Request a Custom Consultation


How Much Does A Qualified Lead Really Cost?

The other day we were speaking to our colleague Susan Hankins from Ask-Susan about various pay-per-click (PPC) campaigns we were working on together. Of course, part of the conversation was about measuring the cost per click (CPC) - a number that determines the scope of a PPC campaign for many clients.

Susan pointed out that CPC metrics do not really provide a full view of a PPC program. Instead, she said, it is important to focus on cost per lead. While it may feel great to have people click through to your website as part of a campaign, if they never become a lead (fill out a form, call you) then you have spent a lot of money for no return.

This got us thinking about the need to understand cost per lead for all of your marketing - can you calculate it for your programs? If so, are you?

Ideally a company will do this for every lead generation program. We recommend doing the following before launching any campaign:

  • Understand your goals for the program
  • Establish appropriate information gathering processes
  • Know the total, real costs of your program - including your time
  • Calculate your expected cost per lead
  • Identify at which points in the program you will measure success

The information you gather through this exercise will provide valuable insight and may even affect your decision about running the program. If your expected cost per lead is $500, is that good? Without knowing your current cost per lead, it's difficult to answer that question and, therefore, difficult to evaluate any potential program.

Your Current Cost Per Lead

To help determine your current cost per lead, calculate all of your marketing costs for a time period (quarterly, semi-annually, annually). Divide that by the number of leads you received in that time period to get your cost per lead. You need to decide what to include as your costs, but here are a few that we find people often forget to include:

  • Newsletter service
  • Membership fees to groups you join to find prospective clients (some groups you may join for personal development)
  • Cost of attending networking events
  • Travel costs to events
  • Hosting fees for your web site
  • Your time. Yes, this is ‘free' to you but if you decide to do some of your marketing activities yourself rather than hiring someone, then that time is a cost to your marketing. If someone else were doing the work, you could be generating revenue for the company.

It's a good idea to track your cost per lead over time to see how it changes. Armed with this information, you will be better equipped to make decisions about whether a new lead generation program makes sense.

While it's important to evaluate cost per lead for marketing programs wherever possible, you may run some campaigns that you cannot tie directly to results but that are still valuable. Perhaps you have been writing press releases and sending them on the wire to build links to your web site. Maybe you have been sending a monthly newsletter so you can stay in touch with customers and prospective customers. Or as part of your networking efforts, you go to events, meet people, and follow up to build relationships. These efforts all carry a cost but may not lead directly to a sale. Don't discount the value of these activities - they can all lead to increasing your visibility, credibility and, over time, your leads.