This Is Better than Focusing on Lead Costs

You know, many businesses are sometimes too fixated on the cost per lead as a metric for making marketing decisions.

That’s to be expected when many lead generation providers and services use this metric quite often in their offers.

But it’s not the best idea to use this metric as the sole basis for decision-making.

You may make costly mistakes by doing so.

Let me explain…

Suppose Mrs. Dough runs Meta Ads to generate leads and manages to get one lead for $15.

Then there is Mr. Smith, who runs Google Ads to generate his leads. But he pays $50 per lead.

At first glance, you would say Mr. Smith should wear a big ”L” on his forehead.

But wait, not so fast.

Mr. Smith has an optimized marketing funnel with an automatic email nurturing campaign. Not only that, he also uses great persuasive sales copy that leads to appointments.

However, Mrs. Dough only has a contact form.

Strictly speaking, that’s also a funnel…a pretty basic one, though. She just texts the incoming leads within 24 hours manually.

With his funnel, Mr. Smith on average needs only 7 leads to convert one into a client.

But Mrs. Dough needs 40 leads with her approach.

So Mr. Smith spends $350 (7 leads × $50) to get one client, and Mrs. Dough spends $600 (40 leads × $15).

To keep it simple, I didn’t include gas or time expenses; both may factor in to get to personal appointments.

So Mr. Smith’s marketing funnel to generate leads is more effective and efficient.

Yes, he spends more than double per lead, but he spends almost half the amount to actually acquire a client.

And that’s what makes more sense to focus on regarding marketing cost metrics.

It also shows something else…

An effective marketing funnel can reduce the marketing costs that actually matter and increase your ROI (your bottom line).

What has been your focus so far? Cost per lead or cost to acquire a customer?