1. Know which type of agency you are actually talking to
"Lead generation company" covers at least five different businesses. Working out which one is in front of you is the single most useful thing you can do:
- Outbound telemarketing agencies phone prospects on your behalf and book appointments. Good for high-value B2B services where a conversation sells better than an advert. Results depend almost entirely on the quality of the caller and the list.
- Paid advertising agencies run Google Ads, Meta or LinkedIn campaigns that drive enquiry forms. Fast to switch on, but you are paying for media on top of their fee — make sure you know which is which.
- Inbound and content agencies build SEO, content and email nurture so enquiries come to you. Slower to start, cheaper per lead once it works, and the asset stays yours.
- LinkedIn and social prospecting agencies run outreach from your own profiles. Effective in professional services; check carefully what is sent in your name before it goes out.
- Data and list providers sell contact data for your own team to work. This is not lead generation — it is raw material. Do not pay lead generation prices for it.
Some agencies genuinely combine several of these. Many simply describe one as all of them. Ask them to tell you which channel produces most of their clients' results, and listen for a specific answer.
2. Define what a "lead" means before you talk money
This is where most disputes begin. To one agency a lead is anyone who filled in a form. To another it is a qualified decision maker with a budget, a timescale and a diarised meeting. The price difference between those two things is enormous, and the value difference is larger still.
Write your own definition before you take the first call. It should cover:
- Who counts — job title, seniority, and whether they can authorise spend.
- Which businesses count — sector, size, turnover and geography.
- What the prospect must have confirmed — a need, a rough budget, a timescale.
- What form the lead arrives in — a name and number, a warm transfer, or a booked meeting.
- How you reject a lead that does not meet the definition, and what replaces it.
Get that definition written into the contract. An agency that resists defining a lead in writing is telling you something important.
3. Work out what you can afford to pay
Do not start by asking what leads cost. Start by working out what a customer is worth to you, then work backwards:
- What is the average first-year value of a new customer, and the lifetime value?
- What gross margin do you make on that?
- What proportion of qualified leads does your team realistically convert? Use last year's real number, not an optimistic one.
- How much of the margin on a new customer are you willing to spend to win them?
That gives you a maximum cost per lead you can defend. Now every proposal can be judged against your number rather than against each other. Cost per lead varies wildly by sector and by how qualified the lead is, so cross-agency comparison on headline price alone tells you very little.
4. Pay per lead, retainer or commission?
- Pay per lead feels low-risk — you only pay for results. The catch is that it rewards volume, so quality drifts unless your definition of a lead is tight and enforced.
- Monthly retainer buys dedicated time and usually better qualified opportunities, because the agency is not paid by the unit. You carry the risk if it underperforms, so agree what success looks like at 30, 60 and 90 days.
- Commission or revenue share aligns interests well but is rare, and only workable when attribution is clean and your sales cycle is short.
A sensible middle ground for a first engagement is a short paid pilot with clear volume and quality targets, and a break clause if those targets are missed.
5. Check the data and compliance side
If someone is contacting prospects in your name, their compliance failures become your problem. Before you sign, ask:
- Where does the contact data come from, and what is the lawful basis for contacting it under UK GDPR?
- Are they screening against the Corporate Telephone Preference Service before calling?
- Who is the data controller and who is the processor, and is there a written data processing agreement?
- What happens to your data and the leads generated if you end the contract?
- Are calls recorded, and can you listen to a sample of real calls made for other clients?
6. Read the contract properly
The terms that cause the most trouble in lead generation agreements:
- Minimum term and notice period. Twelve months with three months' notice is common and is a long time to be tied to an underperforming campaign.
- Lead rejection. How long do you have to reject a lead, and is there a cap on rejections? A cap quietly transfers quality risk to you.
- Exclusivity. Is the lead sold only to you, or shared with your competitors? Shared leads are worth a fraction of exclusive ones.
- Ownership. Do you own the campaign assets, ad accounts, landing pages and contact records when you leave?
- Reporting. What do you get, how often, and can you see the raw activity rather than a summary slide?
7. The ten questions to ask every lead generation company
- Which channel generates most of your clients' results, and why that one for my sector?
- Show me your written definition of a qualified lead — how does it match mine?
- Can I speak to two current clients of a similar size in a similar market?
- What results did your last three clients in my sector get, in numbers?
- Who actually does the work — in-house staff or subcontractors, and where are they based?
- What do you need from me each week for this to work?
- Are the leads exclusive to me?
- What is the total cost over the full term, including media spend and setup?
- What happens in month one, and what will you have proved by day 90?
- If it is not working at 90 days, what are my options?
Any agency worth hiring will welcome these questions. The ones that deflect, promise guaranteed volumes or refuse references have answered you already.
8. Make sure your own side is ready
Plenty of lead generation campaigns fail for reasons that have nothing to do with the agency. Before you switch anything on, check that someone is responsible for following up every lead within hours rather than days, that there is somewhere to record and track them, and that you can tell three months later which enquiries came from the campaign and what they were worth. If you have nowhere to put the leads, start with choosing a CRM system first, and make sure someone can work the pipeline once the enquiries arrive.
Next step
When you know what you need and what a lead is worth to you, comparing agencies gets much faster. Browse vetted UK providers in the lead generation category, take the supplier vetting tick sheet into every conversation, and read how to compare supplier quotes before you appoint anyone.