The Rise and Fall of Angie’s List
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The Rise and Fall of Angie’s List
Angie’s List used to be service-based, intent on providing unparalleled customer service. The formula worked wonderfully, connect top-rated contractors with top-rated homeowners.
Angie’s List was founded in 1995 by Angie Hicks and her business partner William Seelye Oesterle. Hicks produced this system because she wanted to develop a way for customers to be able to find reliable construction contractors.
She implemented a rating system, using data she collected by going door-to-door in different neighborhoods, asking people which companies they felt offered the best services.
In 1999, as the internet soared in popularity, Hicks took all the data she collected from years of research and published it on her website.
For over fifteen years, Angie’s List became the go-to destination for people searching for reliable contractors, peaking in August of 2016 when the website had over 3.2 million paying members.
Yet, just three short years later, Angie’s List has begun to plummet. What happened to this once giant staple in the construction business? In this blog, Storm Group Roofing explains how Angie’s List has lost its reputation, one that for so long seemed impenetrable.
What happened to Angie’s List? Where are they today?
Here at Storm Group Roofing, we would argue that Angie’s List was the best service to connect contractors and homeowners that have ever been on the market. On May 2, 2017, IAC, a powerful media company based in New York City, announced that it had purchased Angie’s List to the tune of $500 million. IAC had ambitions to change the structure of Angie’s List.
Unfortunately, now that Angie’s List is owned by IAC, who also owns HomeAdvisor, we would argue that HomeAdvisor is absolutely the worst platform to connect homeowners and contractors.
The demise of Angie’s List didn’t happen overnight. Before 2015, the company had been relying on capital infusions from investors, and for eighteen years the company never recorded a profit in their annual income reports. Something had to give.
So, what happened? How did the worst company in business buy the best company in business?
Angie’s List has been struggling for years, as a matter of fact, for 18 years Angie’s List has been depending on cash infusions from investors. They were simply not profitable and only turned a profit right before they sold to HomeAdvisor.
Angie’s List was a search engine. Think of Angie’s List as a Google for contractors. On the other hand, HomeAdvisor has always been in the lead generation business. A completely different business model. Angie’s list was focusing on quality where HomeAdvisor has always focused on quantity.
Angie’s list was service-based. HomeAdvisor is based on selling information. Angie’s List was connecting top-rated contractors with top-rated homeowners. Angie’s List worked because contractors were not competing with other contractors, they were competing for the attention of homeowners. Competition based on their reviews, based on how many offers they received through Angie’s List. It was good for business.
A lot of people in the business from those early years 2010 through 2012 said that 80% to 90% of their business was coming from Angie’s List because the search engine was so powerfully relevant to the contractor. Reviews were really good and reliable, contractors were trustworthy, they were the best of the best. The bottom line, the best contractors would compete with the top 10-15 contractors in town. Angie’s List built the platform that was connecting homeowners with the top contractors. The contractors who made the first page of Angie’s List did very well.
Instead of Angie’s List prioritizing customer service, it is geared toward finding as many homeowners as possible and then selling the prospective customers’ information to contractors.
HomeAdvisor is all about who is willing to pay. You can start a company today and tomorrow you can start buying leads. So, your information if you’re the homeowner would be compromised. With HomeAdvisor they pretty much start selling information right away and it doesn’t matter how good the contractor is or how many reviews they have, they promise to connect you with the best. In reality, they are connecting you only with the people who are willing to pay for the service.
Angie’s List never turned a profit through their 18 years of business. They kept struggling, their stock kept struggling. On May 02, 2017 IAC Interactive Corp owner of HomeAdvisor announced that it had agreed to acquire Angie’s List for five hundred million dollars.
Angie’s List was service-based, it was connecting top-rated contractors with top-rated homeowners. Under the umbrella of IAC, Home Advisor’s acquisition of Angie’s List was simple, capitalize on the contractors and customers Angie’s List already had in place. HomeAdvisor is selling information to any contractor but mostly startups who are struggling to find jobs. The HomeAdvisor business model is very simple, find more homeowners to sell to more contractors. That’s why HomeAdvisor really needed to buy Angie’s List because they just became a huge competitor with way too many contractors who believed in it.
HomeAdvisor acquiring Angie’s List was a no brainer. They wanted both homeowners and contractors that’s what they were after. They start making changes right away. It’s getting much harder to see contractors on Angie’s List. So pretty much if you’re a homeowner and you come to Angie’s List today you will be redirected to HomeAdvisor contractors and your information is going to be sold to them. So, you’re no longer using the search of Angie’s List. In some scenarios, it is still possible but it’s way harder to actually get down to it because they’re building walls to protect those contractors because HomeAdvisor wants to make money. If a homeowner has a request for a job HomeAdvisor will trick you to connect you with a HomeAdvisor contractor and sell your information to them.
HomeAdvisor does not want you to use Angie’s List as a search engine for top contractors. They don’t want you to see the actual list of top-rated contractors. They want to sell your information to people who are willing to buy it. And those people are not always the top-rated. The way it works, if a contractor wants to buy leads that day and if you come in that day, it doesn’t matter who the contractor is, if he’s buying lists he’s buying leads and HomeAdvisor is going to sell it so that’s how it works today.
Despite promises of keeping Angie’s List model as it was, HomeAdvisor now sells customer information to HomeAdvisor contractors. Because of this discrepancy in honesty and policy, Angie’s List today does not get their old contractor renewals because a lot of companies all dropped out within the last two years.
So, today Angie’s List lost a lot of good contractors, probably 80% of paying contractors. Because contractors are no longer willing to pay Angie’s List to promote their business because they don’t get leads from Angie’s List anymore. Those leads are being sold to HomeAdvisor contractors and pretty much HomeAdvisor has ruined Angie’s List. This means that high-end homeowners who loved the quality of Angie’s List are now being bombarded with inquiries from contractors with little to zero reputation, creating an environment that is not beneficial to either party.
So, what’s the conclusion?
The only way HomeAdvisor can keep growing is if it keeps buying platforms. Just recently they purchased Nextdoor app. Nextdoor was an amazing app where a lot of people were finding good contractors. But now, just like Angie’s List, it’s the same thing HomeAdvisor has been doing for years. So instead of a changed business model to monitor contractors, they pretty much keep making money and not in a very ethical way. Nobody recommends them, turnover is huge inside the company and outside the company, contractors don’t recommend them and nobody wants to be part of the network. Maybe we’ll get another player similar to Angie’s List who will be bold enough to compete with them. Amazon is doing a lot of things in the right direction now. Somebody like Amazon can put a stop to the current model of corruption, it’s only the beginning of the end.
The bottom line is that under the new ownership, Angie’s List has been compromised. Angie’s List has turned into a company whose reputation loses credibility each time a frustrated homeowner is put in contact with an unreliable contractor. Today, the once-proud contractors of Angie’s List? The ones who made the website what it was? They too are left wondering, “what happened?”
Let me know what you guys think in the comments below. I would like to invite you to take a public survey. If you’re a contractor and you did do business with Angie’s List and maybe you don’t do it anymore, or maybe you still stick with it, let us know in comments below we would like to hear from you or go to our Facebook page and share your story and we will send you a free t-shirt.
Storm Group Roofing Team.