Should a Contractor Advertise with Amazon Home Services

Posted by David Chism | Mon, May 2, 2016

 Should a Contractor Advertise with Amazon Home Services
Ama­zon has decid­ed to com­pete with com­pa­nies like Porch, Ang­ie’s List, Houzz, and Yelp by offer­ing its own home improve­ment lead gen­er­a­tion ser­vice for its loy­al mem­bers. This real­ly makes a lot of sense for Ama­zon, since they are the best at know­ing their cus­tomer’s buy­ing behav­iors. I think this can be a real bless­ing for cer­tain ser­vice providers. Yet, I also think it can have a real neg­a­tive effect on cer­tain home improve­ment contractors. 

Pros Cons signpost in a beach background

Pos­i­tive Rea­sons to Advertise

  • Small in Size or Lim­it­ed Resources: If you are new in busi­ness or you have a lim­it­ed mar­ket­ing bud­get, Ama­zon could pos­si­bly be a great place to get leads and build your busi­ness. You real­ly have noth­ing to lose. You can set­up your ser­vices and account pret­ty quick­ly. Then you sit back and allow Ama­zon to work their mag­ic. If you are very respon­sive, pro­fes­sion­al, and have rea­son­able prices, you will get work! Also Ama­zon is one of only a few com­pa­nies that offers a pay for per­for­mance mod­el. This means you only pay when you sell a project. This is where I think it can have neg­a­tive results too, and I’ll talk about that below.
  • Mar­ket Dom­i­na­tion: If you want to make sure con­sumers find you every­where, you might be one who will want to con­sid­er Ama­zon. Maybe you see that your com­pe­ti­tion is on Ama­zon so you feel you need to be there. That is some­thing you will have to decide.

Neg­a­tive Rea­sons to Advertise

Now for the neg­a­tive part. Let me be clear. I am reg­u­lar user of Ama­zon and a rav­ing fan of how this com­pa­ny has built an amaz­ing busi­ness mod­el. I use them myself to buy hun­dreds of prod­ucts — includ­ing flow­ers! (yeah they made it eas­i­er to buy flow­ers than ever before.) Yet, I am hear to help my clients spend and mar­ket wise­ly and build THEIR brand. Key phrase in the last sen­tence: Did you catch it? Adver­tis­ing on Ama­zon builds Ama­zon’s brand more than it does your own. When you decide to get leads from Ama­zon, you are a sub­con­trac­tor for Ama­zon. Ama­zon is the Gen­er­al Con­trac­tor and you are the ser­vice provider. If there is a prob­lem on a job site, Ama­zon is the one who ulti­mate­ly owns the job, not you. They take respon­si­bil­i­ty. You will then for­feit your client(s) to be owned and ser­viced by Ama­zon. This is a very bad mod­el if you are try­ing to grow your com­pa­ny and have cus­tomers that become rav­ing fans. If your cus­tomer comes through Ama­zon, they can­not call or email you out­side the Ama­zon sys­tem. So when 6 months from now, your client calls you back and says, Hey Dave, I loved the paint­ing work your team did for me last fall. Can you come out and give me a bid for paint­ing 2 bed­rooms?” You will have to respond with, We’d love to do that. Please sign into your Ama­zon account and fill out an esti­mate request. We’ll then cre­ate the pro­pos­al and sub­mit it through Ama­zon. Since you heard about us through Ama­zon, we are not allowed to work with you out­side of Ama­zon!” What that con­sumer does not know is that they are also going to pay a pre­mi­um too. Since Ama­zon is act­ing as the gen­er­al and tak­ing respon­si­bil­i­ty, they have to get paid too, right? So, their fees will nor­mal­ly add any­where from 10 – 15% on each project.

Exam­ple of How This Plays Out

The rea­son I am writ­ing this blog is because I have been test­ing out Ama­zon’s Home Ser­vices with a few clients. It took us awhile to fig­ure out the sys­tem and how it worked. Over the 8 – 10 months, my client was on Ama­zon’s ear­ly adapter pro­gram, he got sev­er­al leads a month. It took quite a few months to sell a project, but it final­ly hap­pened. The job was a prof­itable one even after pay­ing Ama­zon. Sounds great, right? Then around 2 months lat­er anoth­er great lead came through. This was where a prob­lem sur­faced. The Ama­zon cus­tomer knew there was a markup on the price, but he did not want to pay the mark up. If my client did not mark it up to pay Ama­zon, he would have lost a lot of mon­ey (all the prof­it). The prospect also want­ed to work with them out­side of Ama­zon. Based on the con­tract they signed, they were not able to do this either. It was a rather large project (could have been over $15k). It was at this point they knew they could con­tin­ue with Ama­zon because this prospect would always pay 12 – 15% mark up and have to work with Ama­zon. They would not be able to send him any emails, cus­tomer sat­is­fac­tion sur­veys, get refer­rals from him etc. So any busi­ness suc­cess in growth would be at the mer­cy of Ama­zon Home Ser­vices.

You Decide What Is Best For You

Per­son­al­ly, I would not rec­om­mend a seri­ous busi­ness own­er to be involved with Ama­zon Home Ser­vices. It will be com­pli­cat­ed. I would not allow this lead gen­er­a­tion ser­vice to dis­tract you. I would not adver­tise just to make sure my name is every­where. That is not always the best way to mar­ket your busi­ness. I think it is best when you can build a brand where con­sumers know, like, and trust YOU…and they can work with YOU and not through some­one else. You have to decide, but the only rea­son I can see adver­tis­ing and using Ama­zon for lead gen­er­a­tion is if you do not want to mar­ket your busi­ness at all. 

About David Chism

David Chism started his business out of a passion for helping small contracting businesses grow, be more profitable and become better known to their target clients. One lifelong hobby of David is using techie gadgets. So this blog is a place where he writes about technology, marketing ideas, just for fun (humor), personal thoughts on small business and more.

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