Could it be any easier for homeowners to find home improvement contractors? Only if the online referral industry maintains its current torrid growth rate. Having emerged in the 1990s and then largely imploded in the dot-com bust, this industry is back and bigger than ever. Hundreds of services exist today, from national behemoths that “match” contractors and consumers automatically to one-person companies that know every client by name.
To homeowners, online referral services promise an antidote to the dangers of hiring unknown, unreliable, and possibly unlawful contractors. Most are free to consumers.
To contractors, they promise to deliver leads, customers, and growth. Sometimes they do: Several remodelers we interviewed credit the services with their success and longevity. Sometimes they don't: We also heard terms ranging from “inept” to “criminal” to describe a few services, and “crappy” to “dead” — quite literally — to describe the leads they deliver.
For better or worse, the online referral industry is here to stay, and it's evolving in ways that could benefit homeowners and remodelers alike. Here's a snapshot of four variations on the online referral model and of several remodelers that have used them successfully. To summarize their advice:
The 800-pound gorilla of online referral services, ServiceMagic blankets the Internet and other media with its promise to connect consumers with prescreened home improvement contractors, and vice versa. Launched in 1998 and expanded through acquisitions (including that of ImproveNet in 2005), ServiceMagic says it has 40,000 contractors in its nationwide network.
In 2005, it processed well over 100,000 consumer “requests” for additions and remodels alone, according to Elaine Schoch, public relations manager. (Hanley Wood, which publishes REMODELING has a business relationship with ServiceMagic.)
To enroll, you pay $99 and supply evidence that you're insured and licensed, if locally required. Select your specialties from a list of some 500 home improvement tasks, and indicate other preferences. As leads meeting your criteria roll in, ServiceMagic automatically sends them to you and up to three other contractors, charging you between $6 and $50 per lead, depending on project type. (You can get one-to-one matches from a slightly more expensive service called ExactMatch.)
You also get a ServiceMagic Web page that includes a company profile, customer ratings, and as many as 50 portfolio photos.
To submit a request, consumers simply answer a few automated questions about themselves and their project. That faceless, painless, risk-free process produces leads in abundance — but often those that are unqualified, clueless, or looking only for a bargain, according to several remodelers.
Scott Grafer of Curb Appeal Homes, Huntley, Ill., paid almost $2,600 for 70 leads over a few months in 2005. Not one panned out, largely because “they were completely out of touch with what this stuff might cost,” he says.
One woman “almost fell off her chair” when Grafer said her job — a bigger kitchen, a new master suite with full bath and closet — could cost $100,000. “She said, ‘I just had another guy here who could do the job for $30,000!'” he recounts. Quick, cheap, and/or disreputable: that's the kind of contractor meant for ServiceMagic, he and others contend.
But many professional, reputable remodelers disagree. Ted Sisley of SKMJ Development, Whitinsville, Mass., says he gets his share of tire-kickers from ServiceMagic, and many he can't even contact. “But you have to step back and look at it from the big picture,” he says.
In 2005, his company (Sisley Construction until a recent merger) spent around $5,000 on leads and closed more than $1 million in sales. “There's no marketing thing in the world that will give you that kind of return,” says Sisley. Mike Beaudoin, ServiceMagic CEO, says the company has helped many contractors get jobs worth $1 million and up.
Pratt says ServiceMagic isn't perfect, but “I would never drop it. There's so much power — it's a killer Web site, with good graphics and strong tools,” including a project estimator and other tools meant to educate consumers.
Most importantly, he knows how to make it work for him. Among Pratt's strategies are responding to leads within minutes, linking his ServiceMagic Web page to his primary Web site, “chatting” with leads to qualify them, and printing out his customer ratings for prospects.
Relatively low-cost way to get potentially high number of leads, establish a Web presence and portfolio, and track leads. You can control how much you spend on leads and can send automatic e-mail responses to schedule appointments. Site has project estimator and other consumer-education tools, along with a rating and review platform.
Cons You pay for all leads. Discontinued model called “Lead Select” allowed contractors to accept or reject leads. This is not available to new members.
Leads may not be qualified or compatible with your services. Refunds are issued only for wrong contact information or if lead specifications don't match your profile.