price.
  • Real Jobs: These are not leads, they are real customer jobs.
  • Handpicked Pros: Contractors only compete with other certified pros in an area.

How Does It Work?

  • Get Discovered: Customers can find and purchase a contractor’s services while shopping on Amazon.com. Those services will also show up with related products.
  • Amazon Sends Jobs: Contractors receive actual jobs when customers order their pre-packaged services. QR

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