I have been a Service Magic contractor for over 5 years. When I first started, leads were $5 and were sent to 2 or 3 companies. As I am now on their "Preferred" list, I only get direct leads, no other contractors get them. The closing rate is almost 100%. There is an occasional clunker, but they will credit my account. I am not required to accept all "normal" leads - only those I want.
SM has been an excellent resource for me over the years, though I understand my experience is better than most. I currently show 40 or 50 reviews (all positive) so customers feel pretty comfortable with me right from the beginning. This month alone, I have received 4 leads, 3 scheduled and one I declined to bid (a large hotel). Approx $3000 in sales at $18 per.
The advantage to the customer is the service guaranty of up to $500 for the customer as well as customer reviews. On a separate note, I highly recommend Angie's List. I have never paid them anything, yet get leads all the time. Treat them right and it will work very well for you.