DOOR vs The Rest (Home Advisor & AngiesList)
In this post we look at today's market cost per lead for home service professionals if they were to use a 3rd party service like ServiceDirect, Home Advisor or others.
There are a handful of places home services providers can market to consumers. The big middlemen in the market are HomeAdvisor.com, AngiesList.com, Yelp.com and a handful of others. They all essentially do the same thing - they gather user data (ratings) and sell businesses leads.
How much does a Lead Cost?
The cost of a lead depends on a few things.
What type of service is the lead interested in buying.
How the lead was obtained (opt-in, web form, 3rd party)
The geography and net worth of the lead
So, now let’s look at how much leads cost in the market today (according to ServiceDirect)
HOME IMPROVEMENT EXAMPLES
Air Conditioning - $25-150
Remodel - $100 - $600
Carpet Cleaning - $10 - $100
Concrete Paving - $15 - $120
Electrician - $25 - $95
Flooring - $20 - $90
Home Security - $20 - $150
Lawn Care: $20 - $80
Pest Control: $20 - $70
….. and many more
You get the idea. Leads have a wide range in cost, but for the most part range between $20 and $100. Even when you research HomeAdvisor and AngiesList, it is the same range - $20 to $80 per lead (not including their subscription fees).
Member Count is Key
The key to providing constant flow of leads to service providers is building the “member count” - a.k.a Users. HomeAdvisor does around $300 Million in revenue per year, which is around $10 per user per year. Of course, recently HomeAdvisor and Angie’s List merged - so now they do over 1B in revenue. Needless to say, it’s a big business.
In order to drive “member count” in DOOR, there are 2.8 Billion tokens reserved specifically to drive registrations. 70% of all DOOR tokens are designated to drive the most important factor for growth - acquiring new users.
As more users join DOOR, the value of DOOR rises because there will be more leads generated and sold to businesses.
Not Mutually Exclusive
The good news is that DOOR can thrive (perhaps even more so) with other services like HomeAdvisor and AngiesList also growing. This is not a “winner-takes-all” market. Unlike most businesses, where market share is more fixed - the lead generation market fluctuates constantly. For example, in the real estate market - 5% of homeowner sell their home each year in the U.S. - but for the most part the 5% from year to year are always new people. So essentially, everyone is “starting over” each year to acquire users looking to access professionals.
This is one of the reasons, DOOR chose home services as a market opportunity. It naturally provides an even playing field due to its turnover.
The DOOR Advantage
The DOOR Advantage will be two-fold - 1) Ability to incentivize consumers with real money and 2) Ability to provide high-quality verified leads to businesses. It will take time to achieve the same growth of HomeAdvisor, but each user that signs up, and each business that buys DOOR will be one step closer to becoming a household name.