Why would you be obsessed with cost per lead?
Cost per lead (CPL) is one of the most frequently reported metrics when judging campaign performance. It’s easy to understand and gives you a good idea of how your campaign will run as well as your conversion costs. Running multiple campaigns with different strategies, audiences and ad creatives can give you very different CPAs, and it’s tempting to assume that the campaign with a cheaper CPA will perform better when in reality this only tells you the CPA and not the true value.
Not all leads are created equal
Receiving a lead from someone who submits a form on your website does not automatically indicate that they are a good lead. Leads can come from people outside your target market, or from services you don’t offer which indicates low intent prospects. Your CPL may be low, but if you’re seeing irrelevant leads, is a cheap CPL really worth it? Generating fewer but more relevant leads can be more important for a company, and paying more can sometimes lead to better results overall.
Simple example: £20 worth of leads for £50
By spending £2,000, you may be looking to maximize your lead volume, and at the start of your campaigns, you may have used specific settings to generate the highest possible number of leads. Ideally, you have come up with a stable CPL for your company but does it really tell you the quality?
Campaign A generates 100 leads at £20 each = £2,000 spent.
Campaign B generates 40 leads at £50 each = £2,000 spent.
At first glance, Campaign A looks much better, but if Campaign A produces 2 leads and Campaign B produces 8, the picture changes completely. The real question becomes cost per lead (conversion), not just cost per lead. Of course, the next step is to identify the quality of these potential customers.
Bullet quality should go hand in hand with bullet size
When running lead generation campaigns, it is best not to optimize to generate as many leads as this can indicate cost increases as the accounts will not have any defined guardrails to improve performance.
Consider whether your campaigns are reaching the types of customers the business actually wants to convert. Look at the keywords you are targeting and make sure your search terms are correct. Eliminate any irrelevant traffic from campaigns or accounts so you don’t spend on traffic that will never convert in the first place. If you’re already seeing cheaper CPLs, you probably already do, but it’s always worth looking at your search terms on a regular basis to see if the incoming traffic is 100% accurate and relevant.
Other items to focus on include reviewing your locations and making sure you are targeting the right areas. We’ve come across many accounts targeting the UK as a whole, and while this is good, we always recommend segmenting the UK by county, and once you have enough data, you can then adjust and optimize bids based on locations. You may find that certain areas attract better leads, so why not adjust your site bids and increase your potential revenue.
Definition improvements
One way to reduce firmware cost and increase volume is to use Meta’s instant forms instead of driving leads to your website. Instant forms are a great way to generate new leads, with the option to link the form directly to a spreadsheet or customer relationship management (CRM) system.
The reason instant forms are optimized is due to several different factors. People browsing social media typically don’t want to leave the platform for a website, so by using instant forms, you actually mitigate that element. Instant forms are also highly customizable, which means you can include every form field from your site in the form and you can apply more fields/questions to further qualify your audience.
Linking Instant Form to your CRM system means you can continue seamlessly without interruption. It’s worth noting that combining it with a spreadsheet is also an easy way to see new leads, but this is a more manual process, so it’s worth connecting to your CRM system where possible.
Cheap leads don’t pay the bills, customers do
CPL is a useful metric but should never be looked at in isolation. There are many factors to consider, and focusing on getting the best quality leads should always be a priority. Whether that’s looking at bidding strategies, tweaking your location or ad scheduling bids, or using instant forms and qualifying your audience further, all of this should put you on the right steps to generate higher quality leads.
Ultimately, companies should judge paid advertising based on the quality and business value of the customers it generates rather than the CPL values that appear on the platforms.
Next time your CPL goes down, don’t just ask how much you’re saving. Ask if these leads actually convert into business.
