Simply put, online review sites ask consumers to rate businesses from which they have received services or purchased products. Other consumers read those reviews and use the information to make informed decisions — turning those sites into lead generators.

Angie’s List and Yelp are the two largest, most widely known sites, but there are others such as Manta, Google+, and Hotfrog (international); remodeling industry–specific sites such as HomeAdvisor (formerly ServiceMagic); local/regional sites such as Kudzu (South); “hyperlocal” sites such as Brooklyn, N.Y.’s Park Slope Parents; and sites that have a wider purview than just consumer reviews such as GuildQuality and Houzz Pro+.

In the review category, Angie’s List is the biggest player, but it’s anybody’s guess as to how these sites will shake out, with newcomers such as Porch and YouNeedMyGuy, which use a consumer’s own social networks to share business referrals. (See Friendly Recommendation.)

While consumers are looking for a good contractor, contractors are looking for good leads.

For some contractors, such as Dan Wolt, owner of Zen Windows, in Columbus, Ohio, Angie’s List offers leads that “are far and away the best. They are gold.” Because Zen Windows gets consistently high reviews, Wolt says that often, when he gets in touch with a prospect from Angie’s List, “they don’t question anything; it’s like they’re talking to the president of the United States.” They buy from him straight away based solely on his Angie’s ratings.

Wolt spends a good portion of his marketing dollars on Angie’s List, running “Big Deals” and paying to advertise his Super Service Award wins. “It will go to 78,000 people and it’s a full page and costs $500. I make $500 off four windows; how would I turn this down?” he says.

Other specialty remodeling company owners report similarly positive experiences with online review sites, but many full-service and design/build remodelers don’t see as much traffic. That may be due to the nature of their clients and the idea that a remodeling contract is too complicated. “It’s harder when there are so many layers … and you have so many subs and it takes a long time for projects to come to fruition,” Keith Liston, of Liston Construction, in St. Louis, says.

Power of the People

Since online review sites are consumer-driven, contractors have no choice but to be involved with them, especially when a consumer criticizes them in some way. Oddly enough, the adage that only people with a gripe tend to shout loudest and most often doesn’t hold true on online review sites. Yelp reports that 67% of its users give businesses four or five stars out of a possible top rating of five stars.

Remodelers may have to put reputation management on the top of their to-do list. Negative reviews push a business down in the rankings and cause damage, “but if you don’t respond, it can be lethal,” says Bob Davis, owner of Window Outfitters, in Savage, Minn. Having a negative review — as long as you haven’t done anything criminal — can still work in your favor. “Clients have said that they selected us when they saw how we explained our side of the story,” Davis says.

Whether the reviews are positive or negative, consumers know that they are the ones pulling the strings. “We treat every Angie’s List [lead] as a referral. We go out and look at the project instead of qualifying it on the phone,” Liston says. “You don’t want to upset [those prospects].”

On Angie’s List, even if a consumer doesn’t use a service, he or she can write a review, though it carries less weight in the rankings than a client’s review. More disturbing are reports that customers are using their power to threaten remodelers for services, saying that if they don’t get what they want, they will post a negative rating.

One contractor told REMODELING of a customer who said he wouldn’t write a good review unless the remodeler gave him $500. “That’s extortion,” says the remodeler, who spoke with an Angie’s List representative about it and claims he was told to pay the money. Angie’s says that its policy is to investigate this kind of complaint since “members are held to a high standard.” The remodeler paid the $500. “It would have cost more to fight this [in court] and lose my branding and reputation,” he says.

From a consumer’s perspective, these sites might weed out unskilled remodeling companies and help make good remodeling experiences even better. Wolt puts it bluntly: “[Angie’s List] is an unbelievable thing for unbelievable companies. But if you suck, you’re dead.”

—Stacey Freed is a senior editor at REMODELING. Find her on Twitter at @SFreed or @RemodelingMag.

The Rest of April's Cover Story:

Online Review Sites topic page

Necessary?Evil?: Online review sites are here to stay

Site Guide: A quick guide to the dominant online review services

Optimized Engagement: SEO experts explain how reviews can boost your online visibility

I heart Angie (Not): Contractors' love-hate relationship with the online world's biggest player

Leading Lights: A shifting definition of what constitutes a lead

Friend or Faux?: Despite fake reviews, consumers are stll believers—for now

Friendly Recommendation: Word still spread quickly via the new wave of review sites that use media

Good Word: Why you should (or shouldn't) pay for positive reviews