Most contractors choose their lead vendor by comparing CPL on a spreadsheet. That's why most contractors lose money on lead vendors. The factors that actually determine whether a vendor delivers ROI are operational — exclusivity terms, refund policies, intent verification — not the headline cost-per-lead number. Here are the seven criteria that separate vendors who deliver from vendors who burn budget.
Why "Cheapest CPL Wins" Is The Wrong Frame
A $40 shared lead at an 8% close rate produces a $500 effective customer acquisition cost. A $150 exclusive lead at a 30% close rate produces a $500 effective CAC. Same number, very different experience: your team spends a fraction of the time chasing dead competitive leads, your sales staff stays motivated, and customers don't pogo between three competing quotes.
The seven-point checklist below works because each item is a structural predictor of how the relationship will play out over 90 days — not just what the first invoice looks like.
The Seven Criteria
1. Lead Exclusivity — In Writing
The single biggest predictor of close rate. Exclusive providers (PeakIntent, Service Direct, 33 Mile Radius) send each lead to one contractor. Shared marketplaces (Angi, Thumbtack) send the same lead to 3-5. The math doesn't always favor exclusive, but the operating experience almost always does — no quote-shopping race, no "I'll get back to you," fewer ghost-quotes.
Get the exclusivity guarantee in the master agreement, not the sales pitch. "Up to 3 contractors" is not exclusive — it's just a smaller shared pool.
2. Refund Policy For Invalid Leads
Every vendor has invalid leads — wrong number, out of service area, accidental form submissions, spam, leads who already hired someone. The question is what happens when you flag one.
Quality vendors have written refund criteria, a clear dispute window (typically 7 days), and a documented resolution timeline. Sketchy vendors have "case by case" policies, push back on every dispute, or charge you for "verified" leads that show the same evidence of invalidity. If a vendor will not put their refund policy in writing, walk away.
3. Intent Verification Before Delivery
The best lead vendors verify intent — SMS verification on the phone number, email verification with a deliverability check (Bouncer, NeverBounce, or equivalent), sometimes a callback before the lead is delivered. This filters out 30-50% of the low-quality submissions that would otherwise drag down your close rate.
Ask: "What verification steps does each lead pass through before I see it?" If the answer is hand-wavy or vague, your close rate will reflect it.
4. Service Area Precision
Zip-level targeting is the floor. Some vendors target by metro only, which means leads from the suburb 90 minutes away will show up alongside neighborhood leads — same CPL, much lower close probability. Other vendors target at the neighborhood / subarea level, which dramatically improves lead quality but is rarer.
Ask for the smallest geographic targeting unit available. For service businesses where distance matters (HVAC, plumbing, roofing), this is the difference between a sustainable spend and a wasted one.
5. Volume Estimate Before You Sign
A reputable vendor will give you a volume estimate for your specific service + metro before asking you to commit. "We can probably get you 5-12 leads per month in Tampa" is a real answer. "We have leads everywhere, sign up to find out" is not.
Volume estimates also help you size budget realistically. If the vendor estimates 8 leads/month and you need 25, you know upfront to layer in other channels.
6. Contract Terms And Cancellation
Pay-per-lead with monthly cancellation is the gold standard. Anything that looks like a long-term subscription, a minimum spend commitment, or a setup fee is a yellow flag — quality vendors don't need to lock you in, because they retain you on results.
Read the auto-renewal clause carefully. The most common contractor complaint about marketplaces is auto-renewals that "couldn't be cancelled" — usually because the cancellation window was 60 days before renewal, buried in section 12.
7. Sales-Team Responsiveness During The Evaluation
This sounds soft but it's a strong signal. How fast does the salesperson respond to your follow-up questions during the evaluation? Are they sending you references? Are they pricing-transparent or asking you to "get on a call to discuss"?
The way a vendor sells to you usually mirrors the way their leads behave when you receive them. Slow, opaque sales process predicts slow, opaque lead delivery. Fast and transparent predicts fast and verified.
The Spreadsheet Test
Pull each vendor you're evaluating into a single comparison row covering these 7 dimensions plus their headline CPL. The exercise usually clarifies the choice in 10 minutes:
| Criterion | Vendor A | Vendor B | Vendor C |
|---|---|---|---|
| Lead exclusivity | 1 contractor | "Up to 3" | Shared pool of 5 |
| Refund policy | Written, 7-day window | "Case by case" | None |
| Intent verification | SMS + email | SMS only | None |
| Geo targeting | Subarea / neighborhood | Zip code | Metro |
| Volume estimate | 8-15 leads/mo for your area | "Plenty" | Declined to estimate |
| Contract | Monthly cancellation | 3-month minimum | 12-month + auto-renew |
| Response speed during eval | Same day | 2-3 days | 1+ week |
| Headline CPL | $120 | $60 | $35 |
Vendor A costs 3.4x more per lead than Vendor C. They will also produce dramatically better unit economics — because exclusivity raises close rates, verification raises quality, neighborhood targeting reduces wasted leads, and the responsive sales process predicts responsive operations.
Common Pitfalls When Evaluating Vendors
Pitfall 1: Anchoring on headline CPL. The cheapest CPL is almost never the cheapest effective CAC. Always compute close-rate-adjusted cost before deciding.
Pitfall 2: Skipping the references. Every reputable vendor has contractor references in your service category. Ask for two. Call both. Ask about refund disputes, not just lead quality.
Pitfall 3: Trusting "guaranteed" language. "Guaranteed leads" usually means the vendor will replace dead leads up to some cap — not that you'll close any of them. Refund policies on invalid leads are real; "guarantees" on revenue are not.
Pitfall 4: Not testing speed-to-lead first. Many contractors switch vendors looking for higher-quality leads when the real problem is response time. Before evaluating new vendors, measure your current time-to-first-call. If it's over 15 minutes, fix that first — see the speed-to-lead playbook. New vendor or not, your close rate hinges on those first few minutes.
What To Do Today
If you're currently working with a lead vendor and not sure they pass the 7-point test, take 30 minutes:
- Pull the master agreement and verify exclusivity is in writing.
- Email your account rep asking for the written refund policy. Note response time.
- Pull your last 20 leads and tag each as valid / invalid / disputed. Confirm the refund process actually works.
- Compare current effective CAC to the benchmarks in our HVAC, plumbing, and roofing pillars.
If your current vendor fails the test on three or more dimensions, the right move is usually to pilot a second vendor in parallel for 60 days — not rip out and replace. Run them side-by-side, track close rates by source, and let the data make the decision. For pay-per-lead options without contracts or minimums, our Angi alternatives roundup is the right starting point.