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What are Lead Generation companies? PART ONE

Updated: Mar 18

Getting a lot of lead gen spam? You’re not alone. There has been a massive surge of lead gen companies since the pandemic—I get hundreds every year, and many are spawned from “get rich quick” schemes on YouTube. So which ones are legit, and which ones are selling you snake oil? It can actually be very hard to tell sometimes. We’ll help break down the industry in a 3-part series.

Let’s start with the basics—What is a Lead Gen company, and what is a lead?

What is Lead Generation?

  • The simple answer is: a service that will acquire customer prospects for you.

What is a Lead?

  • A lead is another name for a prospect or potential customer. They are delivered in the form of a list, usually a CSV spreadsheet with names and contact info. This may seem unnecessary to define, but the devil is in the details about what a quality lead is.

There are three types of leads:

  • Qualified Lead - AKA a "hot lead" is a prospect that has heard about your company and interested in making a purchase. Qualified leads are generally not difficult to convert.

  • Warm Lead - A person that’s heard about your company and might be interested in learning more. Basically, they haven’t said no and are open to becoming a customer.

  • Cold Lead - Never have heard about you, colloquially referred to as a "cold call" in the telemarketing world. These are hit and miss and usually yield a very low % return.

Where this gets blurred is how a lead gen company defines a “qualified lead.”

So now that we know what the different types of leads are, let's talk about the different organizations that can generate leads/prospects. These are the main sources of lead generation:

List Brokers

List brokers are the more common type of lead gen company because they require the least amount of work. They simply resell data lists, and depending on the demographic targeting, may call their leads “qualified.” List brokers have been around for 100 years, but they’ve rebranded themselves as Lead Gen.

  • Comprised of cold leads

  • List brokers do not engage with your brand

  • List purchasing is still necessary for direct marketing campaigns, but list quality matters

  • The highest volume of scammers also buy and sell in this category

Outsourced Sales Funnel Generators

A sales funnel generator will actually interface with prospects via telephone or email. In a nutshell, they take the first step in converting a cold call to a warm or hot lead. The final deliverable is a contact list of people who know about your company and are expecting to learn about your product or service. They are the modern version of the telemarketer.

  • Sales funnel generators will engage with your brand but are not highly creative and will need direction with crafting quality scripts

  • To have the most success, it’s best to plan with A-B message testing and pick the most responsive message versions

Content Marketing and SEO

Content marketing is becoming exponentially messy because of AI. Generating web content has been always been a NET positive for Google ranking, with things like: SEO, blogs, articles, backlinking, etc. Where things get a little sideways is the degree of AI automation. Now companies are churning out THOUSANDS of articles and backlinks from AI that are poorly researched and contain mostly vapid content—purely to boost Google ranking. For example, most of your “top 10 lists” fit into this category—the internet is rife with them.

  • While this used to be a reputable group, it’s quickly being eclipsed by people just trying to score a quick buck at the expense of high-quality content

  • If content marketing continues down this path and becomes a problem, Google will likely reexamine how it ranks article content. For example, if you post 50 articles and 100 backlinks in 3 days, Google may start flagging it as spam

  • Be wary of grifters and scammers, especially in the SEO arena—properly vet a company before granting access to your Google Business account

Full-service Marketing

A full-service marketing agency will acquire leads based on a strategic plan and will generally engage aspects of your brand to create a marketing campaign. Big Guerrilla fits into this category. A full-service marketing company may subcontract a list broker or sales funnel generator but generally does not subcontract content marketing and SEO—that is kept in-house.

  • Agencies also run the gamut from poor to great—it’s best to review their portfolios and judge for yourself

  • Be wary of Sales Funnel folks masquerading as full-service agencies. Many of them have subpar creative or are subcontracting the creative work out to a full-service agency

So is a lead gen company a marketing agency?

Not in the complete sense. Some of them offer ancillary design services, but they're more in the business of brokering information. Very few offer comprehensive brand positioning or will design your company’s logo. A full-service marketing company will think through a strategy, provide your sales team with tools, and create a plan. Most lead-gens have a shotgun approach to harvesting contact information. That’s not to say list building is irrelevant—it can be a very good way to start growing a database of contacts.

In the next series, we’ll break down the different types of brokered data, where it comes from, and how to get the best quality from a list broker.

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