Lead generation (commonly abbreviated as lead-gen) is a marketing term that refers to the creation or generation of prospective consumer interest or inquiry into a business' products or services. Leads can be generated for a variety of purposes - list building, e-newsletter list acquisition or for winning customers.

A lead is a sign-up for an advertiser offer that includes contact information and in some cases, demographic information. There are two types of leads in the lead generation market: sales leads and marketing leads.

Sales leads are generated on the basis of demographic criteria such as FICO score, income, age, HHI, etc. These leads are resold to multiple advertisers. Sales leads are typically followed up through phone calls by the sales force. Sales leads are commonly found in the mortgage, insurance and finance markets.

Marketing leads are brand-specific leads generated for a unique advertiser offer. In direct contrast to sales leads, marketing leads are sold only once. Because transparency is a necessary requisite for generating marketing leads, marketing lead campaigns can be optimized by mapping leads to their sources.

How lead generation works

The nature of lead generation depends entirely on the decision process of the buyer. For complex products and services requiring a complex decision process, the keys are identifying the most likely prospects and then educating and qualifying them before deploying more expensive sales resources. The education benefits the buyer; qualification benefits the seller. This gradual lead cultivation process can go on for months and involve several individuals involved in evaluating a solution.

For commodity products, the rendezvous dilemma is one where two parties are seeking each other, but are obscured by time, distance, or attention. In essence there is a set of well-matched candidates for product purchase within a larger set of poorly matched candidates. Those well-matched candidates are what one is seeking to attract or identify in effective lead generation.

Although there are several methodologies and implementations, each involves one of two primary rendezvous strategies: Broadcast or Concentration.

• Broadcast involves communicating to a broad set of candidates with the expectation of a statistical response back to the marketer. Advertizing is a classic example of broadcast marketing rendezvous.

• Concentration involves identifying and creating situations that concentrate well-matched candidates into a broadcast-effective set. Market segmentation and trade shows are classic examples of concentration-marketing rendezvous strategies