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The Sharpest Tool™

Part 2 | Predictive Analytics Should Be Driving Your Marketing

Cheryl McRae
Josh Smith
Rustin Kretz, CEO of Scorpion, and Daylen Farkas, Vice President of Advertising Research, continue their conversation about how artificial intelligence and machine learning are helping home services business owners win customers and discover a return on their marketing. Successful home services businesses are spending their money wisely by relying on machine learning. However, it takes going above and beyond the numbers to have a healthy company in the long-term. While machine learning and SAM are part of that, it's the intangibles like answering the phone and going above and beyond for customers that sets companies apart. For example, Rustin and Daylen share how at the end of the day, your customers don't know that your home services company is analyzing data about them in order to make decisions. They just know they're receiving a great customer experience from you.

Josh Smith (00:03):

Hello. And welcome back to the sharpest tool where we take the sting out of marketing. This is Josh Smith, and here we go. Again, part two of machine learning, the scorpion advertising machine, or Sam as these come to be known and helping home service businesses grow and make more money. We had a lot of great feedback from part one so far and some good advice for businesses to use, to make their money go further. Once again, I'm joined by Rustin Kretz CEO of scorpion and Dalan Farkas vice-president of advertising research. So guys, you ready to go for round two? Absolutely happy to be

Rustin Kretz (00:32):

Back so excited for round two.

Josh Smith (00:34):

Awesome. So let's continue off. The last episode machine learning is saving money and needs to be used. It's a no brainer, right?

Rustin Kretz (00:41):

You know, we can have the greatest machine learning. This is my business advice. Now we can have the greatest machine learning in the world, which we do, and we can spend the money as wisely as possible. There's something to be said about making sure at the same time that you're delivering great business results. Yes. That means taking care of your customers, creating that great experience, answering your phone calls, getting reviews. There's a lot that a business can do to help the performance of the advertising that we have. And you generally see that the customers that we have that are committed to being a good business, their results are better and you can't touch it. It's just it. You feel it. But you look at the numbers and you go, why is it that this 50% of businesses succeed a little bit more well, because there's the intangibles, it's the doing the stuff that you really care about and having that vision about your company that does matter. And it does actually help, even though we have this predictive model and all this other stuff, it's still the, those are the things you can do as a business owner above and beyond.

Josh Smith (01:34):

And that boils into really making sure your people are the best that they can be. Because at the end of the day, people are doing business with people and they're not doing business with robots. They're not doing business with animals, doing business with people. So people would rather take an exceptional salesperson with a mediocre product over a poor salesperson. Who's got an excellent product.

Rustin Kretz (01:53):

Yeah. They just would never know that you had an excellent product. But one thing that was really interesting about what you're saying is that we live in this world where it's people are clients here at scorpion, they're powered by all this incredible technology and it's improving the performance and we're seeing their business grow while their end customer never has any idea that that's happening. They have no idea that we're analyzing their clicks on their landing pages and we're analyzing what pictures work better and what messages work better. It's not just the advertising, it's the entirety of their marketing, their customer. Doesn't need to know that what their customer needs to know is that they're going to deliver a great experience and it's going to be great to deal with. And then you're going to get repeat business. And then your lifetime value of that customer that may have only been that one time cleaning the drain cleaning that may have cost a couple hundred bucks may result in repiping later or some other project that's bigger. Yay. So just take care of those guys.

Josh Smith (02:42):

Yeah. So revenue generation, it's the key to successful advertising, arguably, and that's kind of the principle and philosophy this scorpion takes, right? It doesn't just stop at the lead. And we delivered X number of leads for X number of dollars, but we really seek to have it go full circle, end to end customer experience for the business. So how does Sam use the data again, going back to improving that constant perpetual improving of performance. How does Sam use the data to

Rustin Kretz (03:08):

This is a painful one, I think day. And I agree with this a lot, which is I got you 500 leads this month. Now some home services, businesses just live off that I want X amount of leads. I asked the question that simple. So what you get 500 leads. So what, well, we think we're going to close a certain percentage of them, but anyone can go drive you crappy leads, right? You just open it up to that 30 mile radius brought it up. And what it is doing is, is basically saying it costs you more for a customer. Don't focus on the leads, focus on what drives revenue that's within

Daylen Farkas (03:40):

Your business. Someone once told me, I know half of my advertising budget is working. I just don't know which half. And I think it, it says a lot, right? Yeah. People are so accustomed to what previous advertisers, before scorpion promote to them. Sure. A cost per lead, what's their click through rate. They're looking at these things like these are what matter, but anyone, anyone with a business sense knows that when you're talking about an advertising budget, it really comes down to ROI. Yeah. What are you making back from that? Is it helping to grow your company or isn't it because you have different options, you can take that money and spend it somewhere else. You want to know for sure that that money that is being invested into digital or to any advertising is going to be as effective as possible. And I feel like people just lose sight of that.

Daylen Farkas (04:24):

I think they become complacent, right? They're okay with duplicate phone calls, showing up on their report, they maybe don't even investigate it. They're not really looking at spam calls, all these things that I think people tend to ignore under the hood. When we're talking about scorpion in the way we're analyzing things, is we're really trying to take the most honest and really put ourselves in the shoes of our clients to say, if this was our business, how would we want to manage this? What would we look at honestly? And let's be honest with ourselves. And I think it's something that we share as a, as a culture internally. It's great to talk to people that are front-facing with the clients and see their passion for the clients and the same kind of view. And it's an important one. And I think it's something that people need to remember because there is a lot of confusion about the reports and what other companies try to tout as a result of.

Rustin Kretz (05:12):

Yeah. It just doesn't matter anymore. I mean, honestly, you go home, Josh, I'll give you an example. You go home and you tell Amber, Hey honey, I can't afford that vacation because we didn't make a lot of money, but my click-through rate is up, but don't worry. I had 500 leads that were four seconds or less. And phone call time. Yeah. Does that matter to her? It certainly doesn't. She wants a vacation. Are you going to Spain or wherever you want to go? Yeah. And how do you do that? It's all about closing business, making deals, growing your customer count. So everyone gets lost in this world because it's so confusing. And people telling you that forget about that end of the day, look at the revenue, look at the results.

Josh Smith (05:50):

And there are just so many factors that go into whether or not you're actually generating revenue, right? I mean, it, it doesn't just stop with the number of leads. I've looked at countless businesses who generate a lot of leads, but their internal conversion rate is garbage and they haven't invested enough in the training of their customer experience to be able to provide real value over the competition once they get that phone call or get that late. And so I think it's this interesting play that a lot of business owners are in where when numbers are down and they have a number of leads that impulse is, I need more leads. All things considered. My conversion rate stays the same. I'm converting the same number of those phone calls versus what it seems we're talking about here, which is make those leads work a lot better for you. And then also the take scorpion has, which is focused on the entire business as a whole and finding a strategic partner. That's so invested in your business that they're looking at it from end to end. They're looking at it, not from one point to the lead, but one point to the close, right?

Rustin Kretz (06:52):

This way, for any plumber across the U S we have so much data that we can predict what we think is going to result in your close rate. So just a simple example, your ideal city that you service, where most of your customers come from at searching at a certain time of day, a certain device with certain keywords that we know are going to convert a certain rate. Sure. Well, that looks the same or similar across the us, but for you, your one business is lower, dramatically lower than anyone else. Well, we know that, right? So we look at that and say that isn't an issue with what we're doing from an advertising perspective. That's an issue for us to go look into what's intake, look like, oh, they were on vacation for a week and didn't answer their phone. Oh, well, that makes a lot of sense.

Rustin Kretz (07:34):

Yeah. Or, and a lot of business owners don't do this, which is what is that experience like for the customer? I want to quote immediately, well, how do you handle that? Or how do you transition to get someone in front of them, to their house? Or are you even available sometimes? It's, well, we don't have any availability for three weeks, but I'm flooded well at that point, honestly, what you should do, don't advertise, or don't advertise for emergency flood repair when you're not available, because it's just a waste of your money. And that's something that Daelyn was mentioning services that you offer and what's important to you. Well, that's something that we have to know and you gotta be blocked step with each other.

Josh Smith (08:10):

Yeah. And that's the philosophy that embodies Scorpion's marketing team. Everybody, you deal with your strategic partners internally are focused on not just looking at the numbers as numbers, but looking at the numbers as part of a bigger whole, and a bigger vision for the business, which is awesome. Let's talk about salmon in terms of the whole context of the advertising space, how is Sam part of a bigger vision for what scorpion is looking at as the future?

Daylen Farkas (08:37):

We look at it from the perspective of where the market's going. You've got these over the top, OTT, the Hulu's a sling TVs, that sort of thing, right? That's becoming more popular. You've got social advertising. That's growing. When you actually compare digital media buys like actual digital advertising against traditional media. Digital media is up by about 20% share over the last year, right? And so it just broke a hundred billion dollars. TV's not even going to grow. It's actually going to shrink by a couple of points. So this is basically saying like these new channels are new devices, new channels are driving the opportunity. That's out there for people to make a name for themselves or the

Rustin Kretz (09:14):

Oh, home service business success. Simple as that, absolutely owning that is the key to growth in the future period.

Daylen Farkas (09:21):

Exactly. Right now, look at the limited real estate and search advertising, right. That's going away. So we need to find somewhere to replace that through social there's. Now this idea that it's not just the home service guy that can afford a TV, commercial can brand himself to the general public. You can actually have some small shop. A couple of trucks actually take that route. It's just a different route, but it's with the same purpose. It's with the same results.

Rustin Kretz (09:43):

We go back to what we started to at the start of this, my little seven year old. Think about that guy and what he's used to in his world and his life. Yeah. Well, just like we were talking about 18 wheelers, driving themselves, planes flying themselves, or Teslas driving themselves, any of those things, that's great. Facial recognition. There's all kinds of crazy technology out there. And that's only going to improve and continue. There's no stopping with this. But what people used to do was I would get in my yellow book, my phone book and I'd have the back page. And I would be the plumber of the world. No one would top me because I was in every house. And then no one used that. And then it was, I'm the guy on TV. And I'm the guy on the radio and that still is working, but it's stopping to work the way it used to just like yellow book. And now all of a sudden, we're getting into this world of who owns your social media, who owns everywhere you go, who owns your Gmail? You think that it doesn't matter, but I'll tell you the guys who are going to win. I don't say you guys, you guys clearly do think that, but you know, the world may not realize that that's a way it's going. And the more times that your brands in front of them, everywhere that they go, well, guess what? Everywhere they go is online. Yeah.

Daylen Farkas (10:53):

And what do you think their reaction is when they do one of those searches online, and then they see your name, the colors. Exactly. And recall, it all works. And it's like, flyers, flyers are quickly being phased out. After TV started to die a little bit. They ended up moving and they started doing flyers because there was no phone book. And that was great. Now that's dying, but there's a way for people to use that to their advantage, right? You kind of got this phase of being an early adopter. You're doing these different things that others are not because it takes time to catch up. And that's what we're trying to stay ahead of. Right. And we wanted to take advantage of that for all that.

Rustin Kretz (11:27):

Yeah. And the guys who adopted early and got into TV early and they became the name brand in LA, Larry H. Parker is the guy you think of when you think of car accidents, because he was on every single TV show growing up. But what is it like today, today at two? Do you see everywhere you go online? Honestly, when was the last time you watched a TV show without fast-forwarding through a commercial? I don't think I've ever done that. Or you're just on Netflix and sling or that's

Josh Smith (11:52):

Me skip the commercials.

Rustin Kretz (11:54):

Yeah. Unless it's live sports, which they're even going YouTube TV and there's all kinds of stuff he's going to change.

Josh Smith (12:00):

This ultimately is the ultimate act of customer centric business, right? Because it's following where your customers are going. And effectively Sam is being a strategic partner with business owners by following exactly where their particular customers are going, where they're located, taking into account all their interests, their preferences, to be able to cater services and an experience to them that they're not going to get anywhere,

Rustin Kretz (12:26):

Got to remember. We own our own website platform. Right? Most people outsource their websites to somewhere else. That's a third party or whatever template they can use. We have our own website platforms. So not only do we have analytics around, what did they search for? When did they search for, what were they using? What was the device? How long do they spend on the site? We know what they click on, what they scroll on, what interested them did they watch video, et cetera, et cetera, et cetera. And you can start to boil up those analytics. Sure. See, this is a confusing world, but of course, we're trying to keep this at a level that makes sense. But it's actually really important to have all of that data to make decisions.

Josh Smith (13:00):

Just one thought on this, talking about all of the things that a business owner has and has to run the value of having those all in one place. I know a lot of our business owners, they're working with QuickBooks or working with, you know, other specific CRMs or working with advertising channels, the sat in the other day, they have so many different third-party platform that they're using. And one of the challenges is getting them all to talk. Yeah. Right. What's the benefit of that? Is that something scorpion does that Sam's looking at is that part of the future plan? What's that look like

Rustin Kretz (13:30):

It's incredibly important. In fact, anyone who's building software that you're using, it needs to be open. You need to be able to share it, but at the same time, if you have a CRM, you gotta be able to share the customer data back and forth. And you know, so that's work that we do, honestly, it cost us a lot of money and we do it generally for free because it's benefit for our customers. So we'll do integrations for them and make sure that we get there closed the loop of where did they come from and what happened and then what's their lifetime value. And because that all matters. I mean, it's as simple as if you're looking at what are you doing today? Are you doing all these things? I can't tell you how important they are. And what's interesting is what I really love. And I know we've all been at these dinners and got a chance to celebrate with our clients is they came in and they weren't doing any of these things. And just a couple of years later, it's like, I'm absolutely dominating my market. And I've had record breaking years and we're getting hugs and, you know, having drinks and, you know, just like all kinds of good stuff. Well, that's what we're all about. That fires us up. And I know that fires us all up and not just the three of us, but everyone here,

Josh Smith (14:28):

One of my favorite things to look at is ROI reports. And the before and after changes, I mean, we were looking at one the other day or one of our clients, his prior ROI was a bout 180%. And then after Sam got involved a move to over a thousand percent ROI, which is just, it's incredible. And it means so much to the business owners, the livelihoods of their families that are working for them that day in and day out. And that's, that's powerful. And that means a lot. It means so much right. Last thought here, we'll tie it up with a little bow. What trends are you seeing for the home services market as a whole, based on all the data that we have and the direction we're seeing, consumer behavior going,

Rustin Kretz (15:06):

Every single channel everywhere you can advertise Google or Bing or Yahoo, but Facebook and different websites and g-mail, and these new different platforms that you can advertise on. How do you look at where we can get the best return on investment? And that's something that we're passionate about, making sure that we're allocating budget to spend it as wisely as possible, regardless of what channel it is. So if I can find a way to turn it, like you were saying a 10 X on a dollar, well, where should I put that first? We have done a huge amount of heavy lifting to improve that. I think the future will show that there's going to be more and more places that people find plumbers and people get used to plumbers, electricians, landscapers, pest control, HVAC. I don't mean to single out plumbers, painters, movers, you name it right. But all of the people that they need for their home services, cleaning folks. So they're going to do that. And it's going to be in places besides just Google and we're ready for that. And I think that that's the trend. You gotta be everywhere and you gotta be everywhere with a great message that resonates. And then from us, from an analytics and machine learning perspective, what message and creative and content really is working.

Daylen Farkas (16:17):

And I love that you use the word change, go back three years ago. And three years ago, no one would ever see a plumber's display ad, click on it, land on a website and make a call. And it just didn't work that way. It is changing and people are more open to using these other channels, right? They're getting used to it. People are building trust in some of these different places that we can be advertising. And it's also the benefit of a system because that's going to continue to change. So we want a system that evolves with it, and we want to make sure that as we basically put money into this machine, that we're calling Sam, we want it to know that it's making the best decisions based off of historical performance. And also what's actually working for that specific client and just continually optimize it and utilize those channels the best way that we possibly can. So that way that budget is just being well-spent.

Rustin Kretz (17:03):

Yeah. Think about seasonality. You deal with it all the time, home services, a seasonal period. What should we be doing? And advertising and promoting and offering during the slow season, your business doesn't have to die during the slow season, but you don't have the volume of people interested in your business during like the summer for HVAC, you're going to get so many leads. You can't handle it, but then it starts to cool down. What are you doing now? I can't tell you how many HVAC businesses would benefit if they just started promoting more often before the big, heavy season maintenance. And they can be filled up for months if like Daylan was mentioning we're in the right spot, advertising the right thing, but the right message to get people to know, Hey, don't wait till it's too late because my wife happens to be pregnant. And if our air conditioner went out, she would absolutely kill me. So like, ah, yeah, I should do maintenance. Good message.

Josh Smith (17:54):

Yeah, absolutely. Well guys, thank you so much for being on the show, sharing all this insight into the technology and the direction that technology marketing is going. This is really insightful. Yeah.

Rustin Kretz (18:04):

I would ask one thing. All businesses do one thing for whoever's working with you today from our vendor or partner on your advertising and just ask them, why are you making those decisions? Because oftentimes that's the gold, you know, what are you doing as well? I'm making these things and dah, dah, dah, that's fine. Who cares about that? Why are they doing it? What data do they have to back up those decisions? Because we live in a world where cars drive themselves and 18 wheelers drive themselves. And if they can't answer why they're making those decisions based on data, you're wasting your money. So

Josh Smith (18:36):

Fix that. That's a great

Rustin Kretz (18:38):

Take a vacation

Josh Smith (18:39):

And take a vacation, go to Spain. Awesome. Well, thank you guys so much for everybody listening. Definitely hit that subscribe button wherever you might be listening at. So you can get more of this awesome content. And from all of us here at the sharpest tool, we catch you next time. Thanks, boom.

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