Telemarketing is on the wane. Newspapers keep raising their ad rates. An inexpensive source of leads is a godsend, and that's exactly what Internet referral services aim to provide. It's kind of like They offer replacement contractors the chance to meet their perfect counterpart, although in this case the purpose is strictly business., ImproveNet, ServiceMagic, and others collect leads online from interested consumers and share them with member companies that pay a fee for the service. Contractor satisfaction varies, but low cost keeps membership rolls healthy.

On the downside, “a lot of Internet leads are people just looking for information,” warns Robin Gray, sales administrator for Bob Showers Windows & Sunrooms in Philipsburg, Pa. The company gets one or two leads a week from ServiceMagic, and some lead to appointments.

On the upside, “the leads are really inexpensive, compared with TV or newspapers,” Gray says.

Other contractors report more success. Roofer owner Steve Briesemeister says fully 30% of his business comes from ServiceMagic. The Huntington, N.Y., company also gets leads from ImproveNet and

So far this year, Creative Energy in Fairfax, Va., credits 10% of sales to ServiceMagic and 1% to The Door and Window Specialist in Upland, Calif., gets five to eight leads a month from ServiceMagic.

“Now my only way of advertising is through the Internet,” Briesemeister says. These days, the $5,000 a month he used to spend on advertising has been substantially reduced. Briesemeister typically spends about $300 a month on ServiceMagic (depending on the number of leads), $700 a year on membership, and up to $75 per lead, plus commission, on ImproveNet.

Creative Energy also has rerouted ad dollars in response to Internet referral success. The contractor cut its yellow pages advertising by 25%. Office manager Andrew Mueller says he likes the detailed way ServiceMagic presents customer information. It lets the company post its profile as well as select the likeliest prospects before paying for leads. “And it's pay as you go. That's a good thing.”

Another good thing, says Door and Window Specialist president Louis Ottrando, is that Internet leads usually are people who have done their homework. “Those leads are a lot more qualified.” The company spends about $1,000 a month on ServiceMagic.

Of course, just as contractors get to look customers over as part of the Internet referral service, customers get to check out contractor information that often includes ratings and reviews by previous clients. “If you're good, it'll be good for you,” says Briesemeister. “If you're bad, it'll be your worst nightmare.

“As more people go online to shop, “it's inevitable that Internet referrals will grow,” Ottrando says. “People are getting savvier.”