What is lead generation for a small business?

The short answer

A lead is a person or a business that could plausibly buy from you, and that you can name. "Homeowners" is not a lead. "Dana Whitfield at 14 Alder Lane, who emailed last spring for a garage door quote and never booked" is a lead. Lead generation is the habit of producing a steady supply of those and starting conversations with them.

There are really only two ways to do it. You can wait for people to find you (search, referrals, ads, your website), which is called inbound. Or you can go find them and write first, which is called outbound. Small businesses that do both get steadier work, because inbound is lumpy and outbound is something you control.

The example in this page is fictional. Joel Pruitt owns Summit Garage Doors, a three-person garage door repair and installation shop in Boise. Work has been referral-driven for years, and it has gone quiet. He wants a steady supply of jobs without paying a marketing agency.

Where small business leads come from

Five sources cover almost every small business, in rough order of how fast they pay off.

• Past customers. People who have already bought from you are the cheapest leads you will ever have. Joel has 120 past customers in a spreadsheet. A friendly "any garage door problems? We do tune-ups this month" to all 120 costs nothing and often books a handful of jobs.
• Referrals. Ask every happy customer, at the moment they are happy, who else they know who needs the same thing. Make it easy: give them one sentence they can forward.
• A list you build. People who match your ideal buyer and who you have not met yet. For Joel that is property managers and small builders in the Boise area, who buy garage doors in bulk and replace them on a schedule.
• Communities. Places where your buyers ask for recommendations, such as neighborhood groups and city subreddits. You answer questions and let the people who liked the answer find you.
• Local search. A complete Google Business Profile, with photos, hours and reviews, turns "garage door repair near me" into phone calls.

How to build a list of 100 in an afternoon

Pick one kind of buyer. Joel picks property managers in Boise, because one manager might handle 40 doors. Then open a spreadsheet with five columns: name, company, role, email, and where you found them.

Find the companies. Google Maps and a search for "property management Boise" give you company names and websites in minutes. Open each website and look for a team or contact page. Write down the person whose job covers maintenance or operations. A hundred takes about three hours if you do it steadily.

Then find the emails. Many sites publish a direct address. Where they do not, the pattern is usually first name at the company domain, and you can check it by looking at any staff address you can see. A free tool or a paid verifier can confirm an address exists before you send. Sending to bad addresses hurts your inbox's reputation, so check first.

If you want the long version, read how to build a lead list and how to find a business owner’s email address. Software can also do this step: Rocketship takes a description of the buyer and finds people by name with a verified email, and you can see the first 25 before you commit.

Do not buy a list. Lists sold by the thousand are old, often wrong, and sold to everyone else with the same idea. A hundred people you chose will beat ten thousand names you did not.

How to reach them

Email from your own address is the best place to start. It is cheap, you can write it in a minute, and replies land with you. Keep it short and specific. Joel's first email to a property manager:

Subject: Garage doors at your Boise properties Hi Alicia, I run Summit Garage Doors in Boise. We repair and replace garage doors for property managers, usually within two days of the call. Do you have a repair or a replacement coming up at one of your properties? If so, I can send a price this week. If not, I will stay out of your inbox. Joel Pruitt Summit Garage Doors, 410 Example St, Boise, ID 83702 Reply "no thanks" and I will not email again.

That follows the basic US rules for commercial email under CAN-SPAM: an honest sender, an honest subject, a real postal address and a way to opt out. Some fields have extra rules, so financial advisors, insurance agents and lawyers should check FINRA and SEC guidance, state insurance rules and their state bar's solicitation rules.

Phone calls work for higher-value jobs where a conversation helps, and a quick call to someone who just got your email is often welcome. Text is different. You need a person's prior consent to text them for marketing, so text customers who agreed to it and leave everyone else to email and phone.

Start with 20 to 50 emails a day per inbox and build up over a couple of weeks. Sending hundreds on day one is a quick way to land in spam.

How to follow up

Most leads do not answer the first message. Plan on four touches over about two weeks: day 1, day 3, day 8 and day 15. Each one should add something. Joel's second email mentions a recent job at a property like theirs. His third offers a free safety check on one door. His fourth is a short goodbye that leaves the door open.

Stop the moment someone replies, and reply the same day. A study in Harvard Business Review by Oldroyd and colleagues found that companies who responded to a lead within an hour were about seven times more likely to qualify it than companies who responded even an hour later. For a small shop, the practical meaning is: answer from your phone, and do not let a reply sit overnight.

Follow-up is the part most small businesses skip, and it is where most of the leads are. Four touches to 100 people is 400 messages. By hand, that is a few minutes a day spread over a month. It is also exactly the kind of job that quietly stops the week you are busy.

What it costs

The first cost is time. Building a list of 100 takes an afternoon. Sending and following up takes about 20 to 30 minutes a day if you do it by hand. Most small businesses can fit that in, and it is worth doing by hand for the first hundred so you learn what works.

The second cost is tools, and it can be zero at the start. A spreadsheet and your own Gmail are enough. When the time becomes the problem, software that does the finding, emailing and follow-up on its own is the next step. Rocketship Launch is $24.99 a month and does exactly that: it finds buyers by name, emails them from your own Gmail, follows up, and books the meeting. It includes 50 leads a month. Launch and Frontier start with a 7-day free trial, card required.

Be wary of paid lead services where you pay per lead without knowing who the buyer is. The question to ask of any of them is how much a customer costs, not a lead.

There is more on this in how much a lead costs for a small business.

What to measure

Three numbers are enough: replies, meetings and customers. Track them against the number of people you contacted. If you emailed 100 people and got 8 replies, 4 meetings and 1 customer, you know your rates, and you can plan from them.

Here is the arithmetic for Joel, made up to show the shape and not a benchmark. He emails 100 property managers over a month. Eight reply, four ask for a quote, and one signs a contract for 12 doors worth $9,600. The cost was an afternoon building the list, plus about 25 minutes a day for a month, plus $24.99 if he used software for the follow-up. That is a good return even if the next hundred do worse.

Look at the pattern after each batch. If nobody replies, the message or the list is wrong. If people reply but do not book, your offer or your price is the issue. If they book but do not sign, look at the quote.

Common mistakes

The same four mistakes show up again and again.

• Buying a list. The names are old, shared with every other buyer, and nobody on it asked to hear from you.
• One email and done. Most replies come from the second to fourth message. Stopping after one wastes the list you built.
• Slow replies. A lead that wrote to you on Tuesday and heard back on Friday has already talked to someone else.
• Describing everyone. "We serve all homeowners and businesses" gets ignored. Pick one buyer, write to that one, and widen later.