Cost per Lead = Cost of Generating Leads / Total Leads Acquired
Cost per Lead Definition
The Cost per Lead metric measures how cost-effective your marketing campaigns are when it comes to generating new leads for your sales team. A lead is an individual that has expressed interest in your product or service by completing a goal. This metric is closely related to other key business metrics such as the cost to acquire new customers. The purpose of this metric is to provide your marketing team with a tangible dollar figure so they understand how much money is appropriate to spend on acquiring new leads.
The Cost per Lead metric also provides important data to use in your return on marketing investment calculation. In fact, each stage of the purchase funnel should have similar metrics associated with it, such as cost per visitor and cost per win. Likewise, these metrics can be used to monitor individual campaigns such as AdWords, banner ads, or social ads, or the sum of your marketing efforts.
Cost per Lead Example
The following is an example from localsolutions:
Consider your company spent $1,000 on your pay-per-click (PPC) campaign and 10 users convert to leads:
Cost per lead = $1,000/10
If this is too high in comparison to the cost of your product or service — $100 per lead has a different value for a business selling luxury cars than for a toy store — you know you'll need to adjust your pay-per-click (PPC) campaign accordingly.
Cost per Lead Benchmarks
Cost per Lead various significantly across industries. Here’s some expert advice and rules of thumb:
- Check out their infographic that provides industry averages for B2B businesses such as human resources, health, marketing and technology. Note that across all these industries surveyed, cost per lead is below $100/lead.
Cost per Lead Success Indicators
The ultimate goal, of course, is to minimize the cost per lead. A low cost per lead with a high volume of quality leads is good indicator that your campaign is doing well, but if your cost per lead is too high, continuing the campaign is extremely difficult to justify.
How to Monitor Cost per Lead in Real-time
Once you have established metrics for measuring Cost Per Lead, you’ll want to establish processes to monitor this and other marketing KPIs. Dashboards can be critical in this regard.
Learn more about how to track your Cost per Lead on a Digital Marketing Dashboard.
Cost per Lead: Top Resources
5 KPIs Every Digital Marketer Needs to Track, Stephen Murphy
Total cost of campaign / # of leads generated