Lead generation is how businesses attract people who may want to buy a product or service. These people—called leads—share their contact information or reach out directly, showing interest in what the business offers.
Some leads require follow-up from sales agents. Others (such as phone calls) connect directly with a salesperson and can convert immediately.
Lead generation helps businesses grow by bringing in a steady flow of potential customers. It supports long-term sales, builds a healthy pipeline, and increases revenue over time.
Lead generation starts with a potential customer who expresses interest in a product or service—often through an online search, ad click, or social media post.
The customer then submits their contact information through a form, chatbot, or call. This information becomes a lead and is passed to the appropriate home services provider based on location, service type, or availability.
The diagram below shows this simplified path:
Customer → Interest → Data Submission → Home Services Provider
This process is common in industries like roofing, plumbing, pest control, solar installation, and other local services—where leads are often shared or sold through real-time lead generation platforms.
Lead generation includes a range of specific terms. Below are the most widely used terms, defined in simple and direct language.
A lead is a person or business that shows interest in a product or service.
They may take actions like:
Example:
A homeowner in Austin, TX, completes an online form to request a quote for gutter installation. The form includes their name, email, ZIP code, and phone number. This individual is now considered a lead.
Leads share contact information, but may not be ready to buy right away.
A prospect is a lead that fits your ideal customer profile and is more likely to become a customer.
Prospects typically:
Example:
Among all leads collected, one resides within the service area, owns a high-value property, and has previously requested home improvement services. This lead meets the criteria of a qualified prospect.
Not all leads are prospects, but all prospects are leads.
An MQL is a lead who has engaged with marketing but isn’t yet ready for sales contact.
They may have:
Example:
An individual downloads a “Gutter Installation Pricing Guide,” opens several follow-up emails, and revisits the website multiple times. Although no direct contact has been made, this behavior qualifies the lead as marketing qualified.
MQLs are early-stage leads showing interest but not purchase readiness.
An SQL is a vetted lead that’s ready to speak with sales.
SQLs often:
Example:
After engaging with educational content, a homeowner submits a detailed quote request, including their address, project scope, and timeline. This lead is now considered sales qualified and can be routed to a service provider.
SQLs are passed from marketing to sales for follow-up.
A cold lead has had no previous interaction with your business—or has stopped responding.
They’re usually contacted through outbound efforts like cold email or ads.
A warm lead has engaged with your brand but hasn’t shown clear buying intent.
They may have visited your website, followed you on social media, or opened marketing emails.
A hot lead is a highly engaged prospect who’s ready to make a decision.
They’ve shown strong buying signals and typically match qualification criteria.
Lead capture is the process of collecting contact information from potential customers.
This is done through forms, chatbots, or phone calls, and starts the lead qualification process.
Lead nurturing means staying in touch with leads over time through helpful content and messaging.
It builds trust and prepares leads to make a purchase.
Example:
A lead downloads a guide but takes no further action. Over the next two months, the lead receives emails with tips for seasonal maintenance and comparisons of material types. These touchpoints are designed to keep the lead engaged until they are ready to take action.
Lead qualification is the process of deciding whether a lead is a good fit.
Common criteria (BANT):
Qualified leads are more likely to convert.
A lead magnet is a free offer used to collect contact information.
Common examples include:
It gives people something valuable in exchange for their information.
A conversion is when a lead takes a desired action—like signing up, scheduling a demo, or making a purchase.
Each conversion is a key milestone in the lead generation process.
The sales funnel shows the journey from first interest to final purchase.
Typical stages include:
Example:
Top of Funnel: A visitor reads a blog post about gutter issues and common installation problems.
Middle of Funnel: That visitor downloads an educational guide on pricing and materials.
Bottom of Funnel: The same individual fills out a quote request form and is matched with a contractor.
CPL measures how much it costs to generate one lead.
It helps marketers track campaign efficiency and ROI.
The lead source is where a lead came from—such as an ad, social media, email, or referral.
It helps you attribute performance and optimize efforts.
Many industries rely on lead generation, especially when purchases involve research, quotes, or personal contact:
The lead generation process moves through four core stages: attracting potential customers, capturing their information, qualifying their interest, and sending them into the next step—whether that's distribution to a buyer or direct conversion.
The diagram below illustrates this flow:
Businesses use web pages with forms to collect contact details. In return, they offer something helpful—like a quote, guide, or consultation.
Ads on Google, Facebook, Instagram, or LinkedIn lead people to forms or landing pages. When people fill them out, they become leads.
Helpful content—like blog posts, videos, and ebooks—attracts people. Businesses offer more content in exchange for contact info.
Emails help nurture leads by providing useful information and reminders. They move people closer to buying.
Posts, stories, and links on platforms like Facebook or LinkedIn help businesses reach and convert followers into leads.
Affiliates promote a business and get paid when they send leads. They may use their own websites, ads, or email lists.
Businesses only pay when they get a result, like a lead or sale. This reduces risk and improves ROI.
Some leads call in. Others are called by sales teams. Phone-based leads are common in industries like insurance and finance.
Lead generation companies specialize in collecting and selling leads. They:
Some sell leads to one buyer (exclusive). Others sell to multiple buyers (shared).
Lead selling means collecting leads and selling them to other businesses. For example, a company might collect leads for solar panels and sell them to local installers.
Lead distribution is the process of sending leads to the right person, team, or company. This is based on rules, like location, product type, or how much a buyer is willing to pay.
Ping-post is a two-step method:
Lead data is sent directly between systems over the web. This is fast and common.
An API (Application Programming Interface) connects two systems. It sends lead data automatically. Common formats:
Some leads are sent by email or text message. This is less common in large-scale systems.
Lead distribution software automates lead delivery. It routes leads to the right place based on custom rules.
It helps:
Example: LeadExec is software built for this purpose.
Lead verification checks lead data for accuracy before delivery. This helps avoid fake or low-quality leads.
It may include:
Lead generation must follow consumer protection laws:
Regulates marketing calls and texts. Requires consent before contacting someone.
Controls how businesses send marketing emails. Requires clear subject lines and opt-out links.
Protect consumer data and privacy. Businesses must explain how they use data and offer opt-outs.
To stay compliant:
Lead generation is how businesses attract and collect potential customers. Lead generation fuels sales and supports business growth.
2. What are the different types of leads?
Some lead types are cold, warm, and hot leads, as well as Marketing Qualified Leads (MQLs) and Sales Qualified Leads (SQLs).
3. What is the difference between a lead, prospect, and customer?
A lead shows interest. A prospect fits your target customer profile. A customer has made a purchase.
4. What are the best lead generation methods?
Top methods include landing pages, paid ads, content marketing, social media, email, and affiliate marketing.
5. How do lead generation companies work?
They build websites, run ads, verify data, and sell leads to businesses—either exclusively or shared.
6. What is lead distribution software and why use it?
It automates sending leads to the right person or system using custom rules, saving time and improving conversion rates.
7. What legal regulations apply to lead generation?
Laws include TCPA, CAN-SPAM, GDPR, and CCPA. These require consent, clear communication, and data privacy compliance.
8. What’s the difference between inbound and outbound lead generation?
Inbound attracts leads through content and SEO. Outbound uses direct outreach like cold calls and emails.
9. What is a good cost per lead (CPL)?
A good CPL varies by industry but reflects how efficiently you're generating leads relative to your marketing spend. Factors such as sale value and market size help to determine CPL.
10. How fast should I contact a new lead?
Ideally, contacting a lead should happen within 5 minutes. Speed greatly increases the chance of conversion.
Lead generation is how businesses find new customers. It includes ads, forms, affiliates, and content. Leads are collected, verified, and sent to the right team or buyer using lead distribution software.
When done well, lead generation brings in qualified people, saves time, and grows revenue—all while staying compliant with the law.