Just as you know your car’s cost per mile, it’s wise to know your business’s cost per lead. Cost per lead (CPL) is the money you spend to acquire a single lead. It’s an important metric, perhaps even more important than your car’s cost per mile, because your CPL will help you determine and improve the profitability of your sales and marketing campaigns.
Several factors can affect your CPL, including the type of marketing channels you use, the target audience you’re trying to reach and the quality of your leads. It’s a metric that is essential to track over time, watching for patterns and monitoring how it fluctuates so you can adjust your marketing campaigns as needed.
7 Tips for Measuring and Reducing Your CPL
1. Not all leads are good leads.
Focus on quality, not quantity. Yes, you want a large quantity to be fed into the top of your funnel. That is a must. Then, as each of those leads becomes more qualified, they’ll travel through your sales funnel and eventually pass into the hands of your salespeople for closing.
Leads that make it to the bottom of the sales funnel are what you’d consider good leads, of course. But that’s not to say the leads that stay toward the top aren’t helpful. They are! They’ll be instrumental in identifying any deficits in your marketing or possibly in your offerings.
2. Quality leads can self-select if you let them.
Leads from the top of your sales funnel that are more likely to convert into customers are those that are nurtured over time. Nurturing does not mean frequent follow-ups from your salesperson. Rather, use digital marketing and other targeted digital sales strategies.
These tools provide your leads with quality content that educates and supports or improves a lead’s business. It’s more efficient, and the metrics you’ll generate from tracking your leads’ activity will paint a picture of what we’d consider digital sales and marketing gold.
3. Know where your leads are in the sales cycle.
Your CRM should track all movement and activity on your website at a granular level, enabling you to gauge each lead’s response to your content. When a lead shows interest, feed that interest.
Your CRM will identify and measure each interaction a lead has with your content. Then, using a simple point system, it will recognize when a lead is sales-ready and notify your salesperson, sharing where and how the lead showed interest in a product or a solution.
(By the way, if you’re not tracking this on your own website, call me and let’s get that fixed pronto!)
4. An educated customer is your best customer.
Create a win-win situation for both your salespeople and your customers. Using digital sales strategies will ensure your salesperson is well-prepared to make the sales call (because he’s reviewed the lead’s activities in the CRM). Your customers will be delighted by the salesperson’s personalized focus. And so, at the very least, it will be a productive call.
It could be a significant win for you, too. Leads who show a greater interest in what you offer are more likely to convert into customers, so the likelihood of a sale will be much greater.
5. Stick to marketing channels that generate results.
Different marketing channels (some of which require more resources than others) have different costs per lead. So, choosing the channels most likely to reach your target audience and generate high-quality leads is crucial. The tracking data collected in your CRM will tell you where you’re generating the greatest number of quality leads.
Don’t hang your hat on the channels that get you the most leads. Instead, focus on the channels that bring you the greatest number of leads that close.
6. Optimize your website pages.
Your website is usually the first impression you’ll make on potential customers. Information presented on every page must include the 3Cs: clear, concise and compelling. Keeping these 3Cs in mind will keep potential customers on your site and interacting with your content.
Being clear and concise is easy. Being compelling can be a challenge but it is well worth investing some time to do so. The longer a buyer remains on your website, the more valuable the data you’ll generate will be. Remember those 3Cs as you write or review each of your website pages.
7. Track and modify your results.
Tracking your results will tell you what’s working and what’s not. Modify your campaigns to improve their results wherever necessary. Then, of course, do more of what’s working and less of what’s not.
Cost per Lead Best Practices
When optimizing your CPL, keep in mind these best practices to maximize your efforts.
CPL is not the only metric that matters.
Track other metrics, as well, such as the number of leads generated, the conversion rate, and the ROI from your marketing campaigns. This will be information that will affect how you deliver your next sales or marketing strategies.
Set realistic expectations.
Your CPL can vary depending on several factors including the resources you put toward your efforts. Your results can be disappointing if your expectations are too high. And that disappointment can lead to good efforts being sidelined, costing you greatly.
Develop an initial goal, get started, and see what results you generate, tweaking your campaigns if necessary. Once you have a ballpark idea of what to expect based on the resources you’re putting forth, adjust your expectations and goals to something more realistic.
Don’t be afraid to experiment.
Experimenting is necessary. In the marketing world, we call this testing, and it’s the only way to see what works for your business. Experiment with or test different marketing channels and various strategies. Be cautious with spending (very important!), but don’t be afraid to try new things.
Maximize Your ROI
Knowing and monitoring your company’s CPL is a dependable method to consistently measure the effectiveness of each sales and marketing campaign. As you start to recognize positive results, use this information to plan your next sales and marketing campaigns.
Knowing your CPL will help you measure the ROI of your sales channels, as well, providing you with valuable insight about which to target. It will also help you decide which audiences to target to win the greatest revenue opportunities, giving you the ability to allocate your marketing budget more effectively and maximize your ROI.
Susan Merlo is a consultant who specializes in digital sales and marketing strategies for the wholesale distribution industry. She identifies digital growth opportunities for distributors and aligns them with innovative digital sales and marketing solutions and strategies. These strategies help distributors increase new and recurring sales, customer spend, customer retention, and profitability. To learn more about what Susan can do for your distribution company, visit www.TheDigitalDistributor.com or email Susan directly at Susan@TheDigitalDistributor.com.