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Ghost of Midnight

… about neighbors, community and Front Porch Forum

Angie’s List a pyramid scheme?

Interesting critique of Angie’s List on Screenwerk today from a plumber in Seattle.  Angie’s List recently pushed into Vermont where tens of thousands of households use Front Porch Forum for a variety of purposes, including plumber recommendations.

I have years of experience with Angie’s List as a local plumber in Seattle. They have gotten money out of me and gave nothing in return except much trouble from customers that tend to be pretty passive aggressive. Angie’s List get paid on both ends – Any contractor listing you see is only visible to you if the contractor is paying Angie’s List through the nose. My cost for Angie’s List “hot leads” was $300 each. Testing Angie’s List cost me $7000 over two years. While paying such high costs for leads may work for a major construction project , it won’t work for a service call where we charge by the 1/4 hour.

Google clicks have gotten as high as $38 per click here in Seattle when the search term used is “plumber” or “plumbing”. On the average it takes 15 clicks to get a call. Do the math on the cost to the guy ringing your doorbell.

Angie’s List cost per job performed was 75% of my company’s average invoice total (about $400). My company does over a thousand jobs a year.

Any homeowner service using this advertising method is paying way too much to maintain any integrity in the service. This type of advertising creating an incredible amount of pressure to convert to a commission-based high profit business model for basic traditional services. If I pay Angies List hundreds of dollars just to ring your doorbell how can I treat you fairly when your plumbing problem requires an hours work? I can’t so I cancelled my advertising contract with Angies List.

Angie’s List uses a unique money making model that actually is a kind of pyramid scheme. They put all the local harvested contractors into their listings but you only will call highly rated ones. In order to be highly rated you must pay Angie Thousands of dollars a year for position in order to be seen AND time in grade is required to accumulate favorable reviews. Only a dozen or so can be in that position. The homeowner only calls the ones at the top so all new advertisers must invest thousands on continuing annual contracts to play the game on Angie’s List…

In my opinion, it is time for both local business and consumers to get control over how we find our services and customers as the marketers are hijacking the business to consumer relationship and forcing costs so high that nobody can bear the costs.

Question: Why should we need out-of-state corporations to connect homeowners to services down the street? Surely there is a simple, inexpensive way for us to know our neighbors and small businesses. We all need to put a little thought and effort in that direction.

Posted in: Front Porch Forum, Local Online, Local Reviews, Peer Reviews, Social Media


2 comments

  1. Steve Fuchs says:

    Michael,

    I agree with you 100%
    I’m about to launch a peer-to-peer, service-for-service barter platform that will be free or next to free for anyone with a trade willing to barter. Please let me know your thoughts. Thanks!

  2. David Mixen says:

    I didnt really know that much about Angies list but thanks for saving me the hassle.I never thought that sounded quite right to me.Im also a plumber and we dont even letter our trucks at this time.Referral has been our advertising since i started.We are about to experiment with some advertising but Angies will not be in the mix.Thanks again,Dave

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