Do you measure your CPL? If not, it’s time to start! Cost per Lead is a great indicator for controlling your Marketing budget and identifying which channels bring the best results to promote your products and services.
With this metric, you can know exactly what your expenses are to get more leads and help your team predict the ideal budget.
It is connected to other key indicators, such as customer acquisition cost (CAC). In addition, it provides relevant data to calculate return on investment (ROI) and a realistic view of Digital Marketing actions.
Oh, and don’t forget: each stage of the sales funnel deserves its own indicator. Cost per visitor, cost per sale… all of these, along with CPL, are your allies in improving your campaigns, whether on Google Ads, organic traffic or social media.
Are you interested in this topic? Then be sure to check out the step-by-step guide on how to calculate CPL that I brought in this post. Enjoy your reading!
What is CPL?
If you still don’t know what CPL is, I can tell you right now that it’s a metric that every Digital Marketing professional needs to have on the tip of their tongue! Do you know that moment when someone shows interest in your product or service? Well, the Cost per Lead is precisely the amount you invested to win over this potential customer.
But wait, it’s not just a random number! CPL is like a thermometer for your online campaigns. With it, you can compare the performance of different channels and strategies to help you figure out where it’s worth investing your budget to get the best possible return.
So, if you want to make the right decisions in Digital Marketing, keep an eye on this indicator. It can be your best ally in boosting results!
The difference between CPC, CPL and CPA
In the digital world, there are three acronyms you need to understand: CPC, CPL and CPA. Here’s what each of them means:
- Cost per Click is the famous CPC. It is the amount paid each time someone clicks on your ad. Widely used in paid media campaigns;
- You are already familiar with Cost Per Lead (CPL)! As I explained earlier, it is the value of acquiring a potential customer, that is, someone who provided their contact information;
- Cost per Acquisition, or CPA, is how much you spend to turn someone into a paying customer.
The big difference between them is the stage of the sales funnel they represent. CPC is at the top, CPL is in the middle, and CPA is at the bottom.
And make no mistake! Each metric has its importance. While CPC helps optimize traffic campaigns, CPL evaluates lead generation, and CPA measures the overall return on investment in Marketing.
A campaign with a high Cost Per Click can have an incredible Cost Per Lead if the conversion rate is good. But be careful: a low CPL does not guarantee a dream CPA if few leads become customers!
The secret is to analyze these metrics together. This way, you have a complete view of the performance of your Digital Marketing campaigns .
The importance of CPL in Marketing
CPL is a metric that goes far beyond simply measuring how much it costs to get a lead. With it, you can instantly compare your marketing channels to find out which platforms or campaigns are bringing in leads while spending less.
In other words, CPL is the guy when it comes to planning and saving your budget.
But be careful, as I said before, it needs to go hand in hand with other metrics, such as lead scoring and conversion rate. Sometimes a low CPL seems wonderful, but if these leads don’t turn into customers, it’s a waste of time!
Another point you need to keep an eye on is that the CPL tends to increase over time. And this happens for two reasons:
- More people entering the digital world: the more companies in the market, the more competition for attention and clicks;
- Platforms become more expensive: digital advertising tools also want to increase prices, naturally, because they are companies that aim to make a profit.
But there’s a solution for everything! In this case, a great option is to invest in SEO strategies within Inbound Marketing. Unlike paid advertising, SEO can bring in organic leads while spending much less in the long run.
This is because you are taking advantage of the cumulative effect of organic audience. Additionally, leads generated this way usually have a higher conversion rate, as they are people who have actively searched for your solution.
Is there an ideal Cost per Lead?
When I talk about the ideal Cost per Lead, it’s good to keep in mind that there is no magic formula that works for everyone. The perfect CPL changes a lot depending on several factors, such as the company’s industry, the type of campaign and even the average value of the product or service.
One thing that cannot be forgotten is that as the company grows and aims higher, investment in Marketing also needs to increase. This may increase the CPL, but it does not mean that profits will fall.
Many people fall into the trap of oversimplifying the CPL, creating a scenario that does not exist.
For example, there are many companies out there that plan their Marketing budget for next year only by looking at current results, without thinking about future growth. That’s a mistake!
Another common mistake is investing the same amount in media all year round, expecting the same growth, when in fact the investment needs to grow along with the company’s goals.
WordStream has compiled a list of benchmarks for search advertising in 2024 that includes, among other details, the average cost per lead in each industry. To help you get an idea of what a competitive CPL is, I‘ve put together a table that shows the average cost per lead per search ad in each industry on Google Ads in 2024. Check it out:
Cool, right? It’s a good illustration to get a feel for the numbers, without forgetting that each business is unique and its ideal CPL may be different from those presented.
How to calculate CPL?
Calculating the Cost per Lead is an important process for evaluating the effectiveness of your Marketing strategies. That’s why I’ve prepared a very simple step-by-step guide so you can put it into practice today. Check it out!
Step 1: Measure the number of visitors
To get started on the right foot, you need to count the total number of visitors to your website over a specific period, usually 30 days.
It is important to segment these visitors by source channel, which can be:
- Social networks, such as Facebook, Instagram, LinkedIn, for example;
- Email Marketing;
- Paid ads, which can be on Google Ads and Meta Ads;
- Organic traffic;
- Direct traffic.
Step 2: Count the leads
In this step, you should check how many leads were generated in the same 30-day period. Just like in the previous step, you need to segment these leads by the same digital channels mentioned.
This segmentation shows who is generating the most leads relative to the number of visitors. This will help you calculate your conversion rate and, subsequently, your CPL.
Step 3: Calculate the conversion rate
With the number of visits and leads in hand, it’s time to calculate the conversion rate for each channel. The formula is simple:
Conversion rate = (number of leads / number of visitors) x 100
For example, if you had 2,000 visitors from Facebook and generated 20 leads, your conversion rate for this channel is: (20 / 2,000) x 100 = 1%.
Likewise, if you had 30 visits through Google Ads and generated 10 leads, your conversion rate for this channel is: (10 / 30) x 100 = 33.33%
Step 4: Calculate Cost Per Lead
Finally, we come to the calculation of CPL. The basic formula is:
CPL = total campaign cost / number of leads generated
In the Facebook example, if you spent $1,000 on Facebook ads and generated 20 leads, your CPL would be: $1,000 / 20 = $50 per lead.
It is important to calculate the CPL for each channel separately, as this allows a direct comparison between them, and the lower your CPL, the more leads you can get with the same budget.
This means more sales opportunities, more leads and, ultimately, more profit.
A competitive CPL also shows that your strategies are well targeted, that you are attracting the right audience, with the right message, at the right time. This way, you will be able to optimize your results.
How to lower Cost per Lead and increase ROI?
Reducing CPL and improving ROI are constant goals in Digital Marketing. Check out some tactics I use to achieve these goals:
- Refine your targeting: The more precise your targeting, the more relevant your ads will be to your target audience. To do this, use demographic, behavioral, and interest data to create custom audiences;
- Improve your landing pages: a well-structured page can increase your conversion rates. Therefore, test different layouts, titles and CTAs to find the most attractive combination for your audience;
- Strengthen your SEO strategy: organic traffic tends to have a lower CPL in the long term, so invest in valuable content and on-page optimization to improve your positioning in search results;
- Use remarketing: Target ads to people who have interacted with your brand before but haven’t purchased. These people are more likely to become customers;
- Test different ad formats: Experiment with text, image, and video to find what resonates best with your audience;
- Improve the quality of your score: in Google Ads, a higher score can result in lower costs per click;
- Optimize for mobile devices: Make sure your landing pages and ads are responsive and offer a good browsing experience on mobile devices;
- Use automation and machine learning: Take advantage of the automation tools offered by advertising platforms to optimize your campaigns in real time.
In our case, with a 50% investment in the media budget, we were able to generate 1239% more leads in less than 2 months, with an immediate impact of 130% more commercial opportunities and an 88% reduction in Cost per Lead (CPL) .
This shows the power of a team of experts and that we believe in the potential of these tactics and put them into practice in our own business.
It is possible to grow while saving your budget!
Did you see how CPL is a powerful tool for creating successful strategies? When you understand this metric, it becomes much easier to plan your marketing actions and make your investment pay off.
Want to boost your online business and optimize your CPL? Then trust those who use their own services to grow!
Orgânica is an award-winning Digital Marketing agency. Come talk to our experts right now and together we will transform your strategies!
