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How the marketplace is shaping itself

Technology is changing everything around us right before our eyes. But what do  you care? You remodel homes. You use real people and solid materials to build your projects. Technology will never replace that. That’s why remodeling is such a safe business, as far as being replaced by fancy apps and printed circuits. You can just truck right along without any concern for disruptive technology.

Robots?

During my career, I thought the same thing. Yet I made a point of being on the forefront of technology, just because I enjoyed it, and I made it work for me. But I never thought, like you, that technology could disrupt my business. During the 80’s and 90’s that was pretty much gospel. You didn’t even have to have a website. Well, not anymore. 

And then I saw an article about robots that could build homes (see “Will Robots Build Our Homes” article). And I thought, “I bet some day they’ll adapt this to remodeling.” So far, there isn’t a hint of that happening. But there are other technologies that are slowly tightening the noose around the present day model of the remodeling industry’s neck. I believe that it’s important that you are at least aware of what’s happening, and how prevalent it is becoming.

Here they come…

I remember when Home Depot and Lowe’s started doing installed sales. That was a short-lived scare, but it did give me pause. The subs weren’t really happy about the process, and although it still exists, it isn’t a major threat to most remodelers. 

Then the referral services started emerging. Angie’s List started in 1995 and grew rapidly. In later years others joined the fray, thinking this to be a lucrative business. For some it is, yet in the 2nd quarter of this year, although Angie’s List had a revenue of $78 million, their net was a dismal $-18 million. That doesn’t seem to be deterring the wanna-be’s, because they are climbing on board at a rapid rate. 

Local Referral Services

Let’s review some of the newcomers and assess whether they could possibly cause any disruption in your business. And on the other side of the coin, is there a possibility that you could use these services to enhance your present business model? The important takeaway here is that you become aware of what’s happening in the marketplace. 

As you read about the various services, note that these services are no longer national or international. They are LOCAL. That means they can target, quite adeptly, your market. They have the technology to send notices, and show profiles, to only those in a certain radius set by the professional, e.g., “20 miles from my office address.”

There is one more factor that should be mentioned that differentiates business today from 10 years ago, and that is the smartphone. Look at companies like Uber and AirBnB. They could not exist or grow without the smartphone. The smartphone, although relatively new, is one of the biggest and most disruptive technologies in the world.

“Without awareness, there can be no preparedness.”

Here is a partial list of some referral services:

Angie’s List – A website where you  can read reviews and hire a professional. Angie’s List has an app for Android and iOS devices. 

Ebay Hire – eBay isn’t much of a threat in its present state, but it could grow, due to its enormous customer base. They introduced eBay Hire in late 2013. In their blog they stated that, “eBay Hire is designed to eventually let service pros sell and market their services to eBay customers in their neighborhood. Interested professionals will have a profile page, where customers can learn about their experience and rates. In future phases, ads featuring the pros will show up in relevant product search result pages. For example, shoppers buying golf clubs might be shown results for accredited professional golf coaches in their zip code.”

Thumbtack.com – An easy to use interface that will help you find a professional and get an estimate very quickly. It is available as an iOS (iPad or iPhone) app. Click the video below to see how easy it is to get a quote.

Home Depot’s RedBeacon.com – Home Depot acquired RedBeacon in early 2012 and has made it into a formidable professional referral service. The interface is not quite as friendly as Thumbtack or Pro.com, in my opinion. Put in the type of project you want, put in your zip code, and then you are asked questions about your project. Submit the query and you’ll get a quote. It is available as an Android and iOS app.

Pro.com – Pro.com is a fairly new arrival too. They have recently partnered with Lowe’s as Lowe’s contractor referral service. They are very well funded and their interface is very user friendly. However, they have less choices to refine your quote, such as Thumbtack has, and they only quote labor prices. Material is not included. 

“… unlike Yelp, Pro.com will not try to feature every contractor or house painter in a given market. Instead, it just wants to focus on the very best in any given market, though those professionals do receive a rating calculated by Pro.com. Depending upon the city size, Williams said that each market would ideally have between 10 and 70 featured home improvement specialists, all fully vetted by Pro.com staffers.” Thanks to John Cook at GeekWire.com

Exec – Exec is a home cleaning service, among many other things. Its founder, Justin Kan launched the business in early 2012. His mission was to be a concierge to busy entrepreneurs and business people, and to clean homes and offices. They soon found that “Errands”, the concierge service, required too much effort from the end user, and that the cleaning service made up 90-95% of their business. Early in 2014 Handbook, another primarily East coast cleaning service, acquired the struggling company for under $10 million. 

Getting a quote for cleaning your home is really simple. Describe your home using the drop-down choices, tell them when you’d like your home to be cleaned, and give them your email address. That’s it.

Why did I include Exec/Handybook in this report? Because they have big plans, that will definitely infringe on the handyman business. They already offer plumbing repairs and minor electric work, and plan to expand into other areas soon. 

Here’s a quote from a TechCrunch article about Exec’s buyout:

Handybook has raised $12 million in total funding to date, from General Catalyst Partners, Highland Capital Partners and TechStars co-founder David Tisch, among others. With Exec in tow, the startup now has to go out and live up to its promise of not just taking on competing cleaning services, but disrupting the home services industry and, potentially, giants like Angie’s List.”

New guy on the block

The latest newcomer, the catalyst for this report, is Amazon.com. Jeff Bezos, CEO of Amazon.com, has been talking about offering local service referrals for over a year. It is already in beta and is rolling out in some of the major cities across the US. 

Why do I think that Amazon might be a contender? 

  1. For one thing, they have 244 million active customers, and are adding active customers at a rate of over 2.5 million each month. 
  2. They are trusted and have an excellent reputation. 
  3. They offer their A-Z Happiness Guarantee. 
  4. They have some of the best, most powerful technology on the planet. 
  5. Their product and service reviews are read by almost all potential buyers. 
  6. They can bundle discounted pricing with the appropriate service. 
  7. At present, even in beta, they are offering over 62 services.

You can take a look at their pricing structure here. 

I personally feel that their prices are high and will restrict many service companies from getting on board. Time will tell. Business, as well as life, is an experiment. You have to find what works best, for your target audience, at a particular point in time. 

Amazon can do a lot of marketing for you, and could move you up in your local market. You be the judge whether it would give you a good ROI or not. They will not be standing still. Their goal is rather lofty, and that’s to provide a service for every single product they sell. As Jeff Bezos said in their last shareholder meeting, “It’s still day one.” He knows there is still plenty of room to grow. 

Having said all that, you can’t beat good ole relationships

I’ve shown you just a few of the referral services on the market. The objective is just that you observe what is happening; what is shaping the marketplace of the future. Be aware that this is happening and see if it has any place in your business.

Lastly, keep in mind that nothing will ever beat the time-honored face-to-face meetings with prospective clients. They may trust Amazon or Pro.com, but they cannot deliver the ‘like and trust’ that you develop with your clients. 

The way you will stay alive and grow in the market is to continue to cultivate your relationships, and run a  super efficient business. And as always, to grow successfully you must put your processes on paper and share them with your staff and clients. Growth and solid improvement cannot succeed without superior processes and systems. Without these,  you can’t compete and make a profit. Learn more about processes that will make you money, and hire a personal business coach to help guide you and hold you accountable as you work toward your goals. Make smart choices, and continue to keep you eye on innovations in the marketplace.

Wishing you the best of fortune, Randall

This article was written by Randall Soules, remodeling coach, adviser, educator, and creator of the Scientific Remodeling System, showing you better ways to advance your business, raise your profits, and improve your life, through the use of superior remodeling processes. If you would like to discover better ways to run your business, click here. He also provides his uniquely customized one-on-one coaching to a select group of contractors. Feel free to contact Randall at Randall@scientificremodelingsystem.com.

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