Depending on the context, “lead” may have a variety of meanings. However, a lead is often a potential customer who is interested in what your business has to offer, but isn't quite ready to buy just yet.
Accordingly, the cost of acquiring a single new customer lead is known as the Cost Per Lead (CPL).
The Cost Per Lead metric tracks how much a lead costs. It’s used to evaluate the success of marketing initiatives. With this number in hand, your marketing team will have a better grasp on just how much money must be allocated toward the pursuit of new leads. There must be a problem if the cost of generating a new lead exceeds the revenue generated from selling that lead.
The Cost Per Acquisition statistic also supplies critical information for figuring out your marketing return on investment. In fact, comparable measures, such as cost per visitor, should be used across the board in the purchasing funnel. You can also use this data to track the success of specific advertising, whether they're banners, PPCs, social media posts, or anything else you're trying to promote.
The Cost per Lead is easily calculated; divide the total amount spent on the campaign by the total quantity of leads generated by the campaign within the same time period.
Cost Per Lead formula:
The definition of a good CPL is very context-dependent, requiring knowledge of your target consumer, market, competitors, and company and industry.
If you're looking to cut down on client acquisition costs without sacrificing quality, a higher CPL might be the way to go. There is a trade-off between quality and quantity in lead generation; if you're after more leads, you could be willing to accept a lower cost per lead.
Set up analytics and a dashboard to monitor activities for roughly 60-90 days to establish performance standards if this is your first digital marketing campaign or the introduction of a new service. When you have sufficient information, you may make changes to your budget, message, or techniques depending on key performance indicators to arrive at a CPL that is in line with your marketing goals.
The average CPL varies by industry and marketing channel, so you may evaluate how you're doing relative to the competition. For example, the average cost per lead by industry is:
You can thus more accurately estimate the cost per qualified lead.
If you want to spend less on acquiring new customers and more on growing your company, consider using the following strategies.