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The Sharpest Tool™

Part 1 | Predictive Analytics Should Be Driving Your Marketing

Cheryl McRae
Josh Smith
Rustin Kretz, CEO of Scorpion, and Daylen Farkas, Vice President of Advertising Research, share how artificial intelligence and machine learning are helping home services business owners win customers and discover a return on their marketing. In today's world, technology and the data it commands and collects has made on-demand television and movies, driverless cars, Alexa, and Uber, commonplace. However, many home services business owners are not leveraging it for their marketing.

Josh Smith (00:03):

Hello. And welcome back to the sharpest tool where we take the sting out of marketing. My name is Josh Smith and I'm your host. And I'm really excited as I usually am in the booth because we actually have a first today we have two people in the booth Rustin Kretz CEO of scorpion and Daylan Farkas, the vice-president of advertising research guys. Welcome. Thanks, Joe.

Rustin Kretz (00:22):

Great to be here, Josh. I don't think you could be more fired up today. I'm excited about it. You giving me the energy. It's a good boost because we've got,

Josh Smith (00:30):

Yeah, let's do this well. Let's make it even more amped up and get more fired up. Because today we're about to talk about how home service providers are winning their local areas by relying on artificial intelligence and machine learning to grow their business. I mean, who would have thought that we would be here 10 years ago?

Rustin Kretz (00:46):

I set it up well, because let's go take a step back for a second. What does technology look like today compared to what it used to look like? And it changes for us Daylen and I, every single day and everyone on the technology team, we're building something every day. That changes something. Yeah. I like to look at it through the eyes of my seven-year-old. It makes a lot of sense. What does he see today that we wouldn't have seen as a seven year old well, cars drive themselves. That's normal now to a seven year old. You can get anything you want on demand, movies, audio, radio, whatever. Back in the day, we would listen to the radio for weeks on end to try to find that song and these things anything's available, which it is. Technology has changed our lives. I think. Yeah.

Josh Smith (01:22):

Everything on demand at your fingertips. You know, it makes me think of my son is almost five and his new thing he's become so used to Alexa at home, he's in the car and he was sick one day and my wife was driving around and before he could go do something, he's like, well, you got to get better before we can go do that thing. And he's sitting in the car, he thinks for a minute. And he says, Alexa, how do I get better? Is no idea that Alexa is not in the car, but he's so used to asking this machine questions that it's become a part of his life. Think about Uber, right? Oh yeah. Back in the day, I used to go to the movie theaters and I would have to tell my mom when to come pick me up. I couldn't just walk out of the movie theaters, open an app on my phone. You didn't have a car. Come pick me up.

Rustin Kretz (02:06):

Yeah. There was a Chris rock comedy show that he was doing. And he was talking about how people who've been married 30 years ago. You would go to work and you would miss your wife because you would never hear from her or you wouldn't know. And you'd leave at six and you'd come back at nine o'clock at night. And it's like, Hey honey, how was your day? But in our world, you know the answer because you've been texted on Facebook and been blown up on your Instagram or whatever it is, that's just our world today. It's kind of hard to miserable. I love your wife, but you know, it's fear every day. It's like, you're in communication with these people every single minute of the day

Josh Smith (02:39):

Constantly. Yeah. Let's dive into this for our home service businesses and simplify it a little bit. What are we using data for? And how does it benefit businesses to make the right decisions?

Rustin Kretz (02:50):

This for a second is you look at how we use predictive analytics or machine learning or artificial. It's everywhere. You just may not know it, but it's everywhere. And so today you have the Mayo clinic or MD Anderson out in Texas, they're using IBM's Watson to find better ways to cure cancer. That's in reality, that's happening right now. Or when you look at self-driving cars, you have Volvo currently testing their autonomous 18 Wheeler. Can you imagine today? Right now, us seeing an 18 Wheeler on the freeway with no driver in it, it would freak us out. But 40 years from now, our grandkids are going to say, oh yeah, well that's normal, but these are the things that are happening and everywhere you go. And it's a funny story. Cause Daylan I've played fantasy football. And one of the guys who should never win fantasy football has won four championships.

Rustin Kretz (03:37):

And you kind of look at them and go, you've never grew up as a football fan. You don't watch football. You don't know football. Like I do. I can tell you that, but how does he win four championships? And the he's just uses the predictive analytics of ESPN. And somehow he picks Ryan Fitzpatrick to start today who happens to never score and then six touchdowns in a game. And he beats you by 20 points. How did you figure that out? Yeah, he didn't ESPN predictive analytics did. So you got guys winning championships with football based on technology today. Definitely.

Josh Smith (04:07):

It's so obvious that technology is really helping people to make better decisions. So when do you guys think that home service providers started using data science to help grow their business?

Daylen Farkas (04:18):

Yes. I think you've got to look back to where the market's going. Things are getting more expensive. Everything's changing. It's always in flux. And as time goes on, the opportunity to us just increases. So we have new channels, we have new ways to target people. And when you start looking at any advertising campaign and the amount of levers that you can pull to make something better, there's just too many of them. So you got to kind of take a step back and say, well, how can we start to do some of that heavy analytics and lifting by a machine as opposed to having to do a physical analysis every single day, it just doesn't work. And you can't respond fast enough to the market changes and pressures. So as things get more expensive, you need to be able to take a step forward and say, well, what can we do to reduce costs, right? How do we combat that home services in the advertising space? It's 10 times as expensive as it was six years ago. So you can't just kind of wing things out. It's kind of the autopilot. You can't train a perfect pilot all the time. That's costly. It takes time. So you need to put in some sort of a system that kind of helps deliver the product that people are looking for. Something with some consistency, something that's learning, something that's going to avoid some of the costly mistakes.

Rustin Kretz (05:26):

You think about that from a predictive analytics standpoint is home services. You understand, we currently today can understand what would you get out of this market? And I think what would be interesting to hear from you is how does that help our businesses that we work with succeed, knowing that we sort of have that cheat code, our fantasy football friend has to tell you, what could you get out of a local market as a plumber? And what does that look like? I mean, that's really what we're all about.

Daylen Farkas (05:51):

Absolutely. Today we're doing a lot and amongst them, we're looking at time of day, we're looking at the geography, we're looking at keyword performance. We're backing that down into like what people are actually typing in. We're looking at age, we're looking at all these different things because we want to make sure that when we have a budget and we're trying to go after customers in a certain place that we're putting them in front of the best opportunity. So there's a lot of ways to waste money. There's a lot of searches that go on. We want to basically be able to identify what the best searches are.

Josh Smith (06:20):

We're talking a lot about predictive analytics here. Can we define exactly what that is and what that means? Because I think it can be a bit theorial

Daylen Farkas (06:29):

Predictive analytics is a lot like studying history. There's a lot of lessons in history books. There's a lot of things that you can take away from that and learn from that. That's what we do with our old traffic. So let's take home services, we're using millions and millions of clicks to analyze what's working and what's not. And that's from plumbers to people that are repairing AC units. And we're looking at every single piece of data connected to that click. Yeah. So we have systems in place that they look at where that click came from. It looks at the time of day, and then it compares that against the performance. And that's what predictive analytics is, is using that data to come up with some sort of idea of what's going to work in the future. Based off of what's worked in the past,

Josh Smith (07:08):

Tied that into how we use that data. So obviously predictive analytics. We pull in this data, it gives us the ability to potentially predict trends, predict different ways to advertise that are more cost efficient. How do we use these predictive analytics to actually improve the efficiency of time for businesses?

Daylen Farkas (07:27):

When you really look at it, the business owner has a purpose in mind, they're making an investment and they're trying to get something back out of it. They've got some sort of business goals. Maybe they want to add a new truck. Maybe they want to buy a new house. Maybe they want to put their kids through school. There's something they're going after for that budget. And in order to forward that purpose, what we need to do is we need to deliver the best results possible. And nowadays sure you could hire a team of guys to come in and run their own analytics. You can have someone looking at how does our scheduling look and when should we be running our ads and what zip codes are going to be best and what demographics are our most ideal customers coming out of that correlate to job value and close rates and things like that. That's just not feasible though, to run a campaign. So when we look at it, from what we're doing, what we're doing is we're taking the people out of it by introducing math and all the data that we have from history and basically putting together a system that's going to start to make those decisions automatically for them. And that's not only predictive, it's reactive too. Cause sometimes markets are going to be different and we need to respond to.

Josh Smith (08:27):

So one of the things that I think predictive analytics has the ability to do for business owners, it's, it's got the ability to really ultimately save them money. It seems because we're using the data, the historical data to actually tailor campaigns and advertising for a business to what has historically been able to produce dollars for them. So you get more of that, then you're ideally using your dollars more wisely. So how is this predictive analytics? How are these changing? The way people advertise today,

Rustin Kretz (08:56):

Predict is what we use today to say, what is the market going to look like or generate based on what we know and what's the best way to spend your money based on what we know. And then the after part is once we run it, what are we doing to constantly optimize it, to make sure it works for you. And so how do you set them up to succeed right out of the gate? And then how do you improve it over time? If the machine learning the machine,

Daylen Farkas (09:17):

It's just, it's the ongoing optimization that the system is doing bingo

Rustin Kretz (09:21):

Every single day. So then predictive analytics would actually change based on the next quarters worth of data. Absolutely. Yes. And that's just how it should work, right? Because now we have more data to make better assumptions. We have your personal data. We have the entire market of every plumber in the United States that are running advertising. We know what's working.

Daylen Farkas (09:39):

The whole idea is that you get a plumber that comes on board and he's got a thousand dollars. We want to be able to spend that thousand dollars as efficiently as possible, given our most back. So if his goal is to spend 2000 and make even more, he has that opportunity.

Josh Smith (09:53):

So effectively what you've been creating and are continuing to create is a system that has the ability to give an advertiser the best chance out the gate for success based off the use of some predictive analytics, but then there's changes that are happening ongoing as more and more data is being pulled in which effectively allows an advertiser to have a better return on their investment, earn more money for each dollar they're putting into it. And this is something that kind of perpetuates throughout the life of their advertising strategy and campaign. So how is all of that essentially changing the way business owners are looking at their advertising,

Rustin Kretz (10:31):

What are home service businesses frustrated with? I fired up a campaign and my phone didn't ring. Well, it should have rang. Why didn't it? Because you were doing the wrong thing. It's simple. Or I spent a lot of money, but I didn't get the return I wanted. Well, you should have got the return you wanted, but you didn't. And in today's world. And Dale and I agree with this so strongly is in today's world. It's more expensive than ever. And more people make more mistakes than ever because our world that we live in is just mostly amateur. There's not a lot of people who just really get this and have invested the time and technology and people to make this work. So because it's getting more expensive, Google changed the whole world and they narrowed the amount of real estate you can have. And so the basically supply and demand, there's less supply.

Rustin Kretz (11:16):

And so the prices is shut up. It's normal, right? It's economics. So you would expect that to happen, but that unfortunately hurt and harmed our home service a business because what used to cost $10 or $5 or $2 cost 15 or 20. Sure. So you can't afford to make mistakes, right? It's as simple as that. So how do we use technology to make sure that they don't make mistakes? So that looks at everything around their campaign. Where are they targeting people who they're targeting? What keywords, all this other stuff, but not just that. Even outside of search, when you're in social, who are you delivering messages to? And what are those? What's the demographic let's look at it. This let's use this exercise and this is something Daylen. And I do often, if you were to think about yourself as a business owner and you place yourself in your business, all right, you go into your business and you're at your office.

Rustin Kretz (12:01):

Now take a 30 mile radius around your business and create a big circle, right? And now that's every single person who lives 30 miles around your business, and you're going to target all of them. And that is what everyone does today. You're going to target every single one of them as if every single one of them was the same exact person. What about the guy who can't afford you? What about the guy who lives in an apartment? What about guys who are definitely not your customer? Well, you're targeting them anyway. That's the current world. And not only are you targeting everyone there, you're targeting them all for anyone who used the word plumber. But if it was plumber store or a cheap plumber, plumber videos, or plumber jokes or things that get my dad, who's a plumber. All of those searches are being done within a 30 mile radius to people who can't afford you and you don't even want to serve to them. That's a mistake. It's infuriating to us because we just see constantly. I mean, it's gotta be, I hate to say it. It's gotta be in the billions of a wasted money that businesses use to spend on advertising. That just doesn't work. And we're here honestly, to fight that. We're trying to basically say, take your money, save your money. Let's spend it as effectively as possible. That's what we're passionate about. Yeah.

Josh Smith (13:10):

How else is this technology really advantageous for home service businesses

Daylen Farkas (13:15):

While we're going to put someone off kind of on the right path to begin with? I think that's something we're very sensitive to. That's important for, for us to talk about is the fact that every plumber or every HVAC guy, they've got different priorities to that, right? And you can't just come out with a cookie cutter template and expect that to work for everybody because it doesn't. We want to be sensitive enough to the goals, what jobs are important to them, the types of things that they value. We want to be able to shape and mold our results around that. So our systems are built to respond to that. You're going to be working with a marketing manager whose sole job is to understand what you want and to make sure that our systems are doing everything that they can to get you that. And that's one thing that I think really separates us in the way we view our analytics. So while you know, predictably, it's great. And it's going to put you in a great position. We want to also understand that your business is going to be unique. And we want to make sure that we do things to take that into consideration.

Josh Smith (14:11):

Those goals are changing constantly. So I mean, what you're targeting Q1 of the years may be different than what you're targeting Q3 of the year, depending on seasonality and a wide variety of things.

Rustin Kretz (14:20):

And also when you're thinking about that, is that over the course of those two quarters or a year or two years, indeed some of our greatest plumbers have been with us or anyone in home service, been with it a long time, a lot of data there, and we can start to see trends around performance increases, but also, Hey, this interesting part of the geo that you never owned before your customers didn't come there. We have opportunities now because we can see that you actually don't get people from here though. Our system will tell us those are ideal folks. And so now we can say, let's grow right there.

Josh Smith (14:49):

And it's just a smarter strategy. So I know scorpion has an employee called Sam and Sam's just been absolutely slaying it for home service businesses. So what is Sam to scorpion and how has it been changing the face of advertising for the past couple of years?

Daylen Farkas (15:06):

So Sam is our scorpion advertising machine. It's an acronym and we've been working on it for awhile, but this is basically the system that powers all the intelligence behind our advertising. So when we build new machine learning concepts and we start building, how are we going to address a new market? How are we going to learn from other markets? How are we going to optimize people's campaigns? It's the platform that we do that on outhouse. I mean, there's a ton of service dedicated to basically looking at modeling data so we can have the best results possible.

Rustin Kretz (15:36):

When you look at Sam, it's been game-changing for us, it really has. What's nice. Is that what I told you before? And I certainly hope home service businesses can take advantage of this. And if not this, something which is stop wasting their money, just stop. It's just insane. But you think about what it can do. If you go back to my 30 mile radius, that big, giant circle that everyone was exactly the same. Well, what is it really that we're doing? We're saying, let's look at that and let's see, should we even be there? Should we even be in parts of that circle most of the time? No. And they're mostly times where we have markets where all your customers come from here, and this is your ideal world. And by the way, let's just say you have a small budget, let's see a 500 bucks or a thousand dollars for a month.

Rustin Kretz (16:15):

Well, it's $30 a day, or even less $16 a day. If you have 500 bucks, how do you spend that effectively? Well, in back in the day, you'd send a bunch of postcards, cross your fingers. Hope for that 1% return may be, but today you're saying, well, really? Where do we want to target? But not just that. When do we want to target? When do we spend our money most effectively, how are you looking at that? And then to who are we targeting? What's the demographic mix that looks like it's going to return the best on your investment devices, what keywords, there are so many variables to consider where you look at the end result, just the end to all that. Doesn't matter. What's the return for our home service provider on their money. And they all have specific goals, right? If you have a thousand dollars and you want to create, you know, I want a thousand leads that just never going to happen, no one can ever get you that just impossible. However, what we want to look at is what can we do to spend that as effectively as humanly possible for them so that they don't waste

Daylen Farkas (17:08):

The single dollar. And I love that. And honestly, when you look at everything from our reporting, the way we attribute leads, the way we ask our clients to provide us with their retained clients it's so we can feed that system to the end result of how do we get more for an advertising budget, right? So it's not just us going through an exercise and this is meaningful, actual data that we're using to make things better for our,

Rustin Kretz (17:32):

That's a really good point. I mean, I think if you're a pro home service provider out there, and maybe you're not with scorpion, here's just advice. Have whoever's working on your campaign, analyze your attribution, analyze where your customers are coming from, analyze what's driving your revenue and then provide you your expected plan on how to continue to do that. You be asking people that period. Absolutely. You are wasting money if you're not holding your people accountable. So just go do that. And even that's good. Step one, maybe you don't come to scorpion family yet. We're happy to have you by the way, but maybe you don't and that's okay, but don't do the wrong things. I think I'm passionate about just seeing people save their money because you can use that for

Josh Smith (18:07):

More. Let's talk about that. And just the idea of providing that customer lists, that list of clients that you've retained for business, from whatever efforts you're going down, how valuable is that when it comes to your advertising campaign and how to scorpion use that?

Daylen Farkas (18:24):

Well, looking at it like this, that client came from a phone call or maybe a web form that goes back to a click and maybe it's from search. Maybe it's from Facebook, whatever it is that click happened during a specific time, it came from a specific zip code, specific device. There's all this data connected to that click that we want to basically pull all of that out. And we want to say, what's working best for this person. And once we have enough of that data, we start to make decisions around it. So while you may say, oh, I've got a 20% acquisition rate, we want to improve that. That's part of our goal. We know that the costs are just going to increase over the next handful of years. So if we're getting out ahead of that, if we're doing things to make ourselves more effective, that's not only securing today's future for them, but it's everything that comes after that. It's starting today. And it's just moving into the use cause LSAs they took away more real estate. Absolutely. When LSI went up, prices went up when LSAs exist, map ads, typically aren't there that leaves three spots. Now, three advertising places. How competitive do you think it's going to get? And for us, if we're positioned right, and we know exactly who we want to be in front of at what time, on what device and all of that data, when we know that we can absolutely make those dollars effective

Josh Smith (19:38):

Rustin, Daylan, this has been awesome. Thank you so much for joining me in the booth. Uh, it's been great being here. Thanks, Josh. It's been a pleasure as always Josh. Yeah. And you know, it's actually, it's so good and so valuable for home service providers that I think we need to do a second part to this. You guys go with that. Love it. I love

Rustin Kretz (19:53):

The idea of doing something for the first time.

Josh Smith (19:55):

So let's do it. Awesome. I want to know more about how businesses can help themselves to positively impact the results even more. So let's do a second episode and for all of you listening, definitely hit that subscribe button wherever you might be listening at and from all of us here at the sharpest tool. Thanks for listening to part one and come back next week for part two. So you assume

Rustin Kretz (20:15):

[inaudible].

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