What Does Cost Per Lead Mean?

A Cost per Lead is an important metric that measures your marketing and sales campaigns' efficiency when generating new leads for your sales team. CPLs provide businesses with essential data to determine if they are acquiring new customers in a cost-efficient manner.

Why Does it Matter?

Cost per leads enables sales and marketing teams to set their sales goals, calculate potential ROI, and determine advertising budgets. CPLs are determined by the total cost of generating one lead, which is an important part of the lead generation process. Continuously tracking cost per leads and conversion rates enables companies to make better decisions. Opex to Sales- Financial Dashboard An Opex To Sales Dashboard

How Do you Measure Cost Per Lead?

Through the use of effective sales dashboards, search engine optimization, content marketing, event marketing (sponsored and hosted), traditional PR, and more, CPLs can be measured through online and offline activities. The Cost Per Lead formula is Customer acquisition costs per month / Leads per month. Leads can be categorized as a marketing-qualified lead (MQL) or sales-qualified lead (SQL). Inbound website traffic, followed by an action taken by the lead to fill out forms (such as a newsletter sign-up or whitepaper download), measures a successful cost per lead.

What Data Sources Would You Use to Measure the KPI?

For this KPI, you can draw important data and insights from Google Adwords, Google Analytics, and SEM Rush, alongside information from a reporting system, an automated lead generation tool, or CRM platform that you use to track sales. Using an advanced analytics platform, you can connect all of your present and future data and quickly transform it into information and insights.

Give me an example…

Let’s imagine that you’re company is selling a package/service. One good lead means a new contract of $100,000 for the year. 1% of $100,000 is $1,000, so by spending $1000 to capture a lead, you can possibly receive 1000x your initial expenditure. Taking the conversion rate of a lead into a paying customer into consideration, you would price per lead against the conversion rate. With the right sales analytics software in place, company’s have a better understanding of their buying cycle. Tracking the data for cost per leads is important to better understand how changes in your marketing mix can improve sales and help you set a budget for future campaigns.

What Benchmarks/Indicators Should I Use?

Top indicators for successful cost per lead performance include:
  • Benchmarking: Assess comparable data between different time periods.
  • Lead Generation Sources: Identify sources of leads that return a high volume of quality leads.
  • Effectiveness:  Follow marketing channels through the funnel to not just evaluate costs, but asses website conversion rates.
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