Lead Generation Companies: Your Guide to the Pros and Cons


At the surface level, lead generation is every business’s ultimate goal. Leads are potential customers, so collecting leads is, by all accounts, a sound business move. However, not all leads are created equal, and not all methods of gathering them guarantee quality.

For example, you’ve likely heard of HomeAdvisor and Angie’s List. Both are sites that homeowners and business owners use to connect, and both sites require contractors and service providers to pay to reach the homeowners using that platform to look for services. That might look like a flat monthly fee, advertising costs or a pay-per-lead model. No matter which way you look at it, the business owner is paying for leads. ALL of them.

Let’s dive into the pros and cons of lead generation services.


Speed Up Slow Days or Seasons
If you’re having a hard time attracting new customers on your own, lead generation services could help you fill in the gap. However, you must weigh the overall advantages against the disadvantages below. If paying for these services is likely to cost you more money than you’ll make from the jobs they bring in, is it worth it?


Visibility for Smaller Businesses
New, niche or very small businesses might not have the established web presence required to bring in new leads organically. As you’re building up that web presence, lead generation services can make you more visible to potential customers who might not find you otherwise. In that way, it can serve as a bridge to get you where you need to be.



Quantity Over Quality
When you pay for leads, it might take a while to find a good one. Tire-kickers and window shoppers are likely to fall through the cracks and be mistakenly labeled as a lead, when their true objective is research instead of purchasing. So, while you might receive a long list of leads, the majority might not be qualified. Unfortunately, you still have to pay for them. On that note…


Paying for Leads Doesn’t Guarantee Jobs
Typically, you pay for every lead you receive, whether it’s qualified or not. It’s as simple as that. At the end of the day, this often translates into a lack of return on investment (ROI).

For example, some specialty contractors and business owners have complained that the business categories on lead generation sites are not specific enough. Take the stained-glass artist who had to group herself into a generic window category, and then received leads for people who wanted the windows on their high-rises washed—something she doesn’t do. But she still had to pay for those leads.


Your Leads Are Not Just Yours
When you use lead generation companies, you’re not going to be the only one receiving your leads. Those leads will go out to other business owners providing your same services in your area, putting you in direct competition with them. So, even if the lead is qualified and they’re genuinely interested in hiring someone like you, you’re going to have to fight your competitors to win them over. And many businesses simply don’t have the resources to have someone dedicated to following up with or handling those leads in real-time.


Converting Leads Is Hard Work
Because your leads are going out to your competition, you can bet that the person in need of those services is being bombarded with phone calls, emails, texts, and other forms of communication. That means your next customer might already be annoyed by the time you get to speak with them, putting a bad taste in their mouth about your business. Ultimately, their biggest decision point is likely to come down to cost and quality of service, and, for you, balancing the true “cost” of that lead with the profit from the job might be difficult to do.


Is a Lead-Generation Service Right for You?

Lead generation services certainly have their place in the marketing world, but they shouldn’t be your only source of leads if you’re looking for a consistent, long-term approach. A more strategic play is to focus on building up your web presence and buckling down on search engine optimization (SEO) so your next customers find your business when they need your services.

Optimizing your directory listings, responding to your reviews, maintaining a professional website and investing in digital advertising can help you bring in quality leads organically and position you as an expert in your industry. The best part? When these potential customers find your website and get in touch with you, you don’t have to pay for that lead. That warm lead is yours—when they submit a form on your website, their information isn’t being sent to anyone but you.


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