How to Start a Business Selling Leads

by David Weedmark; Updated September 26, 2017
Close up of arms and hands of business people in the office having a business meeting

Selling leads may be a lucrative business, but it can also be very competitive. Understanding the costs you will incur in getting leads and the prices you can charge in different markets is critical to creating a successful business in this field. Because you are dealing with personal information, it's also important that you consult with a lawyer to ensure you understand federal and state laws.

Choosing a Niche

Not all leads have the same value in different markets, so it's important to research what clients are willing to pay for leads and what specific demographics they may require, like age and income brackets. Compare different client markets to determine which niche might be the most profitable. For example, if you decide that your niche is local newlyweds or expectant parents with household incomes over $80,000, your leads may be valuable to mortgage brokers, insurance agents, realtors and home renovation companies.

Calculating Costs

Gathering leads requires time and money. Your business plan must include a way to generate these leads at costs that will leave room for a profit. For example, you may determine that online content marketing is a good way to generate leads for expectant parents by offering free tips and advice to anyone who registers with your website. In this case, you need to estimate the cost of web-hosting fees, the time or expense in developing content and generating traffic to the site, either through ads or social media marketing. If you plan to sponsor a contest at a bridal show to gather names, the cost of your booth and prizes needs to be calculated.

Managing Data

In most cases you will need a database to store your leads. While you can use a spreadsheet to store names and details, they become problematic when you need to search for multiple criteria. In a database, for example, you can pull reports based on age, zip code and income, which is something you would have to do manually in a spreadsheet. For Web-based lead generation, most Web hosting companies provide access to SQL databases, however you will need a programmer experienced in SQL to connect your site to the database and to make the information available to you or to your clients. If you want clients to have access to leads online, implement a method of payment system, adequate security and tracking to prevent anyone from freely accessing your data.

Licensing

In addition to standard business licensing your state may require, anyone collecting personal information must be aware of state and federal laws regarding telemarketing. Even if you generate leads online rather than by telephone, state telemarketing laws may apply to your work. In addition, if you are generating leads for the financial sector, like mortgage brokers, you must be aware of that industry's licensing requirements. In some states you may need to be licensed, depending on what information you gather, who you sell it to, or how you sell it. In Georgia, for example, if you sell mortgage leads on a commission basis, you may need to be licensed.

Advertising for Leads

Advertising is a common way for lead generation companies to acquire new names. For example, you may be planning to post ads online to gather lead information, like inviting consumers to get free insurance quotes, or inviting them to apply for mortgages with low interest rates. Before advertising in any medium, familiarize yourself with state and federal advertising laws, especially when it comes to collecting personal information. If your lead generation plan includes email, familiarize yourself with the CAN-SPAM Act, which spells out requirements for contacting people through email

About the Author

A published author and professional speaker, David Weedmark has advised businesses and governments on technology, media and marketing for more than 20 years. He has taught computer science at Algonquin College, has started three successful businesses, and has written hundreds of articles for newspapers and magazines throughout Canada and the United States.

Photo Credits

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