CPL is short for cost per lead. It helps us measure the profitability of actions aimed at attracting potential customers.
The abbreviation CPL stands for cost per lead . It can also be found under other names such as online lead generation or pay per lead (PPL).
This metric helps us measure the profitability of marketing actions aimed at attracting potential customers. These leads are typically later processed by the sales team to ultimately convert them into buyers .
The sales team, for its part, will have the CPA metric, i.e., the cost per acquisition of new leads. The CPL value will always be higher than the CPA because, within the dynamics of the conversion funnel, leads will gradually decrease as they progress.
By having this metric, the marketing team can determine how much money is feasible to spend within their available budget and helps us understand which channels are most conducive to acquiring potential customers.
How to calculate the cost per lead ?
It’s common to work with this metric when the type of product or service requires further explanation so the buyer has complete confidence that the purchase they’re about to make is the right one. Some sectors where this problem is common include:
- Insurance
- Sale of courses
- Consultancy
- Real Estate
Why is it interesting to measure CPL?
One of the main reasons for measuring CPL is to be able to compare the cost per lead depending on its source:
- SEO
- PPC
- Social networks
- Affiliate marketing
- Emailing
- Display
This doesn’t mean that the channel that achieves the best results in CPL is where we should allocate our entire budget. It’s also important to consider the cost of acquisition (CPA) to understand how many channels ultimately convert into sales. And don’t forget that a mix of channels can be very beneficial for achieving the goals we’ve set in our digital strategy .
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How to achieve success in CPL campaigns
One of the most interesting tactics for achieving good CPL results is the segmentation possibilities offered by digital marketing. This way, we can reach different types of audiences and buyer personas , delivering the most personalized message possible to each one .
How to calculate the maximum amount to pay for a lead
To know how much we can pay for a lead , we must consider how much we can invest in achieving a sale while still being profitable. A priori, the gross margin we have on the cost of the product or service is the maximum we should consider paying , but we can also be more daring and consider that beyond 100% of the margin, it can be profitable thanks to another concept: LTV ( lifetime value ).
LTV allows us to consider that a person may make more purchases throughout their lifetime as a customer, or may bring us another potential customer, so we can think about seeking longer-term profitability .
What is a lead ?
The concept of a lead is essential for explaining CPL in marketing. A lead refers to a person who leaves us their basic contact information because they’re interested in a service or product. Therefore, they are potential customers.
Data collection is usually done through forms:
- Subscribe to the newsletter
- More information on a landing page focused on a specific service
- Downloading a material that has been created ad hoc , known as a lead magnet
- Contact page form
- etc
It is usually very common when talking about Inbound marketing because one of the objectives is to convert website visitors into leads and, in turn, these leads end up becoming buyers by offering them valuable content so that the potential buyer ( lead ) makes a decision, usually through what is known as lead nurturing .
The advantage of inbound marketing is that the cost per lead is usually lower than other outbound marketing strategies .
The CPL as a form of remuneration
It’s a possible form of compensation for many sites that serve customers who may be more or less focused on a specific business niche. The media outlet trying to promote the product receives a fee for each lead captured by the advertiser.
Compensation may be determined, for example, by the amount of information requested. As we can imagine, the more data, and the more demanding it is, the greater the likelihood of it being quality, making it easier for the sales department to later convert it. Other factors that affect compensation may include the brand.
The CPL can also vary depending on the sector, competition, time of year, etc.
Advantages for our online marketing strategy
CPL is scalable when it comes to driving our advertising campaigns. The company will pay for acquiring potential customers, not just for displaying a banner based on impressions. For the company, it eliminates the effort of the first part of the funnel, since the medium advertising its brand to attract potential customers will do the work through the media it considers most appropriate or has available, such as email , display advertising , etc.
Startups are typically less interested in profitability, so they often aim for 100% or more of gross profit. The idea is to be able to quickly grow their customer base in search of profits later, over the next few years, as Facebook did in its early days. These types of companies can afford this because they are externally funded by groups of investors seeking accelerated growth rates.
Have you already measured your CPL? Do you know what your potential client costs you?
