A lead is a known business contact who has expressed interest in the company and its related products and services. There is a cost to the business for generating leads. These costs are also called cost per lead (CPL).
What does the cost per lead mean?
In short, the cost per lead (CPL) represents the marketing and sales costs spent to generate a lead.
Accordingly, the CPL is a direct metric in the company for lead generation. This is because it can be used to determine how successfully a campaign has been implemented.
Lead generation has clear goals:
-
To publicize the company and make it known.
-
To present the products and services clearly.
-
To demonstrate one's own expertise.
-
To attract qualified contacts.
This works in such a way that a person registers online, for example, and leaves personal data with a request or is thus given the opportunity to download a whitepaper.
This person is called a lead from that point on. In the case of the lead, the company does not yet know whether the prospective customer belongs to its own target group and whether the person has sufficient resources and decision-making power within the company.
The Marketing Qualified Lead (MQL) is different: the MQL is a qualified lead. This means that the company is aware of the request and that it can be processed. Furthermore, it is already known that sufficient resources are available.
The final stage is the Sales Qualified Lead (SQL). This is the MQL who gets to sign the deal and create a concrete project plan for implementation.
How is the cost per lead (CPL) calculated?
The CPL is a key figure. This key figure can be defined as a success or target figure in a company. The success figure can be defined in such a way that the total number of viewers of a campaign is set in relation to completed orders.
The target figure then represents the key figure as an annual target for the responsible employees in the company. Costs that are included in the CPL are, for example, personnel and other costs as well as the costs for:
-
Creation of advertising strategy(s) and their ongoing adaptation
-
Creation, maintenance and ongoing optimization of website(s) and their search engine optimization (SEO)
-
Content creation such as image and sound materials
-
Creation and implementation of campaigns
-
Presence on social media and rating platforms
-
Commissioning of special agencies
The CPL calculation can be broken down to specific products or services. However, a ratio of total annual costs is also conceivable.
For example, an advertising campaign costs the company CHF 100,000 per year. In the process, 1,000 viewers convert to leads. Thus, the CPL amounts to 100 francs.
Total cost of advertising / number of converted viewers = cost per lead
According to this, it is necessary that the advertised product or service, bears the costs of the advertising campaign of 100 francs. Although the "advertising budget" is often borne by another cost centre in the company and is not directly related to the costs of the respective projects, the CPL is an important feature.
It shows how well the campaign is being implemented and is thus an important tool in marketing as well as in corporate and personnel management.
This is the average cost per lead (CPL) in B2B
A survey of 350 companies showed that the average cost is CHF 200. However, it should be noted that there can sometimes be big differences depending on the company.
Here are some examples of different average CPLS for different types of companies:
-
Non-profit: CHF 43
-
Schools and education: CHF 66
-
Consumer goods: CHF 182
-
Marketing agency: CHF 172
-
Financial services: CHF 271
-
Healthcare: CHF 286
-
Computer systems: CHF 370
The range is clearly visible. Rapidly developing themes, such as financial services and computer systems, have a higher cost of marketing their products, since, for example, users first have to be convinced of the new products. On the other hand, revenues are correspondingly high.
Lead generation can be done on a variety of channels. These channels also vary greatly in the CPL, these are for example:
| |
High costs |
Average costs |
Low costs |
| SEO |
CHF 47 |
CHF 31 |
CHF 14 |
| Ads |
CHF 99 |
CHF 75 |
CHF 51 |
| Fairs |
CHF 1442 |
CHF 881 |
CHF 180 |
The cheapest channel, is the SEO settings on one's own website and content. These have the purpose that the website and content can be easily found by users.
Trade shows have the great advantage that the company can actively present itself and can actively recruit leads. However, this channel is sometimes the most expensive and currently simply not possible.
How to reduce the cost per lead (CPL)
CPLs vary depending on the industry and the products and services offered. As always and everywhere, the goal is to reduce costs as much as possible. To be able to reduce the costs, it is realistic to start from different points:
Reduce the cost of the advertising campaign.
Here the basic costs are lowered, this includes the personnel costs but also the costs for the content and also the created media. For example, it is cheaper to send an email than letters.
To increase the sales price (often only possible to a very limited extent).
Indirect costs are the product sold or the project implemented. Theoretically, it is possible to charge a higher final price so that the advertising "pays off", but this is not always feasible because of the competition.
Target specific groups and thus address relevant people.
A particularly easy way to lower the CPL is to define target groups when distributing advertising. This is often done on the Internet.
Here, for example, advertisements are placed on search engines. During the creation of these advertisements, target groups can be precisely defined. For example, age and region. This allows regional products and services to be displayed directly to specific age groups.
In addition, there are other possibilities, which are briefly explained below.
Focus on content marketing
Content marketing can help reduce the cost per lead (CPL) by capturing interested users and delivering information clearly and quickly with tailored content.
In addition, it is important to captivate the viewers so that they look at the created content and do not jump off after a few seconds.
Source: ELPRO Company Blog
Use e-mail marketing
Sending emails can significantly reduce the cost of printed media and mailing. While marketing via email is cost-effective, care must be taken not to over-send. This is because there is a risk that prospects will unsubscribe from the list.
Source: Personalized Newsletter from Pedalix Software
Playing on social media channels the right way
Social media are valuable channels with which companies can establish many contacts. These channels are often free of charge, but must be managed correctly by employees.
This means that content must be placed in accordance with the strategy. It is conceivable to be active on various platforms in order to achieve the highest possible reach.
Source: Preview of a LinkedIn post with the Pedalix software
Use gated content
Gated content is content that can only be accessed by interested parties if they leave their personal details such as contact details.
The procedure is quite simple: general information is presented on the already existing web page. If the person viewing wants more information, they will give in exchange to leave their data. Afterwards she gets the desired, detailed information.
Conclusion
Leads cost money, no question about it. However, it is necessary for a business to optimize its lead generation costs as much as possible so that it is paid for by the revenue gained.
This is where the cost per lead is meant. This is done by acquiring the best possible leads and converting them into Sales Qualified Leads (SQL).
The cost per lead depends on the business sector and many other factors, the average is CHF 200.
In order to keep the costs as low as possible, it is necessary that content is distributed in a way that is appropriate for the target group. For this to happen, B2B companies should be active on social media and use newsletters.
