What is Lead Generation?

Mary McMahon

Lead generation is a marketing practice involving cultivation of interest in the products or services a company offers, with the goal of turning that interest into new customers. A number of tactics can be used to generate leads, ranging from using a service to advertising directly to members of the public. Generating leads is a constant task, as companies want to maintain a steady flow of new customers, and for people like real estate agents and salespeople, generating new leads is necessary to get new commissions and maintain their jobs.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

Approaches to lead generation vary from industry to industry. Making contact directly with members of the public by attending events and handing out cards, placing advertisements, and becoming known as a presence in a community by sitting on the boards of charities and other organizations are all common tactics. Lead generation services provide outreach and advertising for a fee; a simple example is a company providing information to members of the public about local businesses in a pamphlet or on a website.

In a highly competitive market, some industries can become very aggressive with lead generation. Promotional items may be distributed to spark interest in a company and people will use creative means like guerrilla advertising to reach potential customers. Making initial contact to get the name of a company or individual in the mind of members of the public can involve a variety of outreach tools and many salespeople use multiple forms of marketing to reach more people.

When people respond to the initial contact, they become leads. Lead generation includes collecting information about people so they can be contacted and many people also take down demographic information so they can interact more effectively with customers. Knowing that people have children or pets, for example, can be a useful hook for a phone call or email, allowing a salesperson to establish rapport with a potential customer and leaving the customer feeling good about the personalized nature of the service.

Not all leads turn into customers. Being aggressive about recruiting leads provides salespeople with a list of potential customers and their sales skills are critical to turning interest into a sale. In some cases, leads may need to be cultivated for an extended period of time by the salesperson, especially for big purchases like real estate. Following up on old leads while working to generate new ones is another aspect of managing leads.

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