Cost Per Lead Breakdown: How to Calculate and Benchmark Your CPL

Last Updated on

December 22, 2024

Many marketing teams work hard to generate leads. As they do so, there should be regular evaluation of these efforts. Businesses need to track the number of leads generated. Not only the number of leads, you should also assess the cost of getting these leads.

This article covers the following points:

Also, you will learn the different calculations for cost per lead, the average price per lead as well as effective practices for the various calculations.

What is Lead Generation?

Lead generation is the process of acquiring more prospects with the main aim of making sales. It is an essential marketing strategy. First, companies create awareness about their product. In the end, potential clients become buyers.

As simple as it sounds, lead generation involves special techniques like email extracting. Bookyourdata is a reputable lead generation company. Companies like this use these techniques to assist your marketing strategies.

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What is the Cost Per Lead?

The cost per lead is a metric that shows the average cost for each new lead. Every marketing campaign seeks new people to buy a product. If you can determine the cost to get new people, you can figure out cost-effectiveness of ad campaigns.

68% of marketers agree that they get the most leads via social media. Whether via social media or email, CPL fluctuates based on campaign performance. This efficiency indicator metric fluctuates based on the campaign performance. This efficiency indicator metric fluctuates based on the campaign performance.

Why is Cost Per Lead Important?

Cost per lead (CPL) is a useful metric for evaluating marketing efficiency. Low CPLs usually suggest a cost-effective campaign. If a business spends much on lead generation, they need to evaluate their marketing strategies. CPL evaluation helps businesses to manage their budget while tracking performance.

Budget Management: With the results from CPL calculations, brands can modify their budgets. CPL determines the money spent to acquire leads.
Campaign Performance Evaluation: CPL analysis gives insight into the campaign strategies for prospect acquisition. The campaign evaluation parameter helps to evaluate campaign performance giving clear cost to lead values. You have a clear idea of internal and outbound lead generation costs.
ROI Assessment: Lead generation is an investment in a business. CPL assesses the return on investment for every strategy by the marketing team.
Benchmarking: CPL also allows for benchmarking. The benchmarking-standard CPL compares a company’s marketing efforts against industry standards. This helps to acquire more leads effectively.

Types of Lead Costs

If you understand the different lead types, you will choose the best marketing strategies.

Advertising Cost: This is the cost a brand spends on advertising. Advertising costs include paid ads, including PPC, social ads, or traditional print.
Marketing Industry Cost: The marketing cost is the amount a brand spends to generate industry specific lead lists. It has to do with all activities, from website content to email marketing.
Sales: Sales as a type of lead cost is monetary compensation. That is, the cost of the sales team's efforts.

Sales Software: The total cost of lead generation tools like CRM and Google Analytics.

How to Calculate the Cost Per Lead

To calculate CPL, get the total money spent on marketing. Then, determine the total new leads. Below is a clear CPL formula:

CPL = Total Amount Spent on Marketing / Total Leads Generated

For example, if a web design company spends $3,200 in acquiring 100 sales leads, the CPL would be $32.

When you calculate CPL, you will know the exact B2B lead costs. You need to calculate every expense, from influencer costs to creative costs. Generally, it may seem less straightforward. However, a thorough calculation gives insights into the kpi for lead generation. It also helps to make informed decisions in the future.

Average Cost Per Lead

The average CPL varies between industries. According to leadport, the average cost per lead across various companies is between $150 to $250. The following tables give a breakdown of the average CPL for different industries, lead generation channels, company size and business revenue. You can use this information as a benchmark. However, be careful to consider your niche, service, and model before creating CPL benchmarks.

Industry	Average CPL
Technology	$369
Healthcare	$285
Finance	$271
Manufacturing	$235
Media & Publishing	$191
Retail	$182
Marketing	$172
Education	$65
Real Estate	$45
Non-Profit	$43

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Company Size	Average CPL
1,000+ employees	$348
201-1000 employees	$212
51-200 employees	$180
2-50 employees	$146

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Lead Generation Channel	Average CPL
Referrals	$25
SEO	$35
Email Marketing	$50
Social media ads	$65
Content marketing	$95
Display ads	$100
PPC ads	$175
Direct Mail	$250
Cold Calling	$300
Events	$1,000

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Business Revenue	Average CPL
$500+ million	$429
$10-500 million	$179
$1-10 million	$184
<$1 million	$166

Factors Affecting Cost Per Lead

CPL is mostly influenced by the marketing strategy in place. However, some other things affect it. As a business planning lead generation, consider the following factors affecting lead costs:

Industry: The customer saturation level varies from one industry to another. Industries like finance and technology have higher CPLs. Why? Many industries believe that it is due to the high value of B2B products and services. In contrast, CPLs reduce for lesser valued industries.
Marketing Efforts: To get a lead, marketing teams carry out many activities. Lead sourcing is a common effort. Another example is the cost to host a webinar platform. Also, the skill set of the team determines the team's ability to drive better results. Efforts from skilled teams lower the CPL by improving conversion rates.
Size and Quality of Target Audience: Who is your target audience? If a brand identifies the target audience, it can accurately determine the size and quality. Lead cost increases with increasing number and quality of lead data.
Conversion Rate: The goal of many marketing teams is high conversion rates at the lowest CPL possible. The lead nurturing strategies determine if a new lead will click on your services. These tactics improve email average open rates and in turn, reduce lead costs.
Competition: If a business has high competition, the CPL will be high. A large market with the same target audience is usually saturated. Consequently, it is expensive to attract and generate customers.

Cost Per Lead Best Practices

Brands can generate leads at a low CPL. There are some practices that ensure cost-effective lead generation. Not only that, it increases the overall sales from a marketing campaign. Here are some best practices for high-value B2B organizations:

Retarget Your Leads: Before seeking new leads, retarget your current prospects. During retargeting, brands reengage potential customers. This way, you can bring them back into the sales funnel.
Create an Ideal Customer Profile: It is important to specify your customer profile. Ask questions like what is your ideal lead? Brands can scrap previous emails to identify their audience. An understanding of your audience will help tailor your marketing efforts.
Track and Optimize Channel Performance: Evaluation is another important CPL practice for any business. First, sum up the costs of each marketing channel. Then, determine the total number of leads generated during a specified timeframe. The results guide you in optimizing the different marketing channels you use.
Optimize Google and Social Media Ads: Brands can optimize lead generation using targeted campaigns on search engines. They can also reach the right audience via social media platforms like LinkedIn.
Use Free Lead Generation Tactics: Brands save costs by using free lead generation strategies. One such is the organic methods such as email marketing, SEO, and social media engagement to generate leads. It is not as expensive as a cold call or google ad. Free lead methods make it easy to generate leads with high purchasing power.

Noteworthy considerations about cost per lead

Like earlier mentioned, CPL shows the cost of every new lead. Here are some things you should always remember. The cost per lead metric is used to guide budget allocation for businesses. Different factors impact CPL. They range from industry and lead generation channels to company size.

When you measure these factors, it is easy to evaluate the effectiveness of marketing strategy. As you evaluate these factors, optimize your lead generation methods. Optimizing allows you to generate leads at the lowest cost possible. It includes targeting, benchmarking, and A\B testing.

To decrease your CPL, retarget your potential clients. Then, create an ideal customer profile (ICP) and optimize every other marketing strategy.

Optimization also includes utilizing the services of lead providers like Bookyourdata. Bookyourdata helps businesses generate high-quality leads within their budget. They offer B2B database with 97% accuracy and seamless CRM integration to analyze leads from different channels.

Frequently Asked Questions

Does Cost Per Lead Vary by Industry?

Yes. Cost per lead varies from one industry to another. There is no rigid price to generate leads for different industries. Also, the prices within an industry change over time.

Can Cost Per Lead Impact ROI Directly?

Cost-per-lead directly affects the return on investment. Brands can compare the CPL with the lifetime value to determine ROI.

How Often Should Cost Per Lead Be Reviewed for Optimization?

Monthly or Yearly. Businesses may choose to review their CPL every month or year. This helps to determine if there is a need for optimization. They can also choose to review CPL after each marketing campaign cycle.