How do you know if something is worth your investment?
Sure, there are a couple of handy metrics to figure this out: return on investment, price/earnings growth-to-ratio, or interest coverage ratios. But there’s one particular metric that you can use in order to determine how much something is worth—and it’s a marketing campaign’s CPL, or cost per lead.
It’s important to distinguish CPL from CPC, or cost per click. CPL is more akin to a blind date - you put in all this effort to dress and present yourself nicely, and hope that someone takes the bait. CPC is the statistically safer option - just being presentable when someone actually takes an interest in you, like asking you out.
But just like dates, these two approaches can come with some baggage that isn’t readily apparent. With CPL, it’ll be by the end of the entire marketing campaign when you’ll realize that your cost per lead might’ve been a bad bargain for what you paid for it. And with CPC, you could find yourself constantly paying for dates—I mean leads—but seemingly ending up with those who have commitment issues. (Big problems for your marketing funnel, by the way.) But there is only one of them that can actually give you a fair idea of how much do you spend for the qualified leads that you can get.
And the winner is...
So who gets the rose in this battle for marketing? Simple:
Cost per lead.
In comparison to most metrics, CPL marketing is one of the most effective ways to evaluate your marketing. Not only does it give you a more robust sense of value when it comes to your investment in a strategy, it also makes it easier for you to calculate your ROI.
Why is this? Well, let’s look at the differences between CPL and CPC. With CPC, you’ll need a very sophisticated plan and departments in place. You’ll need a dedicated ad campaign manager, an analytics team to determine which clicks are bringing the most revenue. It’s a ton of work and resources that may be spent on potential leads and people that aren’t really that interested—which is what dating apps, not marketing companies, are best at doing, and with minimal effort to boot.
However, this isn’t the case when it comes to average cost per lead by industry. The advantage of CPL marketing lies in it’s simplicity: specifically, how exactly you calculate for cost effectiveness.
Cost Per Lead Formula
Cost per Lead = Cost of Generating Leads / Total Leads Acquired.
Specifically, if you spent 1000 dollars on lead generation with around 25 leads acquired, that means you spent 40 dollars per lead. No fuss.
The beauty of this simple system is that this formula takes into account qualified leads, not simply people who may have clicked on your ads by accident, who fell off the marketing funnel at some point, or people who just curiously viewed your ad campaign.
We all want someone genuine in our lives—and genuine business leads are those that come along who are sincerely interested in you and what you have to offer, not because you happened to catch their interest in passing. It saves money, offers a clearer view of where that money goes, and guarantees that it’s spent on something worthwhile.
Taking it to the next level
And like any good relationship, CPL marketing can go through a wide array of paths and interests that can shape your company’s future together. For example, the ultimate goal is to decrease cost per lead—but how to do that? Perhaps you can optimize your SEO to gain more traction. Improve content on your pay-per-click campaigns. Implement omni-channel marketing. Cost per lead gives you a macro view of your marketing efforts, which can be used to effectively cut costs.
At the end of the day, you’ll always come back to that cost per lead formula—and learn exactly how exactly is that investment worth it. And as far as business is concerned, that’s a definition of a pretty good date.
For a deeper discussion of sound marketing and sales tactics, drop us a line. We'd be glad to answer your questions.
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