You Can’t Improve What You Can’t Measure: Understanding Cost Per Lead

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If you spend $10,000 on a campaign and you get 100 leads, your cost per lead is $1.00.

Depending on your industry, a cost per lead of $1.00 could either be excellent or below average. First, you have to figure out your cost per lead and how it compares in your industry.

Understanding your cost per lead can help you assess your marketing campaign. You can assess what’s working in specific parts of your marketing funnel.

While you need to understand the cost behind each lead, you also need to understand the process of getting that lead and if you can lower that cost.

Here’s everything you need to know about cost per lead in your industry.

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How Much Is Each Customer Worth?

If you sell $200 worth of goods to a customer each month, your average customer is worth $2400 because that is what is accumulated over 12 months.

Knowing how much each customer is worth can help you figure out how much each lead is worth.

After you figure out how much each customer is worth, you need to figure out how many leads you can make a customer. If you have a 10% close rate, it means you are closing 1 out of 10 leads.

If the gross profit from a customer over a year is 50% of $2400, your profit from a single customer is $1200. That means a single lead will generate $1200 a year for you.

If you want to learn how to collect leads with email and social media marketing, read this blog article.[/vc_column_text][/vc_column][vc_column width=”1/2″][vc_column_text]

How Do You Bring in a Good Cost Per Lead?

A good cost per lead is dependent on the marketing vehicle. If you didn’t know, there are a lot of ways to bring in leads that are cost-effective, it just depends on your business and what you’re promoting.

You can use social media marketing, email marketing, display advertising, cold calling, and search engine marketing. These are often the most successful at lead generation.

Each of these lead generation methods requires testing of your offer and your audience.

With the right lead generation marketing strategy, you can focus on lowering the cost of bringing in each customer. You can lower your cost of getting a lead by improving the quality and relevance of your ad and spending more money on high performing keywords.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]

Figure Out How Much Your Spending and What’s Working

Understanding your cost per lead tells you how well your marketing campaign is performing. It tells you how many sales you’ve closed. It tells you how effective your funnel is in bringing in leads.

However much you’re spending on leads will tell you if you are on track to go over budget and it tells you how much you will profit. Ultimately, when you can figure out the cost of what it takes to make a customer, you can figure out if you actually producing a sustainable business or if you will eventually go out of business.

For more information on marketing strategies, contact us here.


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