shamrin
Active Member
- Reaction score
- 48
- Location
- Lexington, Ky
Thumbtack offers a kind of reverse blind auction for service providers. Prospects, consumers with computer problems, enter information about the nature of their computer problem, subscribing service providers are then offered via email or text, the opportunity to bid on the project, paying Thumbtack a fee of about $3-$5. Our initial take on this was that a $3 (or even $5) customer acquisition cost was probably not that bad when compared to some of our other advertising. And, on say a $100 repair, again 5% of that job going to customer acquisition still doesn't sound that bad. That thinking was wrong as is the overall Thumbtack business model.
First, the real customer acquisition cost is the total cost of all your bids, including losing ones divided by the number of winning bids. So let's say you're really good at this and are winning 25% of your bids at $3 each, that's a $12 acquisition cost. If you're not lucky and getting 10% of the jobs you're bidding on, then your cost is $30 per customer.
Next, you can't improve your odds by learning about the marketplace - there is no feedback. If you don't win a bid, you don't know who did, you don't know how much they bid, you don't know how timing came into play (more on that in a minute), and you don't know anything about the customer's decision process. If you're surviving in the computer repair business, you know that you have to learn most lessons the hard way, try, fail, learn, try again until you get it right. Sealed bid blind auctions mean you learn nothing from your mistakes.
Finally, there are cases where you bid but you never had a chance at the business because the customer made their decision and awarded the job before you even placed your bid. We had just such a case this week where we bid on a job 45 minutes after the customer requested bids. Someone else was quicker and bid 15 minutes after the job came online and got the business 15 minutes later. By the time we bid on the project, our competitor already was working on it. Thumbtack considers refunding your payment in this case a one-time exceptional courtesy - and they'll only do that if you know about it (which you probably won't) and you ask for it. Now, you might be able to come up with a strategy to increase your odds by only bidding jobs that you can answer within minutes of it coming on line, but gaming an auction system, like last second eBay bidders, isn't a business model that we would like to pursue.
tl;dr After experimenting with Thumbtack for several months, the lack of transparency and the hidden accumulating costs of bidding on Thumbtack jobs makes them a poor and expensive source for leads in our opinion.
First, the real customer acquisition cost is the total cost of all your bids, including losing ones divided by the number of winning bids. So let's say you're really good at this and are winning 25% of your bids at $3 each, that's a $12 acquisition cost. If you're not lucky and getting 10% of the jobs you're bidding on, then your cost is $30 per customer.
Next, you can't improve your odds by learning about the marketplace - there is no feedback. If you don't win a bid, you don't know who did, you don't know how much they bid, you don't know how timing came into play (more on that in a minute), and you don't know anything about the customer's decision process. If you're surviving in the computer repair business, you know that you have to learn most lessons the hard way, try, fail, learn, try again until you get it right. Sealed bid blind auctions mean you learn nothing from your mistakes.
Finally, there are cases where you bid but you never had a chance at the business because the customer made their decision and awarded the job before you even placed your bid. We had just such a case this week where we bid on a job 45 minutes after the customer requested bids. Someone else was quicker and bid 15 minutes after the job came online and got the business 15 minutes later. By the time we bid on the project, our competitor already was working on it. Thumbtack considers refunding your payment in this case a one-time exceptional courtesy - and they'll only do that if you know about it (which you probably won't) and you ask for it. Now, you might be able to come up with a strategy to increase your odds by only bidding jobs that you can answer within minutes of it coming on line, but gaming an auction system, like last second eBay bidders, isn't a business model that we would like to pursue.
tl;dr After experimenting with Thumbtack for several months, the lack of transparency and the hidden accumulating costs of bidding on Thumbtack jobs makes them a poor and expensive source for leads in our opinion.
