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Construction Programs & Results Inc

We Like to See The Good Guys Win!

Online Lead Services

by Michael Stone

Recent comment from a reader - we're posting it again because we'd like to hear your response:

I would be curious to hear peoples thoughts about and experiences with on-line lead services. We have used them for the past 2 years and have been very happy with the results. Once we learned that the closing ratios are going to be lower (1 in 10 vs. our typical 1 in 5. This is for raw, unqualified, leads.) and accepted that some people are going to be tire kickers, we have been able to effectively work the leads and it has grown into 25% of our business. We primarily do residential remodeling and additions.

We have used 4 companies so far and most of them have worked out well.

I look forward to hearing other peoples experiences. 


We have used several over the years and have not had the best of luck. We currently belong to one service and since we have refined our criteria it has been a little better but still not worth the hefty fees. We are also a remodeling company specializing in Kitchen and Bath Remodels.

I joined Servicemagic last fall and the only magical thing about it was the checks I sent them for dog doo quality leads(?) I did manage to sell the only person that actually responded to my call. Most never responded to numerous emails, calls, and mailings. I, along with (3) of my competitor's paid them $ 45.00 for each lead. To me that adds up to $ 180 to Servicemagic for everytime some idiot consumer fills out their online form.
I think if you are in a marketplace that is short on contractors these services could be worthwhile. And, I would love to get in on the ownership side of these services. They are money making machines. For me the experience was less than desirable and not worth the investment.

I agree with Ken. I used Service Magic and got very excited when my phone started ringing 3 times a day just from them, however I soon became disappointed and frustrated. I did not convert 1 lead into a sale, in fact most of my calls back to the leads went unanswered...and to think we get accused of doing that! My local colleauges have had similar results, even the specialty contractors. The problems I see with online leads are 1) There are now dozens of services doing the same thing...information overload. 2) People look to the internet for non-commital general information and shopping around, not to seriously hire a contractor. 3) You're immediately put into a competetive bidding process with at least 2 other contractors, thus effectively commoditizing your services. Service Magic used to have a service where you could review the leads before you bought them, and see what stage the lead was at, their timing, description, etc. I pushed the issue with them and got them to let me use that program, it still stunk. Most of the leads were "planning and budgeting" and "timing is flexible" we all know what that means. I've also used, for a flat fee of $40/month. Same problems though, and even the name suggests a bidding war. Hope this is helpful.

Same story as Ken & Chuck here with the ServiceMagic leads. I'm (somewhat) lucky in the territory I'm in, there's a ton of work going on for me right now.
The ServiceMagic process is probably ok for low to middle level projects but, even adjusting the zip codes for better leads leaves me to bid competitively against 2 other contractors every time. Many of the leads are just tire kickers and will probably never turn into realistic opportunities for anyone other than a handyman.
I have yet to secure a project from any of the leads. I'll probably keep trying for a couple more months to see if I can get it refined enough to generate worthwhile leads but if not, I'll shut it down.

The idea of getting leads from a third party can sound attractive since it presumably frees you up from the time it would take to get leads on your own - or at least supplement the ones you are producing by yourself. However, the important part of generating a lead is the initial conversation that you have and the impression that you create with a potential customer. This shouldn't be - and really can't be - entrusted to anyone else unless they are your employee. Finding new business takes some effort but you should be the one doing that through referrals, advertising, web presence, networking, and similar opportunities. And as you've already experienced, there is no guarantee of the quality of a lead prepared by someone else.

I also concur with Ken. Used the same service, same results. To many tire kickers. Thought this would be good for Handyman type work but not much use at all. One job sold, did not even cover the cost of the total service. It was worth a try. So here is three of us that tried, I hope three or more read this and try a different approach to marketing.

I have used internet service leads with mixed results. Renovations experts have worked out well for me and our closing ratio has been good.
Also, to help the competition factor if you offer financing for your customers and focus on projects like basement remodeling, kitchens, bathrooms, you just might be the only contractor the homeowners will need to make a buying decision.

Patti Boekankamp (not verified) /

We tried Service Magic with the same results as everyone above. We had just started in business and thought it would give us a kick start. Well, the phone rang, we went to projects, we estimated and then nothing became a closed sale. We got one permanent customer and that is Life Alert. However, they do not generate enough business or profit to make it worth anything except feeling good doing a service for the elderly. My advise would be not to do it. I really haven't heard much exception to this rule.

Ditto to all!! I was with before Service Magic bought them out. At that time I was allowed to reveiw the leads prior to making any decisions or being charge for unqualified prospects. Service Magic to the rescue?? They made a solicitation call to me stating that the reason I wasn't getting any qualified leads was that I was not getting the information fast enough and should upgrade to their immediate contact program. I agreed to try it (hind-sight is 20/20). The results were exactly the same except now I was paying for unqualified leads! Great program?!! I approached Service Magic with my concerns without any resolution, in fact they didn't even return my phone calls. I finally had to stop payment on my credit card billing method to get them to call. Even then they didn't call, their legal counsel called? I finally had to pay a settlement to be able to close my account PERMANENTLY! My strong suggestion would be to avoid this and most other online lead generating services.

briggs noble (not verified) /

i tried servicemagic initially beleiving i was probably missing out on the advantages of the online customer. i signed up for multiple types of work only to bury myself in estimating jobs for only customers that had no intention of spending now or ever what the project would cost. all tirekickers. i finally was so frustrated with the worthless info and the cost that i called and explained to the college boys at the other end that they were providing me with customers that were not qualified by their service and exactly what i thought their business was worth to me. absolutely nothing! they came up with a new program for me----- they would send leads, i should look and if liked the lead , they would then charge me. i told them to please never darken my doorstep again. thanks for everyboby for their input, sadly it is nice to feel like i was treated like everyone else. i do have to laugh about hanley-wood for at least printing in their magazine stories similar to all of yours re; servicemagic leads. too bad they don't learn from them.
thanks to all , briggs noble

I always prefer to get my own leads - however long that takes - because part of the process of prospecting and generating leads is making that initial connection with the potential customer and determining their needs. It's also called rapport building. Anyone can give you a list of names out of the phone book or other directory that they've mined. This is neither productive or helpful. Save the shortcuts - there aren't any. If you want to hire people to help you cull the numerous leads that you have from an ad, trade show, or email that's OK, but you really need to keep it in-house. There are so many ways to generate leads that I'd think about buying them from someone after I exhausted the other 99 ways of doing it myself first.


Thank you everyone for the information. I was very close to signing up with ServiceMagic (their salesmen are RELENTLESS) but just wasnt' comfortable with the program. I input a Servicemagic request myself, just to test out the service before I bought, and got three contractors calling me. I told them what I was doing and they were ticked! They had to pay for my lead same as any other! I felt bad, but this also confirmed just how poor this service really is. Anyone can fill out their form and spend $135 of someone else's marketing money for any reason! This is horrible! I'll never use or recommend anyone use ServiceMagic again, either as a contractor or a consumer. thanks again.

Well I have been one of those consumers calling into Service Magic. As such I submit that it may be impulse curiosity. Many of us are thinking of doing this or that but not really ready to do the work. We are curious of pricing so that we can budget moreso than get a contract signed. In addition, we are still weary about strangers coming to take our money!

These among other reasons is why your investments in these online lead generators is for many a stretch. However, on my website MYCBH.COM I offer local zipcode based sponsorship of home remodeling Improvement sections that a contractor can retain for marketing purposes. Since these sites are locally advertisied and promoted by REAL PEOPLE you may find that your investment will be well rewarded.

I worked with Diane Jameson at ServiceMagic, she helped set me up and I have had nothing but positve leads. I have started spending more because I am making such great money with the projects I am winning, I would recommend the service to anyone!


Assuming you are making the minimum 8% net profit before taxes on each job you are doing, I say good for you. We get all too many negative comments not only about Service Magic, but most of the rest of the online lead generating companies in business today.

If you would care to share with our readers your approach to working with
Service Magic, we would be glad to post it here. Maybe you have some ideas
that would work for others in our business. Lord knows we need all the help we can get.


Barbara (not verified) /

We used Service Magic for only a short time. I would run far away from their sales pitch, to pitch the vendor leads. The leads I received were horrible. One lead, I worked hours on, between visiting with the customer and than estimating her very large job, was a complete waste. The customer never even emailed or called me back after I quoted her. The other leads were for repairs, which we don't do. When they give you a credit for a bad lead (that you have to spend time explaining to them, why it doesn't fall under your criteria) You don't get your $ back, you just get another crappy lead to replace that one. The shoppers, are shopping, nothing serious. I'm beyond mad, and we didn't even invest more than a couple of hundred dollars, but I feel so taken advantage of!

Mike (not verified) /

Service Magic is another way of taking money in exchange for big and sweet promises. They never mention what type of people are using their services, most of which just fill out the form and forget about it. I wouldn't mind talking to those people but for the price that ServiceMagic is charging us the investment is not justified. Im electrical contractor, to repair a switch we cant charge more than $65, ServiceMagic rate for that lead is $13 u do the math. They do not ask consumer if the job requires union or not.

Richard (not verified) /

I am a Contractor looking for decent leads. Service Magic sold me HARD, real boiler room closers. So I put a $500/month limit on it, then raised to $1,000/month. I'm looking for remodels, additions, new construction. I analyzed my recent experience of just over 25 "leads"...

over 10 calls not returned, most of their voicemail greetings don't even say "Hi you've reached Jim" or anything. You hear a computer voice saying "You have reached 555-123-4567, leave a message" (I'm not giving you the real phone number here). So I can't even confirm that this person really exists.

4 people whose first words were "I've decided not to do anything... till next year... ever..."

1 guy who doesn't speak English

6 leads who I actually went out to visit and they are shocked to learn that you can't do new home construction for $50/sf! So they say "You are WAY high!"

4 people who I get to talk to once, and they say it is a bad time to talk and they'll call me later. I call them back repeatedly and they never call back again.

In my experience these leads are non-productive. I'm an excellent salesman, and builder, and offer good value. We have an impeccable reputation, excellent references, and an A+ Better Business Bureau rating.

Service Magic does NOT tell the customers that it is important to return the contractors calls right away. SM does not tell the customers that these contractors have paid hard money for the leads.

Run fast the other direction! I can only guess that they make all their money by burning through new clients like me who pay them a few thousand dollars and then figure out that it is a ripoff. Hence the hard-closing, boiler room salesmen.

Joe (not verified) /

Check out That is the service magic of the future.

Thanks to everyone who rang out the warning bells on Service Magic and there online lead selling bretheren. You have saved me from untold misery and lost capital. WE all have to honestly evaluate any new trend and those of us who get burned must sing out loud and clear about the traps. As Michael says, let the good guys win!

Norm (not verified) /

Uhhh, yah! Unfortunately, I too feel like I was taken advatage by Service Magic. The salesmen from this company are really good at what they do. They repeatedly called me to sign on with them. Promised the world... I finally signed up with them because they waived the sign up fee. They do have a well organized website and good support. It is one of the top results on many search engines...I will give them that.

The economy is slow here in Ohio and I told service magic our money is tight. I have a family of 6 who depend on the my income and I can't afford to waste my hard earned money. They assured me I would not be charged for leads which turned up to be nothing. But, they lied. I stayed with them for about 4 months. I had my spending limits set at 300.00 a month. $1200.00 later, I am here to say, don't waste your money with this company. In the four months, I had 3 leads out of 40 pan out to make me any money. I built a swing set and made $300. I installed a small hard wood floor and made $450. I did a small plumbing repair and made $200. The rest of the leads I had to call service magic and ask them to check into for a refund. Some were refunded to me, but if a breathing vertebrate answers the phone when they call, we get charged for the lead. It doesnt matter if they are a tire kicker or they didnt know they were filling out a form for an estimate..."Sir, we did confirm that Jane Doe lives there and she did answer her phone so we will not be refunding this lead fee." "Have a nice day." They really have a way of making you even more angry. Its like, sorry we have to screw you, its policy.

Service Magic made more money than I did. Plus, that doesn't count the other 3 contractors who were charged for the same lead.

If Service Magic came up with a system where they had a flat fee of say $100/month, it might be worth it. If they call you, ask them to change their fee structure or don't join. If they want us good contractors to stay on with them, they need to change their ways. Have a nice holiday and good luck to all the contractors this year.

I used Service Magic and it was bad magic! I got three leads which were no good before I shut it down. One person called me to get information about Servic Magic! One person never answered my call even though I immediatly called back after getting the lead. The last person wanted lettering done on the side of a building which has nothing to do with murals!

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