Why Niching Down Is Non-Negotiable

I asked Marko why picking one niche is so important. He has the specific HVAC Quote tool, a fencing marketing book, the coating marketing book. Why is picking one niche so important?

"The biggest thing when you're growing any business is having focus."

If you're going to be the jack of all trades or the handyman, the handyman can do roofing, he can do plumbing, he can put together your water heater, he can put siding on your house. But he's truly not the expert in all of those things.

Because if you're going to be good at something, you have to have focus. You got to be good at a couple things to be really good at and be the best and be confident that you can go to market and say, hey, we're the best type of company for this.

"So like if I were to start a roofing company in Arizona, I would focus on the one or two roof systems that are really popular and I would focus on just that."

Get really good at it. Get good at repairs, get good at replacements for just those services. Why try to do everything, especially in the beginning when your company is smaller and you're in that startup field?

Same thing applies for an agency. If you're going to start a marketing agency and want to grow to seven figures or multiple seven figures, it's always best to focus on a niche and become the expert in that.

"So for us, we're the expert in concrete coating marketing. People just kind of know that we're the go-to marketing agency for the concrete coating industry."

They see them online. They see them at the events. They see them at the conferences. They see them in email and social media and all these different platforms. So it's now become a household name in that industry.

Now it is a small industry. People talk just like all of these other ones. Just like HVAC, for the tool, the software company they developed and launched this year.

"It's an HVAC specific tool. So it's tailored towards HVAC companies. We've listened to what HVAC companies want and need. And we've provided a solution for that specific type of person."

There really is an ideal client profile for each service that they offer because they want to focus on that. They want to grow within that industry.

How Niching Applies to Home Services Too

I mentioned that a lot of people talk about niching in the agency space, but home service people also need to keep this in mind. Stop trying to provide every service. Stop doing plumbing, electrical, HVAC. Just pick one and be the best in your area.

"To be great at what you offer, you need to do it for enough time. There's a time equation."

When you do it for enough time, put enough energy into something, you can get great at it. If you focus on advertising for just one industry, it's like now people realize, hey, you really do have credibility in this industry and you manage millions of dollars in this industry specifically.

It comes with a lot of credibility, but also confidence that you're the best.

Why Only 3% of Businesses Hit a Million Dollars

I asked Marko why are so few people hitting a million dollars. He's 23 right now and he's already grown several million dollar businesses. There are guys that are 40, 50, 60 still haven't reached that million dollar mark.

"I was looking at the data the other day. I think it was like 3% of businesses in America actually do a million dollars in revenue."

And that's a million dollars in revenue. You could do a million dollars in revenue and spend a million too and make zero dollars.

For what he's done and where he's trying to go, they've really gone nowhere compared to where they're trying to go. "It's all mindset thing. How far are you trying to take things?"

And also it's the people you're around. The five people you're around, you're a product of your environment.

When he hangs out with people like Dennis Yu and the owners of big manufacturing companies, if you're in those rooms and you learn from people that have done it, that are older than you are and have more experience and can lead you in the right direction, that's ultimately what it comes down to.

"You want to be a sponge of those environments because that way you're able to learn from the things that they have already done and you don't need to make the same mistakes along the way."

Obviously you'd be stupid to think that you're not going to make any mistakes. But as long as you don't make the same mistake twice and you learn from those things, you take them as lessons, but you also learn from other people that have walked in your shoes.

If you're trying to grow a roofing company to a million dollars a year or greater, figure out how to talk to people that have done that. Not just growing any company, but grown a roofing company like you're trying to grow and learn from them.

Marko's brother's going to start a gutter company. He's going to want to talk to people that have grown multiple million dollar gutter companies. Those are the people he wants to talk to so he can figure out the economics, how to set up your financials, how to price for profit, how to hire, how to create incentive programs for your employees, what to do in the winter months when it gets slow.

"Those are all the things that he's going to want to learn from people that have done it."

How ChatGPT Changed Everything

I asked Marko how he uses ChatGPT in his day-to-day life.

Most emails he sends are analyzed by ChatGPT. A lot of people, he can be a very direct person, so he needs to have ChatGPT not make it so direct.

"I'm not a mad person when I send emails, but I wanna make sure it comes off right and the right tonality."

He uses it in that regard as well. He just used it before coming on the call to create a quarterly plan for Q3 for one of their bigger clients in the B2B space.

He was looking at everything he used it for this morning. Just before coming on, he was going to go get lunch and he was looking for places that serve tacos that don't have seed oil in downtown Phoenix.

ChatGPT is awesome. "You're able to use it to do pretty much everything, grow your company, figure out the best restaurants that don't have seed oil."

There's so many things you could use ChatGPT for and it's become a habit for him to use it. He'll just be sitting in a bunch of guys talking business or talking in the living room.

"You just pull out the phone, let's ask the AI what it thinks, because it's probably much more correct than any of our conversations."

Usually if it's something that someone asks him, he'll usually go get the answer for them using ChatGPT. "And then they'll think I'm really smart. When I'm not really, I just relay information."

Why Facebook Ads Beat Everything Under a Million Dollars

I asked Marko to talk more about Facebook ads. I was watching a podcast he was on and he said if you're under a million dollars a year, you should be spending a lot of money on Facebook ads.

What he was probably referring to is in the concrete coating industry. "If you're under a million dollars a year, Facebook is gonna be the best platform for you."

That's only because it's gonna be the cheapest way to acquire new clients than any other platform other than door knocking and just cold calling people.

If you're to run any sort of ads, do Facebook before Angie leads, Home Advisor, Google website, any of that other stuff.

"I've seen concrete floor coating companies go from zero to seven figures a year, just running Facebook ads."

Now is it smart to only do that? Well, probably not. You should start doing some other stuff then. But the point is you're able to grow dramatically using Facebook ads if it's done correctly.

For other industries, obviously if he's an HVAC company, now that they launched the software in the HVAC side, if he was running an HVAC service company in residential, then he would have a website, get Google Guaranteed going, LSA, local service ads, and start running Google ads.

"I would do that before I run Facebook ads."

For HVAC and plumbing and electrical, it's more of a need and people are searching on Google for that service. Versus concrete coatings, it's more of a want, it's a luxury service, and so Facebook works really well for them.

Facebook can also do fantastic for HVAC, but it's more of a secondary platform he'd focus on.

Why Broad Targeting Works Better Than You Think

I asked Marko how targeted those ads should be. Should you do just one ad for a big city or target neighborhoods?

"We do broad for the most part."

Just targeting homeowners across the entire county or service area that they offer. For HVAC companies, everybody has an AC unit on their house for the most part in America.

You can target pretty much anybody who has a home that has a heartbeat because at some point they're going to have to replace their HVAC unit. "And Facebook actually does a fantastic job of finding the homeowners anyways."

If you just give it a broad targeting and your ad copy's about HVAC and your image has an HVAC system on it, and maybe you're doing the instant quote tool where people are able to click on it and get a quote for their HVAC system, that algorithm, Facebook is going to find the right people to show the ad to.

Sometimes you're going have to reboot it or change the ad copy. That's just basic optimization. "But Facebook for the most part does a lot of the heavy lifting."

Versus 10 years ago or 15 years ago, it was more media buyer heavy where it actually required more work to run ads in Facebook.

Even if you look at Google nowadays, HVAC companies are able to go to Google local service ads and run their own ads. You don't even have to hire an agency to run local service ads and manage to get hundreds of leads if you're in a metro area and you have a lot of Google reviews.

"You're no longer having to pay these massive agency retainers."

Obviously you want someone to look at it and keep an eye on it, but as far as the optimization heavy, it's not so much anymore.

How HVAC Quote Gets 45% More Leads

I asked Marko about HVAC Quote and how he got started with that.

HVAC Quote is basically an AI powered instant quote tool for HVAC and plumbing companies. Hundreds of companies are starting to use this tool.

"Basically what the tool does is it gives the homeowners what they want, which is the price."

As a contractor, you're able to go in the back end and configure your pricing. So that way, when you put your pricing on your website or you put your pricing in your marketing materials, homeowners can actually get a range price, what it's gonna cost to replace their actual unit.

It's gonna give them a range, a good, better, best option. So that way you're not misleading and you have pricing transparency.

"That's where this industry's going. A lot of HVAC companies across the country are looking to put transparent pricing on their website to essentially win over their competitors."

If you're in the HVAC industry and you're not putting your price on your website and maybe you're scared to or you have the sales where you come out there and you want to change the price all the time and basically be a little bit slimy about it, well, this industry is moving in the right direction with ethics and pricing transparency.

A lot of HVAC companies are doing that, but also homeowners want to know. "Our generation, we're both in our twenties, our generation, if you own a home in our generation, you want to know what it's going to cost to replace the HVAC system before you call someone."

It's less work. You don't have to call someone and call someone out there. If you like the price and you like what they've showed you on your website and the installation process, then the next thing is, well, let's book an appointment then.

At least now you have an idea as to what it's going to cost.

"The other thing is what we're seeing so far is a 45% increase in leads."

Just by putting this tool on your website as an HVAC company, you're getting 45% more leads right off the bat.

Because when you have it on your website where it says instant HVAC quote, instead of filling out this long form and not getting anything, a lot of homeowners just bounce off your website and go to the next site.

When you have this tool on there and it says instant HVAC quote, people click on it and they fill it out. "All of a sudden these companies are getting 45% more leads."

Some are higher. Some are dramatically higher. 45% is a conservative survey that they've built out.

Then the other thing they're saying is that you have a much higher close rate on the appointments that you actually get from this tool.

If you're a homeowner and you're getting a quote for your HVAC system and you see, it's going to be $12,000 to $13,000 for my HVAC system, and then you call that company to come out there, when you get a quote that's in between that range, you feel very comfortable moving forward because you already knew the price or at least a range before calling them out.

"And so you have a lot more trust in that brand."

Now, if that company came out and they said it was going to be $16,000, now you're like, wow, that was misleading because online you said 12, now you say 16.

That's why it's important to set your pricing, configure it, and be able to be competitive in the marketplace and land more jobs.

Why Traditional and Digital Marketing Work Better Together

I asked Marko where he falls on traditional marketing versus digital marketing.

"Traditional marketing actually works very well. Very, very well."

If you're gonna start a new company today, you should obviously do both. He'd probably put more of his eggs into digital marketing because that's what he's good at. But all the traditional marketing efforts work very well as well, and they work good in contingent.

If you have your Facebook ads running and your Google ads running and your online stuff doing, but you don't have any traditional marketing, well, they're just finding you online. They don't actually see you in person too.

If you have your traditional marketing efforts and you're doing mailers and you're doing TV, radio, and you have all this stuff out there and you're going to the conventions and the local home shows, but you're also running ads, "It actually has a better effect because now your ads are gonna convert at a higher rate."

If you didn't have the traditional marketing, your ads are going to convert at, let's say, an average of 3% or 4%. If people are so familiar with you because of the traditional marketing efforts that you've done, then your ads are going to convert at a higher rate than not.

He's seen this happen in many industries. Businesses will contract them to run their ads for their actual business. They do a B2B business where they sell to businesses.

A lot of those companies have a very good reputation in their industry and they've done things traditionally. People just known about them from the events or they've maybe even done mailers to every company in the area.

"And when they run Facebook ads, it just works way better than if you were to launch a new business and run Facebook ads."

That proves his point that if you do the traditional marketing, you're going to have a much higher success rate with your digital marketing, which is ultimately going to grow your company even more.

"I don't think one is better over the other. I think if I had to choose one, I would do digital. But if I were to grow a company all over again, I would do both."

Marko's Message: Hold Your People Accountable

I asked Marko for his final message to home service owners and local marketers.

Home service companies, if you're an HVAC company, you definitely want to pursue online pricing transparency. Any home service company, look into something like that. Look for your industry. Look up and see if there's an instant quote tool for your industry, because that's going to instantly generate more conversions for your home service company.

The last thing is as businesses, we want to keep people accountable.

"What are things that you should be holding your marketing agency or maybe software companies accountable for when you hire them, especially marketing agencies?"

When you hire a marketing agency, what are the five point things that you should follow to hold your marketing agencies accountable and be able to grow your company? Because it's not about them, it's about you and why you hired them and how to grow your company.

"You want to follow those steps to maximize the efforts that you're hiring."

There's a reason why you hired the marketing agency. Don't forget why you did. And don't just spend money down the drain, just spend it.

"You want to make sure that you hold your people accountable, just like you hold your employees accountable. Do the same thing for your agency and grow your company."

My Main Takeaway

This conversation with Marko completely changed how I think about niching and pricing transparency. The biggest insight is only 3% of businesses in America hit a million dollars in revenue. It's all mindset. How far are you trying to take things? And it's the people you're around. You're a product of your environment.

The niching point is critical. To be great at what you offer, you need to do it for enough time. There's a time equation. If you focus on advertising for just one industry, people realize you have credibility and you manage millions of dollars in this industry specifically. Same applies to home services. Stop being the handyman doing everything.

And HVAC Quote is fascinating. 45% more leads just by putting an instant quote tool on your website. Because homeowners want to know the price. They don't want to talk to anyone. They don't want to book with anyone. They want to know what it's going to cost. Our generation wants pricing transparency.

But what resonated most was traditional and digital marketing working better together. If you have traditional marketing running and people are familiar with you, your digital ads will convert at a higher rate than if you just launched a new business. It proves that omnichannel is the way.

Thanks for reading, and if you found this valuable, make sure to check out the full podcast episode. Marko drops even more Facebook ad strategies and HVAC Quote insights that I couldn't fit into this recap.

You can find Marko on Facebook at Marko Sipilä or marcosipila12. Check out HVAC Quote at hvacquote.ai.