Lead Gen Models

Lead Generation business models are those where a company uses the web, or some other mechanism, to generate a large number of leads, and sells them on at a higher price.

A well known example of this would be LendingTree.com, where they use radio advertisements, Google Adwords, SEO, etc. to drive leads to their site, and then sell these leads to banks and mortgage companies.

Another good example of this is a company called QuinnStreet. QuinnStreet works in a series of verticals to develop proprietary content sites, publisher partnerships, ad placements, email campaigns, etc. to develop a lead flow, and then sells that on to buyers at a higher price per lead than they are paying overall to acquire the leads.

Going back to our CAC and LTV thought process, these companies clearly have a higher LTV (customer lifetime value) than their CAC (cost to acquire that customer). These can be very attractive business models.

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  • http://incomeproducingasset.com Incomeproducingasset

    interesting post David. im currently working on my own lead generation business and I’m finding its difficult to create spreads in certain categories. Id love to read more about this topic from your perspective.

  • Anonymous

    It is a nice content.A lead usually is the contact information and in some cases, demographic information of a customer.I like this one.This is an amazing.Thanks to share this blog with us.Keep it up.

  • http://www.abhinavk.com Abhinav Khushraj

    What’s the difference, if any, between a lead gen model (like the one above) vs. an affiliate model (Ad Sense)?

  • http://www.forentrepreneurs.com David Skok

    They are very similar. An affiliate model is usually used with eCommerce sites, whereas a Lead Gen model usually is aimed at businesses like higher education, mortgages, local services companies (plumbers, electricians, etc.).

  • sozo33

    David, it would be nice to see an article that dives in to some actual business models that a normal person would use. Ex: I have a website and I know how to get people to it, but I need a distribution network through which to sell the leads. 1. How do I go about finding those distributors? 2. How would I best inquire about their willingness to purchase leads without triggering the competition response? 3. How do I determine lead value for that industry/market? 4. What system do you recommend for managing a lead-gen website’s database? 5. what other questions should someone ask who is starting a lead-gen website? Any help here is greatly appreciated.

  • http://www.forentrepreneurs.com David Skok

    Unfortunately I have no plans to do that kind of article as I am not an expert in this business model. I am sorry I will not be able to help you here.

  • Sophia Rose

    It’s hard to find a decent company to buy leads from. Seems like a fairly crooked business so any advantage you can find you need to use. The best thing I’ve found as far as advantage is a service called Zuumlead that instantly converts my incoming email lead that I have to be watching for into the customer just being on my phone. It’s fast and saves me the constant stress of needing to watch over my email constantly.