Shared vs Exclusive Contractor Leads: A 10-Question Test

Every lead provider sells the same three words: quality, exclusive, ready. The contractor who buys them has no way to check any of the three until the money is spent and the phone has been dialed. That is why the useful question is not whether a lead is shared or exclusive. It is which claims about that lead the provider can show you, in writing, before you pay.

This guide uses a public document to build the checklist: the Federal Trade Commission's order on how one large marketplace described its leads. Then it gives you ten questions to ask any provider, a worked example of cost per closed job, red flags, and an honest view of when marketplace leads do make sense. Closeup sells lead generation too, so ask us the same ten questions before you sign anything.

01What does the FTC order on lead marketing actually say?

In March 2022 the FTC announced an administrative complaint against HomeAdvisor, Inc. The FTC alleged that since at least mid-2014 the company made false, misleading or unsubstantiated claims about the quality and source of the leads it sold to service providers. The agency said many leads were not from consumers who intended to hire soon, did not match the services or area a provider had specified, and were not from consumers who had asked for the company's help, because some were bought from affiliates. It also alleged that sales agents overstated job conversion rates and that a free first month of an optional software subscription was not free. Those were allegations.

The FTC approved the final consent order by a 3-0 vote. In the order the company neither admits nor denies the allegations. The order binds that company; it is not a rule for every vendor. What it gives you is a precise list of the claims regulators thought worth restricting.

• It bars misrepresenting that leads concern people who intend to hire soon, including by calling them 'ready to hire,' 'project-ready,' 'not window shopping,' 'not just price-shopping' or 'need a project done now.'
• It bars misrepresenting that leads exclusively match the services and geographic areas the provider specified.
• It bars misrepresenting that leads exclusively come from people who submitted a request directly to the company.
• It bars calling something free when it is not free or when it raises the price of another product.
• It allows a claim about the rate at which leads convert into jobs only if the company has a reasonable basis, has data or written materials in its possession at the time, and can make them available to the FTC on request.
• On money, the company pays $4,448,000, plus up to $2,752,000 more if mHelpDesk claims exceed a set amount, which is where the FTC's 'up to $7.2 million' comes from ($4,448,000 plus $2,752,000 equals $7,200,000).

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The order binds that company; it is not a rule for every vendor.

Read the list again as a buyer. Each bullet is a question you can ask any provider: how do you know these people want to hire soon, how do you know the lead matches my service area, where did the person actually fill out the request, what data supports your conversion claim, and is anything described as free really free? The test below turns those into ten.

02Shared, exclusive and own leads: what each really means

Shared lead: the same homeowner request is sold to several contractors, so you are in a race and the homeowner is comparing prices before you arrive. Exclusive lead: the request is sold to one contractor. The word needs a definition, because exclusive to you can still mean sold to other trades, resold to partners, or exclusive for a few hours. Own lead: a request that came through channels you control, such as your website, your Google Business Profile, your past clients and your referrals, or ads running in accounts you own.

None of the three is good or bad by label. Each has a different cost per lead, a different cost per signed job and a different level of control. The only comparison that matters is the one at the end of the funnel.

03The 10-question test for any provider (copy this)

Send these in writing and keep the answers. If a provider cannot answer the first six clearly and in writing, you have your answer.

• 1. Exclusivity: exactly who else receives or can buy this request, including partners and affiliates, and for how long is it exclusive to me?
• 2. Source: where did the person fill in the request? Your site, a partner's site, a call, a purchased list? Can I see the form?
• 3. Intent: what did the person say about timing and budget, and is 'ready to hire' a measured field or a marketing phrase?
• 4. Match: what happens when a lead is outside my service area or is for work I do not do? Who decides, and how many days do I have to dispute it?
• 5. Verification: are phone numbers and emails checked, are duplicates filtered, and can I hear call recordings where leads come by phone?
• 6. Conversion claims: what data supports any claim about jobs won? What sample, what period, and how do you define a job?
• 7. Speed: how quickly does the lead reach me after the request, and how many other contractors are contacting the same homeowner?
• 8. Attribution and ownership: will I see which ad, form or keyword produced each lead, and who owns the accounts, the recordings and the lead data if I leave?
• 9. Contract terms: minimum term, auto-renewal, cancellation notice, price changes, and any add-on described as free. Is every fee in writing?
• 10. Measurement: will you agree in writing to measure success in estimates and signed jobs from my own numbers, not only leads and clicks, and who calls the homeowner?

The last question has a California angle. CSLB's fact sheet on online marketplaces says a referral service can pass along contact information but cannot solicit or negotiate contracts for a contractor, and that the homeowner should contract with and pay the licensed contractor directly. It also says that, with limited exceptions, a home improvement salesperson registration is required for anyone soliciting, selling, negotiating or executing contracts for a licensee. Ask who speaks to the homeowner before you do.

04How do you compute cost per closed job? A hypothetical example

Every number below is an assumption, not a result from any provider or contractor. The formula is cost per job = spend divided by (leads x share reached x share booked to an estimate x close rate).

Source A is a shared lead at $50. You buy 40 leads for $2,000. You reach 50% of them, which is 20 people. 20% of those book an estimate, which is 4 estimates. You close 25%, which is 1 job. Cost per job: $2,000 divided by 1 equals $2,000.

Source B is an exclusive lead at $200. You buy 10 leads for the same $2,000. You reach 80%, which is 8 people. 50% book an estimate, which is 4 estimates. You close 25%, which is 1 job. Cost per job: $2,000 divided by 1 equals $2,000.

The lead that costs four times as much produces the same cost per job, because it is reached more often and books more often. The cheaper lead is not cheaper, and the dearer one is not dearer. Notice also that both sources produced 4 estimates, so the same hours of estimating went into each.

Now move one number at a time. If source B's close rate were 30%, you would sign 8 x 0.5 x 0.30 = 1.2 jobs and pay $2,000 divided by 1.2, about $1,667 per job. If you reached only 40% of source A's leads, you would sign 40 x 0.4 x 0.2 x 0.25 = 0.8 jobs and pay $2,000 divided by 0.8, which is $2,500 per job. Compare that with an assumed $8,000 of gross profit per job: at $2,000 per job, acquisition takes 25% of the gross profit; at $2,500, about 31%.

The point is not that exclusive wins. It is that the middle of the funnel decides, and you only know your middle if you measure it. Test one source for a fixed period, count every lead through to a signed job, and then decide.

05What should you ask about exclusivity, response time and refunds?

Exclusivity. Ask for the definition in the contract, not in the sales deck: exclusive against which companies, in which trades, for what period, and what happens if the same homeowner appears twice. If the provider will not define it, treat every lead as shared.

Response time. Ask how fast leads are delivered, then measure your own time to first contact. A lead answered the next morning is a different product from one answered in minutes, whatever the label says.

Refunds and credits. Ask what counts as an invalid lead (wrong area, wrong service, fake or duplicate contact), how long you have to report it, whether credits are automatic or discretionary and how you will be told. Check the window and who has the final say.

Attribution. If you cannot see where each lead came from, you cannot tell a good source from a bad one, and you cannot leave with anything. Ask for the lead source field, call recordings where available and an export of your data.

Contract terms. Minimum term, auto-renewal and notice, price changes, and the free trial or free add-on that quietly renews. The FTC's complaint included a first month described as free that was not, so read every line item.

06What are the red flags?

You do not need to catch a provider lying. You need to notice when answers are missing.

• They cannot define exclusive in writing.
• They describe leads as 'ready to hire' or 'project-ready' but cannot show the timing field or the form.
• They quote conversion or job-win rates with no data, sample or period.
• Credits are at their discretion, with a short reporting window.
• Auto-renewal with a long notice period, or an add-on described as free that renews.
• They report leads, clicks and impressions but never estimates or signed jobs.
• They own the ad accounts, the phone numbers or the recordings.
• They want to speak to the homeowner and negotiate for you, which raises the California contract and salesperson questions above.
• Pressure to sign this week to lock a price.

07When do marketplace leads make sense?

Honestly, sometimes. They suit a new company with no website, no reviews and no referrals, where speed matters more than margin. They suit filling gaps in a crew's schedule with small, nearby jobs that you can price over the phone, where an estimate costs you little. And they work as a short test of a new service or area, because you can start in days.

They suit big remodels badly. When each estimate costs you hours, when the homeowner is comparing several bids, and when your margin per job is high enough that every wasted visit hurts, the cheapest lead is rarely the cheapest job. That is where leads from a channel you control, and an estimate process that wins, tend to pay back more slowly but more reliably.

If you use a marketplace, set a spend cap and an end date before you start, count every lead to a signed job, and decide in advance what result makes you stop.

08What does it take to own your leads?

Own leads are not free. They take a site that answers the questions a homeowner has, a Google Business Profile with real reviews, past clients you actually ask for referrals, and usually paid ads in accounts under your name. They take months to build, not days. What you get back is control: you know where each lead came from, you can ask the homeowner what they were told, and you keep the data if you change vendors.

This applies to us as well. An agency that runs ads for you is one more provider, and the ten questions fit. Ask who owns the ad accounts and the phone numbers, what is reported all the way to signed jobs, what the contract says about notice, and what the first 60 days will show you.

09What does a fair pilot look like?

Before any long contract, agree on a pilot in writing.

• A fixed period, for example 60 days, and a spend cap.
• A written definition of a valid lead and a refund or credit window.
• The funnel you will both count: leads, reached, estimates, signed jobs, revenue.
• Who owns the accounts, numbers and recordings, and how you export them.
• An exit without penalty if the numbers you agreed on are not met.

10What to do this week

You can run this without new tools.

• Write down the last 20 leads from your main paid source: when each arrived, when you reached it, whether you booked an estimate, whether you signed.
• Compute your own cost per signed job with the formula above.
• Send the ten questions to your current provider and to one alternative.
• Find the clause on renewal and notice in your current contract.
• Decide the spend cap and the stop rule for your next test.

11An honest close

No lead type will fix a slow response or a weak estimate, and no label is a substitute for numbers you measured yourself. The FTC order is useful because it shows how easy it is to describe a lead in words that sound like a promise.

If you want to run these ten questions on your current setup, or on us, book a Strategic Growth Session. We will go through them with you.