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Episode 19 - Part 2: Do comparison sites put a downward pressure on fees?
87 Plays2 years ago
In Part 2 of Episode 19, we're speaking with Simon Bath from PinLocal about whether or not comparison sites put a downward pressure on fees and how to review marketing costs.
Simon is the CEO of iPlaceGlobal which operates PinLocal, Moveable, iPlace Financial Services and Altium Legal.
Over the four parts of this episode, Simon shares his thoughts on a range of topics around sales, conversion rates and optimising processes.
In this second part, we discuss:
📣 Marketing strategies for surveyors
🤩 The importance of displaying reviews and external validation
🏷️ Does the cheapest price always win?
🎨 Understanding differentiation
💭 Consumer preferences and motives by source
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Transcript
Impact of Comparison Sites on Fees
00:00:00
Speaker
Okay, so one of the things you can hear a lot are statements like comparison sites leads to a downward pressure on fees, and I know you touched on the fact that in our first topic that customers that might be going to a comparison site could be more price-sensitive. As a surveyor, then, is that a fair comment that they place a downward pressure on fees, and what can surveyors do, I suppose, to combat that, and therefore to make that stand out and show the value
00:00:31
Speaker
I think it's important just to take a step back and understand cost per acquisition. So if the different sources of business will attract different cost per acquisition. For example, if we're taking referred work from an estate agent, then we know there's a referral fee to pay back and we can build that in. When we go direct to consumer through lead generation sites like Pinlocal, exactly the same, build that cost
00:00:59
Speaker
per acquisition in. So if you understand the average net fee that you're going to take from a surveying job, make sure you factor in that cost per acquisition. For example, you could chop your average fee by £100 and get a better conversion rate. You can increase it by £100 and get a lower conversion rate. But just to understand that as a total picture, as opposed to being really sensitive around just price.
Strategies to Combat Fee Pressure
00:01:28
Speaker
because the two factors are important to building together so that you can understand the overall yield of the work that you're going to be taking in. So just to clarify on that, if what you can do to combat it is put your price up in terms of the level you feel is fair. Yes, you might see a lower conversion rate, but overall your profit margin allowing for the slightly lower conversion rate, your higher spending needs to counteract that. So you're still getting then a good fee on the jobs you're converting and you're not having to. Exactly that.
00:01:56
Speaker
Exactly that. If you know that an estate agent is going to demand 150 pound referral fee and you know that buying leads from pin local is going to cost you eight pounds a lead, well, then you can quickly work out how many leads you've got to convert to make it the same yield as you would get from a different source of business. So it's really important to understand the metrics. And I think we're going to go into this a bit later, but understand the volume of leads. What conversion rate am I expecting?
00:02:25
Speaker
Therefore, what's my cost per acquisition? And then that can play into what legal fee you can put there.
Tools for Dynamic Pricing and Customer Engagement
00:02:32
Speaker
Another really important factor and where we see the best conversion and the best yields from our clients is when that when that fee is always fluid, it's not set in stone. If it's, you know, if it's relevant on the 15th of August, it might not be relevant on the 16th of August. And that's based on internal and external factors.
00:02:54
Speaker
What's the caseload look like? What's the market look like? What are your competitors pricing? What coverage do you have coming up? So it's making sure that that fee is always flexible. And on Pinlocals platform, you can edit your fee at any time of day, whenever you need to.
00:03:11
Speaker
That's just an interesting point. I suppose one of the features we've got that can support that is discount codes. So if you wanted to run a, you know, if you book in the next 24 hours, this code is valid and it takes a fixed amount of attention, amount of then great. If not, if you're not that time sensitive, then you end up paying the higher fee. So there's ways you can encourage the, uh, a temporary lower fee with a, uh, would you, you know, what's the, what's the word? Uh, you know, it's quite a redo. Yeah. Yeah.
00:03:43
Speaker
How do you think firms can better explain their differences, though? So let's say you've got four or five surveyors that appear in the results. As a consumer, obviously, you want to know what makes them different. And one thing, and I've said this on other podcasts or other episodes, is the USPs that you often see are, I'm RSDS, I'm local, we're jargon-free reports, all that type of stuff. And actually, it's the same USP that every other surveyor is giving. So what are the types of things that you see from surveyors the way you think
00:04:05
Speaker
Yeah, yeah, yeah.
00:04:13
Speaker
there are these are the types of USBs they could consider or the better ways of explaining the value. I think across all channels that we work with this around third party validation. So how do you build TPV into what you're going to be pushing out to somebody who's never heard of your brand, never heard of your business. So in any way that you can capture that typically around review sites.
00:04:36
Speaker
If you can get some link into Google reviews, Trustpilot, Fifu, whoever they are, I think that's what the consumer behavior is now used to. I see a name. I've never heard of that name. Let me go and research that name to give me that third-party validation, because you're right. You're trying to distinguish yourselves from everybody's jargon-free, everybody's local, everybody's immediately available. How do you then build in that
00:05:07
Speaker
third party validation piece that says actually, no, my previous customers have said that, yeah, I was really quick. Yeah, the report was easy to read. And yeah, it was value for money.
Adapting to Consumer Preferences
00:05:17
Speaker
So if any way you can build in that third party validation, and it takes a bit of time, you know, it's not an overnight thing, but it's worth every penny of time building up some form of external review validation piece. Yeah, yeah.
00:05:32
Speaker
I think it's important to know as well how you differ to your competitors. No one's going to be the same. Reviews is one great way of being able to display that difference in terms of quality of service. Exactly. I think one example I can think of, and it's potentially the wrong direct comparison because it's very much a product rather than a service. But if you go on AutoTrader and you look for a forward focus,
00:05:58
Speaker
you can find many Ford focuses near you. And they're all going for different prices. And they will all sell eventually for different prices because they've all got slightly different factors. You know, some have got heated seats and, you know, auto park or whatever it is, hill assist, all this type of stuff. Yeah. Others will be very basic. And I, the equivalent is the minimum standards of air, which is fine. They're meeting the standard, but all the way up to the one that goes well above and beyond with drone surveys and all types of other aspects. And I think it's about understanding
00:06:27
Speaker
what actually makes you different as well. And I'm not sure how often people communicate that well versus it's a level two and therefore it's a direct comparison with the perception of it being the same. Yeah. And again, on that it's understanding what the consumer wants.
00:06:45
Speaker
So it's understanding that the consumer might want a digital experience. They might never want to talk to somebody, you know, do it all over email, make a payment by PayPal, receive the report, go onto a portal and check when the estimated survey date is going to be. And that's fine. But equally, it might be that, no, I'm just about to give over hundreds of pounds. I want to speak to someone. I want to
00:07:07
Speaker
you know, understand a bit more. So it's about making sure that you're demonstrating that flexibility for the type of consumer that you're going after. Bear in mind the source, right? Remember, that consumer has gone on to a search engine, a comparison site, you know, that's their behavior type. It's about making sure that you marry up your USPs to that consumer type.
00:07:33
Speaker
Yeah, that's a very good point, actually. Customers coming through different sources have different motives, different preferences. I think one of the things we try and explain in the survey, because yes, we've got that automated lead response that can go out in the follow-ups, but it's not designed to replace that conversation. For the customers that don't want to talk to you and they just want to be able to book in, and there are a lot of those now, where they're so used to buying stuff online, rather than going through that. But equally, it's designed
00:08:00
Speaker
completely the other way which is if it's saving you enough time to be able to speak to every customer you want to be able to speak to and hold the hand where you need to hold the hand. Absolutely.
Differentiation and Market Positioning
00:08:08
Speaker
So just going a bit further back onto the statement that gets thrown around a lot around the downward pressure on fees through comparison sites and I think it's good to be able to defend yourself on that and give another perspective.
00:08:24
Speaker
I suppose it's something you see in a state agency a lot is this argument of fees being driven down and driven down with likes of purple bricks for example or strike and these online options. But the flip side is I do see a lot of discussions in the estate agency world where actually you can really easily put your price up if you focus on the right things and so yes sometimes it's about price if someone's offering an equal service but equities about that
00:08:51
Speaker
really is about that differentiation and understanding how you fit in. But I think we were discussing previously about understanding how the volatility of prices have changed and how the markets move. So I suppose rather than me talking, it's probably best for you to be able to answer that. You bang on that. Price is fluid. Price is always changing.
00:09:17
Speaker
And if the price on the 15th of August is the price that your confidence is bang on today and is a price point that you're happy to convert leads out and how we take jobs out, fantastic. But by tomorrow, by the next day, by the day after that, that will be a different price. And it's important to not get too obsessed by checking that competitive price, understanding where market volumes are, but it's important to keep revisiting that.
00:09:47
Speaker
in conjunction with everything else, in conjunction with lead conversion, in conjunction with capacity. Price is absolutely a factor to make sure that you're accurate. You've got the best chance of winning business on direct-to-consumer B2C comparison sites.
00:10:04
Speaker
Perfect. And then the, I suppose the final part from the, from the people you, you speak with in terms of your, your own customers and obviously touch base with them on their conversions and how they're getting on. Uh, is it the cheapest that always wins or do you find actually that's not the case? So it's, it tends to be a someone that's in the mid range or is there, do people actually get put off by a low, a low price you find or it's a terrible analogy, but it's like ordering a bottle of wine in a restaurant.
00:10:31
Speaker
very rarely does anybody go with the one at the top of the list. You know, depending on how close it is to payday, you kind of come down off the top. So we, again, is balancing your USP propositions to that price point. But absolutely, being the lowest doesn't necessarily drive the best conversion based on what your USPs might be. If you're trying to build value into it, then actually positions two or even positions three and four
00:11:01
Speaker
can be equally as effective as position one. Yeah, and I think that's reflective of what we see on the system. We see a whole range of pricing from quite low to very high, because we do see quite an overview of different customers. And I'd say the ones that are very high do just as well, if not better, in terms of converting, because they have to be more glued up as to what their proposition is.
00:11:30
Speaker
Absolutely. And it's something that we kind of hold ourselves to account for as well, because we want to make sure that the partners that we display through our comparison side technology are fully price transparent. So having somebody with a 99 pounds level three survey is going to do us no good as a trusted source and is equally going to pretty much annoy every other single partner that we would have on there.
00:11:58
Speaker
by displaying spurious price. So we want to be agnostic, absolutely, but we also need to be the guardian of sensible pricing. So we keep a strong eye out for any indication that that's not happening. Yeah, that's interesting. Yeah, so do you monitor then if someone's ridiculously low, I suppose, compared to the others, or if you're doing a big price set?
00:12:24
Speaker
Absolutely. Absolutely. Like I said, we're agnostic.
Ensuring Fair Pricing Practices
00:12:27
Speaker
So you put a price in, we don't set your price in, you put your pricing in. However, we want to make sure that we are the best that we can be in terms of offering transparent comparison pricing. So yeah, we'll closely monitor any superior pricing