What Is a Lead? Definition, MQL vs SQL and Cost per Lead

In short: a lead is an identified contact, with at least a name and a way to reach them, who has shown interest in your offer, for example by filling in a quote form or downloading a guide. It becomes an MQL when marketing judges it ready and an SQL when a salesperson confirms the need; on Google Ads, each of those contacts costs $66.69 on average in 2026, according to LocaliQ and WordStream.

In a small business, the idea sounds abstract until the day you compare two campaigns. One brought in 80 contacts and no customers, the other 12 contacts and 4 customers. Knowing how to define, qualify and price your leads is knowing which campaign to keep paying for.

What is a lead?

A lead meets two conditions:

1. It is identified: you have at least a name and a way to get back in touch (email, phone).
2. It has shown interest: the person has made a move toward your business.

An anonymous visitor to your website is not a lead. A newsletter subscriber counts as one for some companies and not for others. What matters is to agree on one definition and stick to it, otherwise the numbers from two different months cannot be compared.

Lead or prospect? The two words overlap. In common usage, a prospect is a potential customer you have spotted and plan to approach; a lead has taken the first step, or has answered your approach. B2B prospecting turns prospects into leads, while inbound marketing attracts leads directly.

What are the lifecycle stages of a lead?

CRMs break the journey into lifecycle stages. The default stages in HubSpot are a reference for many companies:

Stage	Definition
Subscriber	Has opted in to hear from you (blog, newsletter)
Lead	Has converted on your site or through an interaction beyond a subscription
MQL	Qualified by marketing as ready for sales
SQL	Qualified by sales as a potential customer
Opportunity	Associated with a deal (quote, proposal)
Customer	Has at least one closed deal
Evangelist	A customer who advocates for your business

You do not have to use all seven. A very small business can get by with three: lead, opportunity, customer. The important part is that every contact sits in exactly one stage at any given time.

MQL vs SQL: what is the difference?

A marketing qualified lead (MQL) is qualified by marketing, based on what is known about the contact without having spoken to them: their profile (industry, company size, job title) and their behavior (pages viewed, content downloaded, emails opened). Teams often use a score: for example 10 points for a business owner, 15 points for a visit to the pricing page, 20 points for a demo request. Above a threshold, the contact becomes an MQL.

A sales qualified lead (SQL) is qualified by a salesperson, after a conversation. A classic checklist is BANT:

• Budget: can they afford it?
• Authority: do they make the decision, or influence it?
• Need: is the problem real and a priority?
• Timing: when do they plan to act?

The line between the two should be written down in an agreement between marketing and sales, often called a service level agreement: which criteria move a lead from one side to the other, how quickly sales must follow up, and what happens to a lead sales rejects. Without it, marketing complains that sales never calls back, and sales complains that the leads are bad.

Examples of leads, from cold to hot

• Newsletter sign-up: interest in the topic, rarely in buying right away.
• Guide or template download in exchange for an email: interest in a problem you solve.
• Webinar attendance: an hour of attention, a stronger signal.
• Business card left at a trade show: direct contact, interest to confirm quickly.
• Quote or appointment request: an explicit need, often already an SQL.

The same number of leads can hide very different realities. Track cold leads and explicit requests separately, or your conversion rate will mean nothing.

How do you generate qualified leads?

A qualified lead looks like your ideal customer and has a real need. The levers that work best for a small business:

1. One dedicated page per offer. A landing page with one goal and a short form converts better than a generic contact form. Every extra field filters more: asking for the company name in B2B already qualifies.
2. Useful content in exchange for an email: a guide, a template, a calculator, a study. It attracts people who have the problem you solve. That is the principle of inbound marketing.
3. SEO on queries with buying intent (“price,” “quote,” “near me,” “company”).
4. Paid advertising, which produces leads fast but at a unit cost you must watch.
5. Outreach and events, to reach the accounts that will not come to you on their own.

Collecting an email to send a guide does not give you a free pass. In the US, the CAN-SPAM Act requires every marketing email you send afterward to identify you, include a postal address and offer an opt-out honored within 10 business days. Calls and texts are stricter: the Telephone Consumer Protection Act requires prior consent for many marketing calls and texts to cell phones. If you collect leads in the UK or the EU, consent rules for consumer email apply. A clear, unchecked opt-in box covers you almost everywhere.

How much does a lead cost?

Cost per lead is simple to calculate: amount spent ÷ number of leads obtained. For Google search ads, the 2026 averages published by LocaliQ and WordStream, drawn from thousands of their customers’ Google and Microsoft Ads campaigns, give an order of magnitude:

Industry	Average cost per lead (search ads, 2026)
All industries	$66.69
Arts and entertainment (lowest)	$26.84
Dentists and dental services	$72.97
Education and instruction	$77.48
Home and home improvement	$90.92
Business services	$93.69
Real estate	$102.51
Attorneys and legal services (highest)	$131.63

Use these as reference points, not targets. Your city, your offer and your landing page move the number more than any average. Our guide to Google Ads on a small budget explains how to keep it under control.

What cost per lead can you afford? Start from the value of a customer. A hypothetical example: a customer brings you $2,000 in gross margin in the first year, and you sign one customer for every 8 leads. Each lead is then worth $250 in margin ($2,000 ÷ 8). Paying $90 per lead is profitable; paying $300 is not, unless customers stay several years. Our break-even calculator helps you run the same reasoning with your own figures.

Buying leads? Lead marketplaces sell quote requests, especially in home services. Price depends on whether a lead is sold to one business or shared among several. Always ask how consent was collected: if the person never agreed to be contacted by partners, you carry the risk when you call.

How do you follow up on leads?

A lead nobody follows up on is wasted budget. Three simple rules:

• Respond fast to explicit requests, the same day if possible. In a test of 2,241 US companies published in Harvard Business Review in 2011, only 37% answered an online inquiry within an hour, and the average response time among those that answered within 30 days was 42 hours. Being the first to call is often enough to win.
• Log everything in a CRM: lead source, stage, last conversation, next action. That is what lets you work out later which channel actually brings in customers.
• Nurture the leads that are not ready yet with useful messages rather than repeated sales pitches. That is the job of lead nurturing.

Lead generation agency or software: how do you choose?

Lead generation agencies and platforms often promise volume. Judge them on quality instead: ask them to commit to a precise lead definition (company size, industry, need), the right to reject off-target leads, and tracking through to signed deals, not just to the form. A good provider will accept being paid partly on booked appointments. Be wary of one who only wants to talk about cost per lead: a cheap lead that never signs costs more than an expensive one that does.