What is a lead and why do they matter?

Key takeaways

• A lead is a potential customer for your business
• A marketing qualified lead (MQL) is someone who has interacted with your business and is ready to speak to you or your sales team
• You can attract new leads by hosting a bring-a-friend sale, publishing free content, or hosting a community event

What is a lead? In simplest terms, a business lead is a potential customer. To attract new leads, it’s important to do thorough research on your target audience, project confidence in your product or service, and be consistent in your follow-up strategies.

Discover more about leads, why they’re important, and how to build a pool of potential customers for your company.

What is a lead, exactly?

A lead is someone who shows interest in your products or services. Over time, this person could become a loyal customer of your business. While there are different types of leads, having a pool of these potential buyers is key to steady growth, no matter your industry.

What is a qualified lead?

After you’ve answered the question, “What is a lead?” you should know the difference between qualified leads and cold leads.

Leads come from a number of different sources and form the top of the sales funnel. Over time, business owners and salespeople bring leads down the sales funnel until they (hopefully) become customers.

A marketing qualified lead (MQL) is someone who’s experienced multiple touchpoints (i.e., interactions with your business) and is primed to buy. For example, an MQL might be someone who walked by your storefront, saw positive reviews of your business on Yelp, and joined your email list. After several weeks of learning about the types of products you offer and your competitive edge, they’re on the cusp of making their first purchase.

MQLs are vastly different from cold leads, meaning people who have never interacted with your company. By focusing your sales efforts on qualified leads—not cold leads—you can increase sales, boost morale in your sales team, and preserve internal resources.

Why are leads important?

Put simply, leads generate sales for your company over time. To get more specific, leads are important because:

• Leads create a steady stream of income. As a business owner, you know it takes time for first-time buyers to purchase a product or service. By cultivating a steady stream of leads, you’re less likely to experience a sharp drop in sales while your first-time buyers are making up their minds.
• Leads help you understand your target audience. Not all leads will convert to customers, but that actually makes for a good learning opportunity. By paying attention to which types of leads do convert, you can build a better understanding of your ideal buyer persona and improve your sales process.
• Leads help improve your digital marketing strategy. Leads can provide invaluable feedback for your company. The questions leads ask, the products they show interest in, and how often they visit your store or website can help you refine your marketing efforts and boost your conversion rate (the percentage of leads who “convert” into customers).
• Leads keep profits high. Even if you’re not a seasonal business, you might experience “dry seasons” when sales aren’t as high as you want them to be. If you have a pool of leads, you can target these potential buyers with a flash sale to entice them over the finish line and increase company sales.

How to attract new leads: 6 ideas to bring in new customers

Getting leads doesn’t guarantee sales—it’s important to build relationships with potential customers and nurture your leads into making purchases. But first, before you get to nurturing or sales, you should think about how you’re generating leads.

Lead generation (sometimes abbreviated to lead gen) is the process of cultivating new leads. In other words, it’s a series of marketing efforts aimed to attract people who could show an interest in your business.

Your unique lead generation strategy will depend upon your business, industry, and marketing team. Discover six ideas for attracting potential customers to help get you started.

1. Invest in digital advertising

The great thing about digital advertising is you can share your products and services with people who have never interacted with your company. Investing in digital advertisements can attract people who match your ideal target buyer.

For example, after you claim your Yelp Business Page, you can invest in Yelp Ads. With Yelp Ads, you can target your audience by location, demographics, and keywords. When a target buyer searches for a product or service that you provide, your business page is placed in key places on Yelp.com and the Yelp mobile app, such as above or below relevant search results in the “Sponsored Results” sections and on your competitors’ pages.

This means a potential customer might be more likely to click on your company name, where they’ll see your business profile, reviews from satisfied customers, and photos of your products or services.

2. Offer a downloadable freebie

Email marketing is an effective outreach tool to transform leads into repeat buyers. However, before you can craft an expertly written email campaign, you need to convince leads to actually join your list.

One of the best ways to attract new email subscribers is by offering something for free—this is called a lead magnet and typically comes in the form of a digital download. For example, if you’re a local catering business and you want to build up a pool of leads ahead of the holiday season, try writing a short holiday recipe ebook. Share some of your favorite holiday recipes on your social media platforms and compile them into a beautiful PDF for potential customers to download.

3. Host a community event

Consider helping out your community by hosting a fun event at your business, giving you the opportunity to generate local leads in the process.

If you own a cafe, consider hosting an open mic night. If you’re the owner of a bookstore, maybe you can sponsor a monthly book club. A sports apparel or equipment store might want to launch an adult kickball or running league. While people might attend your events for a sense of community, they could transform into high-quality leads over time.

4. Launch a free course, workshop, or webinar

People are always looking to learn a new skill, trade, or hobby. Consider fulfilling a need in your community and attracting new leads by designing your own course.

A course could be a one-hour webinar or a series of workshops scheduled throughout a month or season. If you’re a florist, you could offer a DIY workshop on creating your own Instagram-worthy bouquet. Or consider offering a series of tutorials on how to properly care for kitchen utensils (like cast iron pans) at your home goods store.

Promote your classes by designing an infographic or flyer and hanging it up in your store and on community bulletin boards. You can also share the flyer on social media and link to an event landing page on your website.

5. Do a content swap

Chances are, plenty of businesses in your local community have the same target buyers—yet they’re not competitors. By partnering with a complementary business, you could find a new pool of leads interested in your services.

So, how do you do it? Consider doing a content swap with another local business. Write guest blog posts for one another’s respective websites. Or try inviting the other business to collaborate on a social media post. If either of you hosts a podcast related to your business or industry, think about inviting the other as an interviewee or co-host.

6. Host a “bring-a-friend” sale

Buyers are more likely to purchase a new product or service based on a friend’s recommendation. That means some of your best potential leads are friends of your current clients.

How do you attract those leads? Try a “bring-a-friend” (BAF) promotion. For example, if you own a fitness studio, post a BAF workout on your schedule. Current clients can bring their friends, each getting a free workout (the existing customer and their workout buddy). When your customers’ friends create accounts to attend the workout, you’ll have their contact information (such as an email or phone number) where you can send marketing materials.

Cultivate new leads through a small business marketing strategy

At some point, every new business owner has asked the question, “What is a lead?” Leads are people who might buy from your company in the future—your goal is to find them and deliver them the details about your products or services. By launching a community meet-up, offering a free course or ebook, or holding a flash sale, you can attract a pool of potential customers.

Remember that leads often require multiple touchpoints before they’re primed to buy, so proper lead management can nudge those prospects in the right direction. To learn how to craft an effective marketing campaign to convert leads into paying customers, check out this guide to small business marketing.