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Remodelers Gripe, ServiceMagic Responds

James Yang

A year and a half ago, Michael Gervais, owner of Prime Renovation Group, in Burlington, Vt., decided to perform an experiment. Gervais had been considering using a lead-generation company, or several, to augment referrals to his full-service remodeling company.

First he typed “lead-generation companies” into Google search. Then he contacted all the companies that came up and asked each for three sample leads. The leads, he says, were “poor, to say the least” — a diplomatic way to characterize what many remodelers dismiss as “garbage,” “junk,” or, often, “bogus.”

Next, he created a fictitious client for a fictitious addition, and that fictitious client requested a contractor from the five biggest lead-generation services. Gervais, 70% of whose business is generated by referral, says that he was less than impressed with the speed and qualification process. In the end, he decided not to use any of the services.

Pennsylvania remodeler Greg Harth had an altogether different experience. In 2008, a local lead-generation service recommended two companies to a couple who planned multiple projects for their recently purchased Bucks County farmhouse. One of those companies was Harth Builders, which turned the lead into a $700,000-plus whole-house remodel. The lead cost Harth Builders 3% of the job price — but that one job was a third of the company’s volume for the year.

James Yang

Protecting the Brand

Many full-service and design/build remodelers are inclined to try lead providers — once. That’s for many reasons, such as project size, complexity, need for multiple visits, and, often, design agreements as conditions of proceeding. “The more complex the job, the harder the sale,” acknowledges David Lupberger, a former contractor who is now ServiceMagic’s spokesperson.

Many remodelers also seek to avoid a bidding war. “We don’t need to be out there with 10 other people and look like fools,” Gervais says.

Most full-service remodeling contractors feel that personal referrals, and repeat business, are their best means of finding clients who meet their profile. They also believe that their image as a high-service organization delivering a high-quality product is their strongest asset, and jealously guard the way that that’s communicated.

In 2005 and 2006, for instance, Strite Design + Remodel, of Boise, Idaho, received 18 leads from ServiceMagic. No appointments resulted, since the jobs were “under $15,000 and generally very price-driven,” says owner Jim Strite. His company’s average job size is $85,000, and its business comes from referrals, repeats, and, increasingly, home shows. Home shows have the advantage of bringing Strite Design + Remodel in contact with people the company can qualify beforehand.

Patty McDaniel, owner of Boardwalk Builders, in Rehoboth Beach, Del., bought 15 leads from ServiceMagic between 2001 and 2003. That resulted in seven calls and one sale. “I would characterize their leads as Yellow Pages leads,” she says. That is, the type of lead that involves people looking for a price from companies they know little or nothing about.

Moreover, design-intensive remodelers tend to be less concerned with a lead’s price as its quality. It’s their brand that’s for sale. “How do you generate real leads for me if it’s not me out there generating the lead?” McDaniel asks. Yes, she says, she’s certain there are homeowners in her market who are looking for “quality, capability, and experience, as well as price”; homeowners who may not know her or her company. But are they going through the paid-leads process? “If I buy 20 leads at $150 each,” she asks, “can’t I better spend that $3,000 sponsoring Little League teams?”