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Talk to anyone who's been in this industry for the last 10 years. They'll tell you about the good old days, when leads cost a lot less than they do now. During the pandemic, there were so many leads you couldn't even follow up with all of them.
Today the cost of leads goes up every year. I've seen people pay $250 per lead on Google. Now imagine handing that lead to your sales team. That has to hurt.
In this post I'll show you how to pay less for your leads every year without fighting in the same auction as everyone else. So your calendar fills up with homeowners who already know you.
Who I am
I'm Temi. I run Lead Phoenix AI, and I used to own a renovation company in Calgary called Dream Home Renovations. Now I help remodeling companies own their lead flow instead of renting it.
In my last video I told you about Renter Ron and Owner Owen. Today I'll show you the real reason Ron's leads keep getting more expensive, and where Owen is actually finding his.
Why "leads cost too much" is the wrong problem
Most remodelers believe their problem is that leads cost too much, and that half of them are junk.
I get it. You can see the bill. It's right there in front of you every month, and it's bigger than last year.
But here's what that belief does. It makes you fix the wrong thing. You switch agencies. You try a new lead site. You push your sales team harder, because if leads are that expensive, they'd better close.
Every one of those fixes happens inside the same auction. So the cost keeps climbing and nothing really changes. And it leads to three things:
- Every switch costs you a quarter while the new vendor ramps up.
- Your reps burn out on cold, shared leads, and some of them quit.
- You start to tell yourself, it is what it is.
Jim Zyminski said it best on the Talking Top 500 podcast: "Lead costs are up. And by the way, they've been up pretty much every year in the 40 years that I've been in this business."
40 years. That's a long time. If switching lead vendors fixed it, it would have been fixed by now.
The real problem isn't the price of leads. It's who you're talking to.
The 3% auction
Here's why the price keeps going up. At any one time, only 3% of homeowners are actively shopping for a remodel. And every Tom, Dick and Harry is fighting over that same 3%.
Every lead site. Every agency. Every get-a-free-estimate ad. Those homeowners click on one ad and get shown a hundred more from similar companies. That's what Meta does now. Same people, lots of companies shouting from the same rooftop.
Think of it like an auction where more people show up every week. You can be smarter. You can hire a better auctioneer. But the price only goes one way, and that's up.
And it's not just ads. Vince Venditti talked about what happened on Google. The search page used to be about 80% free listings and 20% ads. Now it's 80% ads and 20% free listings. And the AI answers take up space too, so people don't even click through to your website.
If every remodeler in your city is bidding for the same 3%, and more remodelers join every year, the price for that 3% can only go up. A better bid won't fix it.
What you have to do is look at the other 97%. These people aren't shopping yet. They're thinking.
Same click, two remodelers
Picture two remodelers. They buy the exact same lead for $50 on Facebook. Same price.
The homeowner has never heard of the first remodeler. When his rep calls, it's basically a cold call. He's starting from zero, and he's competing with four other companies she clicked on this week.
Now the second remodeler. The same homeowner has been watching his videos for three months. She's seen his kitchens. She's heard him explain what a basement really costs. So when his rep calls, it feels like a friend calling back.
This is what actually happens with our clients. People tell them they've seen them so many times on Instagram, and that it's good to finally hear from them. She already knows them. That's a totally different call.
So the only way to bring your lead cost down is to stop competing for the 3% who are shopping, and start teaching the 97% who are thinking. When they're ready, you're the one they already know.
How I went after the 97%
I learned this the hard way. When I started Dream Home Renovations, I had zero referrals and zero relationships. Nobody knew who we were. There was no chance we'd win the 3% auction against every established company in the city.
So we went after the 97%. We started making videos answering the questions people ask long before they call anyone:
- What does a basement cost?
- How long does it take?
- What permits do I need?
In four months, we had 835 leads come through those funnels, at about $12 each, and $600,000 in booked jobs. The Instagram page had over 50,000 followers.
With a design-build remodeler we worked with, when their rep called, the leads would say they saw them everywhere. But they actually weren't everywhere. They were just the only company in town talking to the 97%.
They seemed to be everywhere because you can reach the 97% for about 10 times less than the 3%. That's how $57,000 in ad spend turned into over $1.8 million in signed work.
For another company, we built a tool using the city's public zoning data. It told homeowners what they were now allowed to build on their lot. None of those people were shopping for a contractor. They just wanted to know what had changed on their property. That brought in about 5,000 leads at $5 each, and the reps picked the gold out of those 5,000.
Here's what the same kind of ad did across three accounts. Question-led ads, aimed at people who aren't shopping yet:
- 767 leads at $18
- 201 leads at about $11
- 130 leads at about $6
Compare that with people paying $100 to $200 per lead.
It's not that leads cost too much. The problem is fighting in shark-infested waters, the 3%, like Renter Ron. Meanwhile, Owner Owen owns the 97%, and he's building a real asset that will serve him for years to come.
Where to start
Think about the most you've ever paid for a single lead. Then watch the next video, where I show you the first thing you can build to reach that 97%.
If you want the whole system in one place, grab the free $1.8 million remodeling playbook.
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