ServiceMagic Inc., of Golden, Colo., matches consumers' service requests with local contractors in real time, addressing 500 different home service needs from simple repairs and maintenance, to complete home remodeling projects.

"We have two customers," explains Michael Beaudoin, co-CEO of ServiceMagic, "the consumer and the contractor. We do all of our marketing to the consumer online. If you think about the Internet, it's not a localized medium. For small businesses, it's hard to use the Internet to market themselves. We enable the use of the Internet by the small local business."

From the contractor to the customer

"We want to educate the consumer," according to Beaudoin. "Consumers are not usually practiced construction purchasers, not educated purchasers. The site has articles to educate them as they begin searching for their contractor: What do you have now and then the interview poses a series of questions-questions built up by working with our contractors-so the consumer can further understand his situation."

When the consumer is finished asking all the qualified questions, ServiceMagic will package up a service request, then get contact information from the consumer. That request is matched against the company's contractor network, which currently includes 24,000 contractors, all of whom are prescreened and approved to be in the network. In today's construction world, any type of "qualification" is necessary for credibility. How does ServiceMagic prescreen?

"We have hard and fast rules around trade licensing," Beaudoin says. "We know if the state the contractor is in requires a license or permit. Once you profile yourself, we check the appropriate licenses and check when they expire. We also require general liability insurance for 90 percent. We check the contractor's legal history-civil and criminal-bankruptcy history, DBA history and though it does get gray, we try to figure out if a business or individual has problems in his history. We check trade references, do a pretty thorough background check and talk to the contractor to see if we find something of concern. Not everything keeps you out of our system but we want to make sure our contractors are taking care of our customers."

Part of this process is ongoing, as customers also review the service they receive from contractors.

"When a consumer puts in a review, we review it and if there's a problem or low score, we go back and talk to the customer, talk to the contractor, see if it can be solved, and if so, great, if not, we step up and offer a service guarantee for the customer," he says.

Get in the system

"First, contractors go through a list of services they offer with our enrollment specialist," Beaudoin says. "They will say they do this or that and in which zip codes. This becomes the matching criteria. We take that consumer in Ann Arbor who needs drywall repair. We look for all contractors in our network and match the consumer. Hopefully, there are three or four contractors who match the need and we give the customer's contact info to the contractor and vice versa, and share pertinent information between the two parties."

The contractor now has all of the consumer's contact information, the consumer's interview form information and the interviewer has seen the contractor's profile. The profile is an online brochure created for and about the contractor in the system.

"As soon as the contractor asks for the customer's service request, we send the customer an e-mail from the contractor that basically says, ‘Can't wait to talk to you about your service need, here's my business overview, the best way to contact me, etc.,'" Beaudoin says. "The contractor can also request a cell text message and this means if the customer sees this in the contractor profile and clicks a button, a message comes up and we send it to the contractor's cell. No time is lost while marketing."

Accountability

So, what does all this cost a contractor? The contractor pays a lead fee, between $6 and $60, depending on the size of the task. The average is $20. Contractors face specific challenges in terms of marketing. JPC Plaster and Drywall, of Dexter, Mich., is one contractor that has successfully utilized ServiceMagic. James Conklin, "the boss," of JPC offered some feedback on the service after discovering it during a Web search in May, 2002.

"I contacted them, looked at their program and decided to risk the $95 fee to become a listed member," Conklin says. "They checked my licensing, required proofs of insurance and still check on my background from time to time."

Conklin said it only took about three or four days for the service to work, getting a plaster job almost right away.

"It's been excellent," he adds. "I have a five-star rating, have never had a complaint, have had excellent customer prospects and high-quality leads. The price is outstanding compared to what it would cost to advertise in greater Detroit to reach this market."

The market Conklin refers to covers at least four counties, a market that could never be reached conventionally for such a fee.

Although ServiceMagic is bringing contractors a targeted customer lead, the contractor still has to play its role in the equation.

"We teach our contractors to contact quickly, have a good profile and build up some good ratings, as these factors can help pre-sell the contractor," Beaudoin says. "We also survey our consumers on how often they actually do the work (depends on seriousness of need) and whether they chose a ServiceMagic contractor or not. For contractors who profile well and understand our services, it is their lowest-cost form of customer acquisition. And an additional benefit is you don't have to spend time returning messages on the office phone, figure out mail strategies, worry if the customer is too far, etc. We do targeting for them."