All the metrics that must be managed in digital marketing, one of the most necessary is the CPL. these acronyms mean “cost per lead”, although this concept is sometimes called PPL (pay per lead).
Whether you name it in Spanish or in English, the important thing is its usefulness: measuring the profitability of the lead capture actions. Or, what is the same, knowing how much money we invest for each potential client achieved.
The CPL of lead capture actions
As we already explained in the article dedicated to lead capture techniques, there are different actions that can be implemented to obtain potential clients.
All these actions have a cost digital marketing and I want to know which ones are most effective, you have to measure the CPL.
You cannot be left alone with the number of leads obtained: this data must be put in relation to the total investment made to know its profitability.
Why? Because your lead acquisition campaign will have reached a certain number of users, of which only a percentage will have met your goal. Later, these leads will advance in the conversion funnel until a part of them becomes a customer.
Knowing the CPL you will be able to know what budget should be invested in each strategy to attract leads like follow this platform Children’s book illustration. Some of the common strategies are:
- SEO positioning
- PPC campaigns on Google
- Facebook Lead Ads Campaigns
- Newsletter subscription strategies
In general, it is a good idea to combine several strategies with the greatest emphasis on the most profitable ones. But in this sense, another fundamental metric must be taken into account: the CPA.
The CPA is the cost per acquisition. Since only a part of the leads will become customers, we must know how much it costs us to make a customer. You may get few leads with some strategies, but the conversion rate is high. Hence, the importance of analyzing various metrics.
How to calculate and monetize the CPL
One of the main advantages of digital marketing is that the metrics allow us to calculate in detail each investment and its profitability. Another of its benefits is that we can direct our campaigns to a very well segmented audience, which increases the chances of meeting objectives.
The formula to calculate the CPL is really simple. You just have to divide the cost of your lead acquisition campaign by the number of potential customers obtained. The resulting figure is the cost per lead.
How much should invest in CPL
To optimize CPL, it is key to segment your campaigns very well and direct them only to users who fit the profile of your buyer persona. Another essential question is determining how much you should invest in capturing leads and achieving sales for your business to be profitable.
Other elements come into play here, such as your production costs, your selling price and the margin between the two. But you must also consider other more subjective factors such as LTV, that is, the value of each client achieved.
Depending on your industry, a CPL above your profit margin can be profitable in the long term if you get customers who repeat purchases and refer you to other users.
In any case, you should bear in mind that the CPL does not have to be a fixed amount. The cost can vary interest you at all times or depending on factors such as your competitors, your industry, launching new products, etc.
For example, many start-ups don’t focus as much on CPL profitability because their goal is to quickly build a large database of leads. Of course, for this type of strategy it is necessary to have capital or financing.
If you don’t have a lot of budget, one of the cheapest strategies to get leads is inbound marketing, even if the results are not so immediate. In short, it consists of attracting traffic to your website and getting leads in exchange for offering valuable content.
In short, CPL is an essential metric to know if your lead acquisition campaigns are profitable or not. As an added bonus, online advertising allows you to precisely segment your target audience. To make your CPL profitable, you must take into account several factors, such as the level of competition, your business sector and the cost of converting your leads into customers.