A basic definition of leads and referrals:

Leads – consumers who arrive at a website looking for a company to do business with.

Referrals – consumers who arrive at a website looking for more information and trying to determine if they want to use that specific business.

Most websites are designed to handle referrals.  This is the basic website design, telling more about what a business can do for their customers.  The reason this is the default is because it is highly effective and easy to produce, thus less expensive.

Lead generation websites are different.  Their goal is less information based and more “contact us” based.  To be effective, they need a constant stream of new visitors, a small number of those will generate leads.  That stream of visitors requires spending of ad revenue on ways to generate them.  For some businesses that can be search engine ranking for others it is lead generation services.

Two mistakes that can be made are these:

1. Sending leads to a conversion site.  This is a huge waste of money as the site is not good at generating leads, it has a large amount of information and is designed with the assumption that the potential customer is aware of the business.
2. Sending referrals to a lead generation site.  Lead generation sites are designed to get contact information and to do it quickly.  A referral isn’t looking to contact the website owner, they have already done that or committed to do it.  They want more information.  Lead sites are short on information, so they are ineffective at conversion.

The far worse crime would be to send referrals to a lead generation site, as often 2/3 of referrals will convert if given enough information.  We know that it is business dependent, but a go lead to contact rate would be 2-3%.

A website can do both functions on different pages.  Make sure leads are going to a landing page designed to get contact information and that referral are going to the front of the website.