KPI

Cost per lead (CPL)

Lead generation is a crucial marketing metric for your sales team and marketing team. You do a lot of different marketing efforts to get new leads, from display advertising to webinars, and you need to track not only how many quality leads you got, but how much it cost you to get these potential customers.

TRACK YOUR COST PER LEAD!

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What is the cost per lead?

The cost per lead is the average cost for each new lead you get in your ad campaign. This lead metric measures how cost-effective your marketing campaigns are so that generating leads is worth the ad spend. Much like CPM or CPC It's also an online advertising pricing model, where the advertiser pays for a sign-up from a potential customer instead of a view or a click.

CPL is not to be confused with these other similar acronyms in digital marketing: 

CPA: Cost Per Acquisition

CPC: Cost Per Click 

CPM: Cost Per Thousand 

CRM: Customer Relationship Management

How do you calculate the cost per lead?

The cost per lead is a very easy metric to measure. Simply take your total ad spend for a given period and divide it by the number of leads you got for the same period. 

cost per lead calculator

The cost per lead formula (CPL calculator):

Total ad spend / number of leads = cost per lead

What is a good cost per lead?

It of course depends on your industry, but overall a good cost per lead is just as much (or ideally less) than your gross profit per sale. So if for example getting a sale gives you a total amount of money of 100$ after your total costs and expenses, your cost per lead should be 100$ or under. 

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What is a bad cost per lead?

The same calculation goes to know what a bad cost per lead is. You don't want to pay more for a qualified lead than the amount of money that lead will bring to your business. So if each lead costs more than your average gross profit per sale, it's not good.

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Cost per lead KPI examples & templates

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Executive report template Executive report template

This template is filled with business metrics your C-suite will want to see. Show them your revenue, new customers, churn rate, and more. You can also add your profit margin, sales expenses, and more. 

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Digital marketing report template Digital marketing report template

From SEO to social media and PPC, this report gives you a good view of all your online marketing strategy metrics and overall online performance. Track your Linkedin leads, inbound traffic, and search engine rankings, all in the same place.

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PPC report template PPC report template

Check your conversion rate, total sales, sales leads, costs and more, from all your marketing channels. You can also track this data alongside your business metrics and industry benchmark.

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Cost per lead best practices

Here are some of the best practices you should keep in mind to improve your number of leads and have a lower cost per lead, no matter what your total marketing budget is. 

Cost per lead best practices

step 1 icon Use retargeting

Maybe the lead you got did not convert into a paying customer yet, retargeting can help you reach these leads again, and make sure they have the best possible chance of converting.

step 2 icon Optimize your ad campaigns

Make sure your Google ads or social media ads are optimized so that your lead won't cost you an arm and a leg. Maybe target less high-volume keywords or ones that the intent is more aligned with your product.

step 3 icon Check performance by device and network

Make sure your ad campaigns are well optimized for different networks and devices. This way you will always get the optimal ad performance.

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Cost Per Lead Synonyms

Although Cost Per Lead is widely used, there are multiple synonyms that can be used. Here are a few : 

Cost per qualified lead (CPQL), Cost per marketing qualified lead (CPMQL), Cost per sales qualified lead (CPSQL), Cost per goal completion, Cost per action (CPA), Lead acquisition cost (LAC)

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