Lead Generation Companies: What You Should Consider Before Choosing

Updated on March 23, 2023

Whether you’re gearing up for aggressive expansion or just looking for a way to keep the phones ringing and your employees busy, it might be time to partner with a lead generation company.  

Lead generation is exactly what it sounds like – the process of finding and connecting with potential customers for your products or services. You may be the best service provider in your industry, but turning that skill into new customers takes an entirely separate skillset. Companies that specialize in this field and sell those leads to businesses like yours are known as lead generation companies.

Wherever your business is at, we want to help you understand the things you should consider when trying to decide whether a lead generation company makes sense for your business, as well as some things you should think about in order to find the right partner for your growth journey.

Is Lead Generation Right For My Business?

Before we get into analyzing the various lead generation offers out there, it’s important to have an honest conversation about what lead generation is and what lead generation isn’t, as well as what role your company plays in its success (or lack thereof). To do that, we will ask one simple question:

Why is it that some companies see incredible success utilizing the same lead generation service that other companies fail with?

The best lead generation companies all run their platform the same way, working with the same publishers, running the same ads, serving potential customers the same messaging, and providing their clients the same tools, yet some clients see tremendous success while others flounder and fail. But why is that?

The truth is that regardless of what type of leads you purchase, they are simply just that: leads. There is still work to be done to take a lead (someone that is in need of your services) and turn it into a customer. Some companies inherently understand that and work tirelessly to perfect the process around turning leads into customers (think: response time to leads, perfecting their sales pitch, following up with leads, etc.).Others pay no mind to the notion that they must perform at their absolute best on all fronts if they want to earn the trust of a potential customer and win their business (think: never answering their phone, waiting days to respond to leads, having poor phone etiquette or sales processes, not utilizing a system to nurture leads properly, etc.). 

So before going any further, it’s important to ask yourself this: Is my business set up to succeed with a lead generation program?

If not, it may be the case that you are simply setting yourself up for failure by partnering with a lead generation service. As we often tell prospective clients, there is no marketing magic bullet that can solve all of your growth challenges. Lead generation can play a pivotal role in your growth, but only if it’s accompanied by strong people and processes that can extract value from the leads.

Here’s a simple checklist to evaluate your readiness to buy leads:

If you find yourself answering ‘No’ to most of those questions, the reality is that your business probably isn’t ready to invest resources in lead generation, and you would be better served investing that money in people, processes, and tools that allow you to extract more value from your existing marketing efforts. You might see a massive bump in revenue just by winning more business from your existing efforts! Once you've done that, if you are still looking to grow, perhaps investing in lead generation makes sense – and you can do so knowing that you’ll be set up for better success!

But let’s assume you do have the people, processes, and tools in place to effectively manage a lead generation service. What questions should you be asking in order to be confident you are partnering with a service that you can trust? 

What To Consider before choosing

How does the lead generation company generate its leads?

Most lead generation companies have developed a strategy for finding you leads. Discussing how they obtain this information is one of the first questions you'll want to ask. It's common that the company won't want to tell you every detail of how they get leads, otherwise, there's no incentive for you to hire them. But most companies will be willing to give at least a broad overview of how their services work. Be wary of any company that claims they're unable to give you any information on how they work. This is a red flag letting you know this company may be illegitimate or trying to scam you.

There is no shortage of ways companies can go about sourcing their leads. And while there is a near infinite supply of ‘leads’ out there, the reality is that there is most certainly a finite supply of people that at any given moment are likely to end up paying for your services. 

Not all leads are created equal, for example:

Imagine you, as a homeowner, filled out a form requesting quotes for a particular service. The moment you submit that information, it is most likely shared with not only multiple service providers that offer that service but also with other lead generation companies (that then in turn try to sell that information to their service provider clients). But now your information has been purchased by potentially a dozen or so people, some of which may actually try to sell that information weeks or months later (what is known in the industry as ‘aged data’). 

Now let’s switch gears, put on your service provider cap: what if you unknowingly ended up buying that ‘lead’ that is months old? How likely do you think that person is to end up using your services? How much time and resources will you waste trying to chase down what is essentially junk?

We share that insight as a stark example that not all leads are the same, and it’s important to understand what you are actually paying for and how leads end up in your lap before you agree to start paying for them.

Are Leads Shared or Exclusive?

You have a lot of options when it comes to choosing a lead service, and some might offer specific types of leads, while others may offer a menu of lead types to choose from. But when you boil it down, you’ll either be buying some type of exclusive lead and/or some type of shared lead. 

• An exclusive lead is only sent to one lead buyer. These exclusive leads are often set at a higher price and are highly prioritized by buyers. This is to make sure that the buyer alone has access to the lead and knows that they will be the only company responding.

• A shared lead is are leads that are sold to multiple lead buyers. The consumer is not signing up for a particular brand.

Both can have value, but it stands to reason that buying an exclusive lead will be more expensive. Why? Because you are more likely to turn it into a customer by virtue of not having to compete against other providers in your area (at least within that platform, that isn’t to say that potential customer might not go somewhere else on the web and pick up the phone and call another provider or two).

Understanding what you are buying, in terms of exclusive versus shared leads, will help you better understand the likelihood of turning a lead into a customer, thus allowing you to better understand how much you should be paying for those leads.

How do they charge for services?

Knowing how you'll be charged is vital to being able to properly budget for advertising and marketing costs. While the standard among lead generation companies is to have a monthly fee, there is typically also an additional cost for each valid lead. To make sure you're within your budget, you'll want to ask about monthly fees as well as lead package prices, or individual lead prices.

You know you may have run into a potential scammer if they want to charge you variable fees month over month with no explanation. It's expected you'll pay more when you receive more business from the leads, but if the price keeps increasing with little to no explanation, it's time to walk away.

What happens if a lead isn't valid?

The downside to many lead generation companies is not having anything in place to validate leads. This means that there is no distinction between a lead that was looking for employment opportunities and one that is looking to hire you. You can imagine how that could cost you both time and money!

Ask the potential partner how they would deal with that or a similar situation. Some companies actually have a team that looks through your leads to make sure you're only getting valid leads and removes anything invalid from your bill (that’s what we at Service Direct offer our clients).

There should be a clear process around lead disputes, and ultimately there should be an earnest desire by the lead generation company to ensure you are only paying for viable opportunities. But there should also be an honest conversation before signing up about what constitutes a viable opportunity (and thus a billable lead). 

If a salesperson tells you that you can dispute any lead within their system that you don’t like and they will take them off your bill, you are probably not being told the truth, and you’ll be in for a painful experience once you actually start buying leads. 

How do they handle customer support?

Regardless of what company you choose, you’ll almost certainly end up needing help in some form or fashion. Ensuring that you can find that help easily is important in order for you to see success. Ask about their process for providing support, and make sure you feel confident that you’ll be set up for success and that all of your questions and concerns will be answered in a timely manner.

Do they set proper expectations and are they willing to talk numbers?

Whether you realize it or not, partnering with a lead generation company is a relationship. And for any relationship to succeed, there must be proper expectations set. When evaluating lead generation platforms, make sure to have an honest conversation about expectations. Ask them about what type of results the average client sees. Ask them why some clients don’t succeed (because most certainly don’t). See if they are willing to be honest with you and set proper expectations, both in terms of their performance, but also about the responsibilities you have as a partner in the success of the program. 

What do their current and previous clients have to say?

With the growing popularity of sites like Yelp, it's no secret that customer reviews are, and should be, a major deciding factor in partnering with a new lead generation service. You'll be able to see quickly if their clients ever felt scammed.

One thing to note, with any review service, it's more common for customers to leave scathing reviews than recounting their positive experience. While you're checking out reviews, don't forget to look at the testimonials on the lead generation company's website. This will give you a picture of the best-case scenario as well so you can pick appropriately. If they don't showcase testimonials on their site and have horrible Yelp reviews, well, I don't have to tell you that's not the right company to use.

Knowing how you'll be charged is vital to being able to properly budget for advertising and marketing costs. While the standard among lead generation companies is to have a monthly fee, there is typically also an additional cost for each valid lead. To make sure you're within your budget, you'll want to ask about monthly fees as well as lead package prices, or individual lead prices.

You know you may have run into a potential scammer if they want to charge you variable fees month over month with no explanation. Though it's expected you'll pay more when you receive more business, if the price keeps increasing with little to no explanation, it's time to walk away.

With all of this in mind, do you think you are ready to try a lead generation service to help grow your business?

Related Content

• Contractor Marketing Guide to Home Improvement Lead Generation
• Exclusive vs Shared Leads
• Lead Generation Pricing Models