Episode 19 – Part 2: Do comparison sites put a downward pressure on fees? With Simon Bath, PinLocal

The following transcript is autogenerated so may contain errors.

Matt Nally 

Okay. So one of the things you can hear a lot are statements like comparison sites leads to a downward pressure on fees. And 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, and how is that a fair comment that they they place a downward pressure on fees? And what can servers do, I suppose to combat that, or, you know, and therefore to make that stand out and show them right.

Simon Bath 

I think it’s important just to take a step back and understand cost per acquisition. So if if the different sources of business will, 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, in when we go direct to consumer through lead generation sites like ping local, exactly the same build that cost per acquisition in. So if, if you, if you understand the average net fee that you’re going to take from a surveying job, make sure you factored in that cost per acquisition, for example, you could chop your average fee by 100 pounds, and get a better conversion rate, you can increase it by 100 pounds and get a lower conversion rate. But just understand that as a total picture, as opposed to being really sensitive around just price, because the two factors are important to building together so that you can understand the overall yield of the work that you’re gonna be taking in.

Matt Nally 

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 this slight lower conversion rate, yeah, I spend on leads counteract that. So you’re still getting them a good fee on the jobs you’re converting. And you’re not having to

Simon Bath 

exactly that. Secondly, that if you know that an estate agent is going to demand 150 pound referral fee, and you know that, you know, buying leads from Penn 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 gonna go on to this a bit later. But understand the volume of leads, what conversion rate am I expecting, therefore, what’s my cost per acquisition, and then that can play into what legal fee, you can put there. 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. What’s the caseload look like? What’s the market look like? You know, 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 Pinnacle’s platform, you can edit your fee anytime a day whenever you need to.

Matt Nally

as 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 out, you know, if you book in the next 24 hours, this code is valid and it takes you know, a fixed amount of tends to jump off, 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 temporary lower fee with a what’s the word a expiry date? Yeah, yeah, pressure on time.

Simon Bath 

Yeah, yeah. Yeah.

Matt Nally 

How do you think firms can better explain their differences, though. So let’s say you’ve got, you’ve got four or five surveyors that appear in the results, as a consumer obviously wants to know what makes them different. And one thing and I’ve said this on other podcasts, or other episodes is, the USP is that you often see our Mrs. DS, I’m local, my job and free reports, all that type of stuff. And actually, it’s the same USP that each and every other spheres is giving. So what are the types of things that you see from surveys where you think there are, these are the types of USPS they could consider or the you know, the better ways of explaining the value?

Simon Bath 

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, if you can get some link into Google reviews, Trustpilot, Fi foo, whoever, whoever they are, I think that’s what the consumer behaviour is now used to, you know, I see a name, I don’t, 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 ourselves from everybody is jargon free, everybody’s local, everybody’s immediately available. How do you then build in that third party validation piece that says Actually, no, my, my previous customers have said that? Yeah, I was really quick. Yeah, the report was easy to read. And there was value for money. 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.

Matt Nally 

Yeah, yeah. I think it’s, it’s important to know as well, what how you defer to your competitors, you know, you’re not no one’s going to be the same. The reviews is one great way of being able to split display that difference in terms of quality of service. And you know, exactly the, I think one example I can think of, and it’s potentially the wrong, direct comparison, because it’s a very much a product rather than a service. But if you go on auto trader, and you look for a Ford Focus, you can find many Ford Focuses, and eight, and they’re all going for different prices, and they will all sell eventually for different prices. Because they’re all slightly different factors, you know, some have got heated seats, and, you know, auto park or wedding or whatever it is hill assist all this type of stuff. Others will be very basic. And either the equivalent is the minimum standards of air, which is fine, the meeting 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 what actually makes you different, as well. 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.

Simon Bath  

Yeah, again, on that it’s understanding what the consumer wants. So it’s understanding that the consumer might want a digital experience, they might never want to talk to somebody, you know, doing all over email, make a payment by PayPal, receive the report, go onto a portal and check when the the estimated survey data 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 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. Bearing in mind the source, right? Remember that consumers gone on to a search engine, a comparison site, you know that that’s their behaviour type. It’s about making sure that you marry up your USPS to that that consumer type.

Matt Nally 

Yeah, that’s a good point. Customers coming through different sources have different motives, different preferences. I think one of the things we try to explain the survey because yes, we’ve got that automated lead response that you go out on 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 I could just get used to buying stuff online. Yeah, rather than going. But equally, it’s designed completely the other way, which is it saving you enough time to be able to speak to every customer, you want to be able to speak to and and hold the hand where you need to hold that. Absolutely. So just so just going a bit further back on to the statement that gets thrown around a lot around the downward pressure on fees through comparison sites. And I think it’s just good to be able to defend yourself on that and, and, you know, give another perspective. I suppose it’s something you see in a stage state agency a lot is this argument of fees been driven down driven down with the likes of purple bricks, for example, or strike and these online options? But the flipside is I do see a lot of discussions in this 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 equally it’s about that really is about their differential differentiation and understanding how you fit in. But I think we were discussing previously about, you know, understanding how the volatility of prices have changed, and other markets move so well, I suppose, rather than me talk, it’s probably best for you to be able to ask

Simon Bath 

your bang on it, you know, price prices is fluid prices is always changing. And if the price on the 15th of August is the price that you’re confident is bang on today, and there’s a price point that you’re happy to, to convert leads out, and I would say jobs, 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, you know, checking out competitive price, understanding where market volumes are. But it’s important to keep revisiting that in conjunction with everything else in conjunction with lead conversion, in conjunction with capacity, a 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.

Matt Nally 

Perfect. And then the I suppose the final part from the, from the people you’ve you speak with in terms of your end customers, and obviously, we’ll touch base with them on their conversions and how they’re getting on. Is it the cheapest that always wins? Or do you find actually, that’s not the case? So it’s tends to be someone that’s in the mid range? Or is there two people actually get put off by a low price do you find or

Simon Bath

it’s a terrible analogy, but it’s like ordering a bottle of wine in a restaurant. Very rarely does anybody go with the one at the top of the list? It depending on on how close it is to pay there, you kind of come down off the top. So we, again, is is balancing your USP propositions to that 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 position three and four can be equally as effective as as position one.

Matt Nally

Yeah. And I think that’s reflective of what we see on on the system, it’s, you know, we see a whole range of pricing from quite low to very high. You know, 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 clued up as to what their proposition is.

Simon Bath 

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 site technology, are are fully priced transparent. So having somebody with a 99 pounds, level three survey is, 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 by displaying spirits price. So we we want to be agnostic. Absolutely. But we also need to be the guardian of sensible pricing. So we keep a strong if for any. Any indication that that’s not happening.

Matt Nally

Yeah, that’s interesting. Yeah, so do do monitor then if someone’s ridiculously low, I suppose compared to the others or doing it’s like a big process or?

Simon Bath

Absolutely, absolutely. Like, say we’re agnostic. So you put a price in, we don’t set your pricing up, 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 we will closely monitor any spurious pricing that comes up.