The Real Cost of Bad Leads (And How to Eliminate Them)

Not all leads are created equal — and cheap leads often come with the highest price tag.

In this episode of Digital Marketing for Contractors, hosts Caitlyn Noble and Meredith Medlin break down the hidden costs of low-quality leads and how they quietly drain your time, your team’s energy, and your company’s growth.

From shared leads and lead aggregators to poor qualification and vanity metrics, Caitlyn and Meredith explain why chasing volume instead of conversion leads to lower close rates, frustrated sales teams, and even brand damage. They also reveal what high-quality leads really look like — and how contractors can build smarter digital systems that prioritize exclusivity, intent, and true ROI.

You’ll learn:

• What defines a “bad lead” (and why they’re so expensive)
• The hidden costs behind cheap lead sources
• Why cost per acquisition matters more than cost per lead
• How exclusive, high-intent leads outperform shared leads
• Simple ways to improve lead scoring and qualification
• The digital marketing strategies that consistently drive better conversions

If you’re tired of chasing dead-end leads and want a system that actually helps you close more jobs, this episode is for you.

🎙️ Listen now and start turning better leads into real growth.

Want to find out how we can create a custom digital marketing game plan for your contractor business? Schedule a call with us at fatcatstrategies.com.

Transcript

Speaker 2: 0:10

Welcome to Digital Marketing for Contractors, a podcast for home improvement contractors to help you crush your lead goals and take your business to the next level. Join us each episode as we give you powerful insights and practical tips on the best digital marketing strategies to help you grow your home improvement business. Let's get started.

Caitlyn Noble: 0:30

Welcome back to Digital Marketing for Contractors. We're your host, Caitlin Noble, and I've got with me my beautiful business partner, Meredith Medlin. Are you going by Davis yet? I'm singing with Medlin. Okay, I love it. Awesome. She's married. Okay, so Caitlin and Meredith here, we've got an awesome topic that we're gonna uh dive into.

Meredith Medlin: 0:49

Yeah, so we're gonna be talking about the real cost of badies. Not just the ball around, but halayaki and happen to time.

Caitlyn Noble: 0:57

This we've definitely we're gonna break down what cheap leads really cost and how to eliminate them with smarter digital strategies. I love it. So I feel like we're we should talk about yes. We hear them all the time. This was a bad leader.

Meredith Medlin: 1:16

Absolutely. But I mean, what are you on a lot of different things depending on who you're asking? Sure. Um, but what we consider happy is contact sites that aren't interested at oh my um you involve accurate creation for them so email phone number doesn't work. Um maybe on Puggy buddy or forty. Yeah, to be because I can call it. And then I can I can close through every service area that they definitely have a good lead for you. Um so those are some of the things that we typically see when um a client, a prospect comes to us and says, Hey, we're just getting a bunch of bad leads.

Caitlyn Noble: 1:56

Exactly. They're not interested or ready to buy, so why did they follow a former call you? You don't have the right information for them. There's no budget, they can't make the decision. No. Um, and or they can't make the decision, and then they're not in your service area. Right. When you chase these leads, you're paying money, time, and energy for nothing. And I know y'all know this, or even worse, a negative customer experience. So I guess my question as we go into this conversation is would you rather pay for a higher quality, pay more? Pay more, because you're gonna pay for a lead regardless. Would you rather pay more for a higher quality lead or less for a cheap lead?

Meredith Medlin: 2:40

That's a great question. I think that you're all sweet out our preference. I think you know, before we get this out, I think it's important to talk about what did she lead it cost you? Yeah. Um, obviously time is money. Yeah. So if you are going after falling up with a bad league, um, different amounts lots of they take me little phone calls, um, they don't answer, and you just keep get in contact with it, your team, your poster, your CS people, they're spending their valuable time following up and not real opportunities when they could be spending that time talking to actual potential customers. So every wasted call, every waste email, that has a cost to you and your team.

Caitlyn Noble: 3:26

Definitely. Time equals money, that's no surprise. Um, you use the word wasted, um, wasted marketing spend is definitely what cheap leads cost you. Cheap leads often cost 20% or more in hidden expenses once you include all the follow-ups, be it phone calls, if you're using some cool technology, if your marketing company's remarketing to them, um, and obviously low close rates. All right.

Meredith Medlin: 3:53

So let's fill the criteria up front might look like oh, this is very pressing, but not you know, all the uh hidden expenses.

Caitlyn Noble: 4:02

Yeah, no, there's definitely a lot of hidden expenses. Um, and that's gonna impact, like I said, your lower close rates. So let's talk about that.

Meredith Medlin: 4:11

Yeah, so um when they rush meaningful contractors, we're talking about lead aggregators here. Um, it really turns into a race to respond to the customer. Um, and often that seem awesome for you. Um, so do you rebook jobs coming from these lead aggregators because you don't have exclusively coming to compete with you know other contractors who receive the exact same lead as you?

Caitlyn Noble: 4:38

Yeah, absolutely. So your close rates are gonna go down and everybody's gonna be mad about it. Speaking of being mad, bad leads result in team frustration and burnout. My God, we've seen it. We've seen it from call centers, from marketing managers, from sales managers, from sales reps. Chasing these dead ends frustrates your team, not just your sales team, but just your entire team. And it affects morale. Reps become less motivated when most leads never convert. And I'll tell a quick story about that. Like, I mean, Facebook leads have their own reputation. We know that. I mean, we had clients, we were generating a ton of Facebook leads for them. But y'all probably know this too. They weren't answering like those leads through Facebook weren't answering the calls. Right. And so we would have a call center, you know, receive those leads, and they knew those leads were coming in from Facebook, and they just already set the bar as low as possible. Um, and like that's just morale and mentality. So we ultimately ended up turning off, you know, Facebook, or I think at one point we like hid the lead source. So the call center didn't know that they were coming from Facebook. Right.

Meredith Medlin: 5:50

Just to, you know, did that re-energize fear about maybe after being new, we go after some leads, but um, it does get frustrating when you're, you know, trying and not being successful with something. So do your team a favor, do your call center a favor. Try to avoid that frustration and that burnout. That's folly. And I mean, yes, it's frustrating to your team, but also they can cause real damage to your grand reputation. Um, if you have low quality bad leads, for example, from a lead aggregator, if they're getting five back-to-back calls, which they are, they they are getting five back-to-back calls from each contractor that that lead was sold to. If they're getting five calls in a row, if you just happen to be the third or fourth, they may be so fed up. Yeah, it doesn't matter that you had their best interests at heart. You're treating your lifespan, essentially. You're just a cold call at that point. And so it damages your reputation. Um, if you come up to conversation with a neighbor or friend maker, they may doubt, you know what, they would not stop calling me. So, you know, just be aware when you're signing up from these cheaper lead sources. Right. Um, there are impacts beyond just the price tag that you pay.

Caitlyn Noble: 7:04

That's a really good point. And I mean, again, what are we considering a bad lead? They're not interested or not ready to buy. A lot of these lead aggregators, I mean, are just out there generating contacts for you. And a lot of people, you know, may not be ready to pull the trigger. So that's just somebody that's not ready to buy. You're not getting the right information. I think Facebook was guilty of that with those lead forms. They can pull in email addresses at Universe Chef, etc. Um, there's no budget, um, and they're not the decision maker. That's why they're always important on those forms to ask. Are you the homeowner or are you a homeowner? Um, I own this home. Because if we're not gonna be able to work with you. Right. And then, of course, the service area. And I know, you know, more uh fields on a form could hurt a conversion, but you know what you're getting into when you start to contact those leads. For sure. Um, okay, so we just talked about like what those cheap leads can cost you. And here's what you should prioritize. So the flip side, what the leads look like, um, let's talk about that and why they're such a great investment. And I'll say I had a conversation ironically this morning because there's a ton of software out there and partners who do make some of these lead aggregators um and some of these, you know, low quote unquote low quality, low-cost leads convert higher. And we were just saying, like, look, you know, we might charge 150 lots for a lead, which is a great price for considering what the lead could be. But if you throw in, you know, this software that's going to text them and qualify them and maybe like soft credit checks, and that's gonna make that lead cost go up to maybe $500, you know, whole a pearls. But the close rate has to be higher once they're qualified. So let's talk about that. Yeah.

Meredith Medlin: 8:59

Yeah. Well, we mentioned before that's already, you know, the field forms and um trying to get a higher intent. That's one of the things that we always try to have our clients prioritize them. That's what we prioritize after marketers. Um, we are truly prioritize people and after people who have expressed actual interest. They're in a service area. Yes. They are the homeowners, they have a budget. Um, all of those things, all of those boxes being checked, leads to a more likely conversion.

Caitlyn Noble: 9:31

If y'all are working with somebody who hasn't asked to your service, goodbye. Goodbye. I I that thought just crossed my mind. I mean, I always feel like it's so annoying to be like, can you please confirm the zip codes that you serve? And they're like, but it's a real You have to, yeah. For sure. Absolutely. Um, so we definitely talked about those high-intent leads. Uh, we've definitely talked about cost versus ROI. Um, and and I'll just repeat it again: a $100 lead that converts at 20% is better than a lead that never closes. It doesn't matter if something is $4. No $5, it's not going. That's the wrong metric to chase. Like, I mean, you know, we have really great partnerships with our our clients and the ones that can help share some of these close rates, help us better know like the types of leads that we're generating. So look at cost per acquisition, not just cost per lead, is my tip for you. I love that. Yeah.

Meredith Medlin: 10:28

And I mean, we talked about a little bit before, but um exclusive lead versus shared lead. Um, you know, if you are the only contractor reaching out because they filled out filled out a form on your website or called your direct member. Um exclusive. You have that exclusive lead. Yes, it may cost more upfront for that lead, but you're not having to compete with three, four, five other contractors and trying to call them quickly and then having to, you know, essentially put a bid in. Um it's an exclusive lead, you own it. Um, it's that's the best case area for you. Costs are probably higher.

Caitlyn Noble: 11:07

They're definitely gonna be higher. The upfront costs, yes.

Meredith Medlin: 11:10

Long term, I would beg to differ. Correct. It is going to be the cheaper solution. Correct. Because you're not having to go through it. Pay all of the follow-up, even the tools or the rehashing or whatever all those other came calls for that we talked about earlier.

Caitlyn Noble: 11:26

Yeah, that's a really good point. Um, this next um item that you should prioritize if you're trying to get better leads. Uh I'm gonna be completely honest with you. I don't think the industry, the holofruit industry does a good job of scoring. And I know there's a ton of tools out there that do help you allow scoring your leads. Um, I mean, marketers, we all we know all about scoring leads. Um, but I think lead scoring and lead qualification are definitely something you could start to prioritize. Qualification is something that we we've talked about, you know, endlessly. I was just talking about like you can even add on tools that help qualify a lead for after it comes through in terms of, you know, are you a homeowner, etc.? Um, project size, what service type, your location of your project. Um, that helps quote unquote score the type of lead that you're about to be following up with to improve your pipeline. Right. So absolutely.

Meredith Medlin: 12:30

And I think being able to do that, you can also, I mean, if you're using your ASMR or if it f well smart or use it smart, use it smart. Um, you're looking back at which leads have the highest and the best scores. Right. The sources. You're gonna be able to tell where your best quality leads are coming from if you're using some sort of scoring system.

Caitlyn Noble: 12:52

So I mean, we'd look at our display of like, okay, I can see fact leads, I can see they generated this many sales, and we consider that a score. Yeah. I'm fake compared to some of the other lead sources, right?

Meredith Medlin: 13:06

And you know, um, there are a lot of different strategies that work. Um prioritize them, talk about them on each and every podcast. Sure. Um, so it's not gonna be you guys, but um things like SEO-driven inquiries from customers, um, so there's organic customers that find to you, cage search results, tight targeting, yes, service area, um, zip coast neighborhoods even that you work in, that you work in, and you know, excluding areas that you don't want to work in as a right day. Sure that you're still as well. Exclude those areas you don't want to be in. Yes. Um, social apps that have the right filters, kind of same kind of deal. Like make sure you're returning what you want and excluding that goes for negative keywords that includes geography. Make sure you're excluding things you don't want to target. You can even exclude previous customers. Oh, yeah. Yeah, absolutely. Yeah, that's a good point. And you know that I just think that's a great clip, isn't it? So glad you made that. Um, I mean, just all of those traditional digital marketing tactics that we use, um, those things are gonna help you find those qualified leads. And they may not be the cheapest up front. No, but in the long run, they're gonna be better quality and they're gonna be less expensive when the whole process is done and over with. Um, but let's talk about some of the common mistakes that we can avoid.

Caitlyn Noble: 14:36

Yeah, um, lots of traps out there. Um, you know, times can get tough, leads can definitely get expensive. I know last year was some of the highest cost leads that we've seen um across the board. You know, you name the service, you name the location, the leads were expensive. So there are traps out there, and I know, you know, lead aggregators are not all bad. It's just like, just keep those in mind. But buying cheap lead list without exclusivity, um, whether it's you're buying that list or you're like, you know, committing to a lead aggregator, you don't have exclusivity to that. You're, you know, they're they're to Mirage's point, you're you're going up against four other companies, you know, like this person's put their name out there, and you know, all four of those five of those companies, you know, are going to be calling that same lead. Yeah. Um the trap, other traps, you know, they ignore lead qualification. Uh, LSA, those Google Guarantee leads have been an issue as of late. I hope by the time this publishes, it's not still true. But I mean, you're a roofer and you're getting leads for, you know, oil changes. Like what?

Meredith Medlin: 15:51

Yeah.

Caitlyn Noble: 15:51

I mean, it's insane. So they're ignoring lead qualification. Um, you're not tracking cost per acquisition. A lot of these, you know, cheap leads, they don't care about acquisition. They're like, we got you a lead. You got a name, you got a phone number. Uh pay the check. Pay, yeah, pay for the lead. Correct. Um, and then relying, like I said, only on volume instead of conversion. So more, more, more, more, more, you know, and don't really worry about where those leads even.

Meredith Medlin: 16:18

Yeah, no, just paying in a lot of ways that can be any metric when you need to be focused on all the process and want to make sure of producing high quality leads. Yes. Instead of just, wow, as a the high symbol we got and because not matter what the number is, like none of them set or so.

Caitlyn Noble: 16:33

No. I I have been in a mini meetings where yours Caitlin was so happy going into those meetings. We generated this many leads for you, and they're like younger. Well, uh, yeah, none of those set. Yeah. But lessons learned. We now know what to focus on, as should you. So if you're tired of wasting time on low-quality leads and want leads that actually convert, reach out to our team at Fatcat Strategies. Exactly.

Meredith Medlin: 17:04

So we help contractors build big chain marketing systems that generate quality leads consistently, so you can spend less time chasing those leads and more time closing them.

Caitlyn Noble: 17:14

Definitely. I mean, and I tell these stories lightheartedly, but like we've learned so many lessons in the years. Like we truly know like what it means to be a qualified lead or not, um, because we have been burned in the past. So um, you can visit our website, you can schedule a consultation, DM DM us. Slide into the DMs social. I hope somebody shot them on DMs. Um, if you want a personalized strategy, all of our strategies are personalized. Absolutely. So um, thank y'all for tuning in to Digital Marketing for Contractors, short and sweet episode.

Meredith Medlin: 17:48

But uh-huh, subscribe wherever you get your plot pass, Sparfy, um, Apple hard paths, wherever else you're please list them all out. Bedpiling that area. I'm sure the involved is okay.

Caitlyn Noble: 18:00

You didn't stay on YouTube. We we have these out YouTube, yeah. Yeah. So thank you guys so much. Share these episodes too if you have a contractor who um you know is wasting time on bad leads. Perfect. Thanks, y'all. Talk to you soon. Bye. Bye.

Speaker 2: 18:20

Digital marketing for contractors is created by Fat Cat Strategies. For more information, visit Fatcat Strategies.com.