Business-to-Consumer (B2C) businesses like yours employ a variety of marketing methods to reach more customers online and off.
From traditional methods like print ads or billboards to digital marketing channels like social media and search engine optimization (SEO), the possibilities are nearly endless if you are looking for a way to win over more customers.
But not all channels are created equal in terms of effectiveness and cost. One metric — cost per lead (CPL) — gives you a good idea of how cost-effective certain marketing channels may be for your B2C business.
In this guide, we’re covering the average CPL for the top B2C marketing channels so you can start to budget out your own marketing strategy — and get a better idea of the results you can expect to see from your campaigns.
In today’s digital landscape, marketers rely on data and analytics to drive strategy. One of the most important metrics for making data-driven decisions is cost per lead (CPL) – the average cost to acquire a new lead. When analyzed properly, CPL provides powerful insights into marketing performance and ROI.
But looking at overall CPL only gets you so far To truly optimize spend, you need to break this metric down by channel Determining the CPL by channel allows you to double down on tactics that deliver leads efficiently while cutting back on channels with a high CPL.
In this guide, we’ll explore how to calculate CPL by channel and leverage this data to boost your marketing ROI. Let’s dive in.
Why Cost Per Lead By Channel Matters
Many companies only look at their overall marketing CPL in aggregate But this high-level view masks what’s really going on at the channel level.
In reality, CPL can vary widely across different lead sources like:
- Paid search
- Social media ads
- Content marketing
- Email marketing
- Webinars
One channel may deliver leads at $50 each while another carries a CPL of $500. By blending all channels together, you miss these opportunities to optimize spending. Analyzing CPL by specific channel provides much more actionable data.
You can identity the lead gen tactics working best for your strategy and double down on those high-performing channels. On the flip side, you may uncover channels delivering leads at too high a cost, signaling the need to shift budget away.
Drilling down CPL by channel allows for smarter optimization decisions to boost marketing ROI. You have the data to back up reallocating budget toward channels with the lowest CPL.
How to Calculate CPL by Channel
Figuring out your cost per lead for each marketing channel takes a bit more work than overall CPL, but the insights gained make it well worth the effort.
Here are the key steps:
1. Tally Total Costs for Each Channel
Add up the full costs involved in each lead gen channel over a set time period. Be sure to include:
- Advertising and promotion costs
- Platform fees
- Technology costs
- Agency fees
- Internal staff time
2. Count Leads from Each Source
Tally the number of new leads generated from each channel during that same time frame. Be sure leads are unique and not double counted.
3. Divide Costs by Leads for Each Channel
For each individual channel, divide total costs by total leads to get the CPL specific to that tactic.
4. Compare CPL Across Channels
With the CPL calculated for each channel, you can clearly see how they differ. Identify channels with the lowest CPL as well as those with excessive costs.
5. Analyze Differences Between Channels
Look at factors like audience targeting, creative quality, and channel saturation to understand what’s driving CPL differences between channels. The insights gleaned will inform optimization.
That’s the basic process for determining cost per lead by channel. With this data in hand, you have the foundation to channel your marketing dollars toward the highest performing lead gen tactics.
Optimizing Based on CPL by Channel
Now that you’ve crunched the numbers to uncover your cost per lead by channel, how do you actually use this data to boost results?
Here are three ways to optimize marketing spend and strategy based on channel-specific CPL:
1. Double Down on Low CPL Channels
The channels delivering leads at the lowest cost should get the lion’s share of your budget. Lean aggressively into the lead gen tactics proving most efficient at acquiring new leads.
For example, if your webinars have a CPL of $30 while paid ads are $60, shift more budget toward webinars to maximize ROI. Doubling down on low CPL channels gets you more leads for your dollar.
2. Improve High CPL Channels
For channels with above average CPL, dig deeper to identify opportunities to improve efficiency. Are there segments of high-value leads in this channel you could better target? What creative resonates best? Which offers generate most interest?
Experimenting and iterating on these variables can reduce CPL over time. Don’t give up on a channel until you’ve tested optimization strategies.
3. Cut Back on Excessive CPL Channels
In some cases, a channel may have a CPL well beyond what can be justified by the value of leads. These excessive costs are draining budget that would be better spent elsewhere.
Carefully assess whether to pull back or even eliminate spending in channels with an unsustainable cost per lead based on your goals, margins, and revenue potential. Redirecting budget to more efficient lead gen tactics improves overall results.
Analyzing your CPL by channel takes some extra effort up front. But the insight gained into your lead gen efficiency at a granular level is invaluable. You have the data to double down on tactics working best and fix or cut tactics that cost too much.
Using CPL by channel as an optimization compass keeps your strategy and budget focused on driving maximum ROI from marketing campaigns. Now let’s walk through some examples.
Cost Per Lead by Channel Examples
To make cost per lead by channel analysis more concrete, let’s look at a few examples for a B2B SaaS company.
We’ll calculate the CPL for three common lead gen channels:
- Paid search
- Content marketing
- Social media ads
Here are the key inputs over a 6 month timeframe:
Paid search
- Spend: $18,000
- Leads: 300
Content marketing
- Spend: $12,000
- Leads: 750
Social media ads
- Spend: $5,000
- Leads: 100
Now let’s crunch the numbers to get CPL by channel:
Paid search CPL = $18,000 (spend) / 300 (leads) = $60
Content marketing CPL = $12,000 (spend) / 750 (leads) = $16
Social media CPL = $5,000 (spend) / 100 (leads) = $50
Here we can see a wide CPL range from $16 to $60 across these three common lead gen channels.
Based on this analysis, content marketing is by far the most efficient lead source with the lowest CPL. Paid search comes in the middle of the pack. Meanwhile social media ads have room for improvement with the highest CPL.
These insights would lead to the following optimization plan:
- Increase content marketing budget to acquire more leads through this high performing channel
- Keep paid search budget about the same, but try to improve keyword targeting
- Experiment with different social campaigns and creatives to reduce CPL before increasing spend
This example illustrates how calculating and comparing CPL by channel provides the visibility needed to optimize budget allocation and strategy. Let’s look at another example, this time with charts.
Visualizing CPL Data
For another example, here is some sample cost per lead data by channel presented visually:
<table> <tr> <td>Channel</td> <td>Costs</td> <td>Leads</td> <td>CPL</td> </tr> <tr> <td>Paid Search</td> <td>$5,000</td> <td>100</td> <td>$50</td> </tr> <tr> <td>Webinars</td> <td>$2,500</td> <td>200</td> <td>$12.50</td> </tr> <tr> <td>Email Marketing</td> <td>$3,000</td> <td>120</td> <td>$25</td> </tr> <tr> <td>Facebook Ads</td> <td>$6,000</td> <td>150</td> <td>$40</td> </tr></table>
The data clearly shows webinars have the lowest CPL at $12.50, making this channel the most efficient lead source. Meanwhile, Facebook ads are on the higher end at $40.
Using these insights, the company should consider increasing their webinar budget and trying different creative with Facebook ads to improve CPL. Having the hard CPL numbers by channel makes it possible to back up these optimization decisions with data.
Key Factors Impacting CPL By Channel
It’s important to note that your cost per lead can fluctuate in any channel depending on the factors below. Tracking how these variables impact CPL over time is key.
Audience Targeting
Targeting niche segments vs. a broad audience can significantly swing CPL. Identify your best-fit audiences.
Creative and Messaging
Dialed-in messaging that resonates with your audience will improve response and lower CPL.
**
What is “Cost Per Lead”?
Cost per lead (CPL) is a form of performance-based advertising in which compensation for one’s advertising campaigns is based on the number of quality leads generated.
Some might consider CPL to be the middle ground between cost per impression (CPM) which an advertiser is not directly rewarded for how those campaigns perform, and cost per sale where the advertiser is completely responsible for how that traffic converts.
Cost per lead gives advertisers decide whether it makes sense to continue investing in a particular marketing channel. Are the leads coming in high quality and acquired at a reasonable price? That’s what CPL aims to find out.
How to Calculate Cost Per Lead
Cost per lead involves one of many formulas that can be used to help you determine the effectiveness of your marketing.
Rather than remain in the dark, you’ll want to look at the data to see how many new leads have been acquired and how much you’ve spent on each marketing channel. This will help you keep an eye on your marketing budget and make better decisions when it comes to lead generation.
You can calculate cost per lead by dividing your marketing spend by the total number of new leads acquired (Total Marketing Spend / Total New Leads = Cost Per Lead):
- Add up your marketing spend.
- Add up your new leads.
- Divide total marketing spend by new leads.
In adding up your marketing spend, be sure to consider your time, ad spend, money spent on contractors, and any third-party expenses. The more thorough you are, the more accurate your CPL will be.
CPL is a helpful metric that allows you to determine the most cost-effective marketing channel(s) for your B2C business. Without it, you’ll be forced to guess when it comes to how successful your marketing channels are, or rely on other metrics that don’t tell the full story when it comes to the effectiveness (or ineffectiveness) of your campaigns.
Many business owners launch marketing campaigns and simply calculate the total number of leads generated or total resulting sales. But without CPL, it will be difficult to determine whether your marketing dollars are being put to good use.
For example, perhaps you ran two marketing campaigns: one on Facebook and one through Google Ads. You generated 15 new leads on Facebook and 25 new leads on Google. At first glance, the Google Ads campaign may look to be the most successful. But how do they compare when it comes to cost?
Perhaps you spent $1000 on Facebook marketing and $2000 on Google Ads. The resulting CPL would be $66.67 ($1000 / 15) and $80 ($2000 / 25 ), respectively. In this case, Facebook had the lowest CPL and is, therefore, the most cost-effective marketing channel.
With this information in your arsenal, you can then decide to allocate more of your budget to Facebook marketing. That way, you’re getting more bang for your buck and are reaching more customers than ever before. That’s the power of CPL. We enable B2B companies to identify the anonymous businesses that visit their website and personalize their experience. Your sales team can now follow up with the visitors that don’t convert, while marketing can personalize your website based on firmographic information to drive up conversion rate.
What is CPL? Cost-Per-Lead Explained For Beginners
FAQ
How much should cost per lead be?
What is the cost per lead pricing model?
What is the cost per lead KPI?
What is the cost per conversion of leads?
What is the cost per lead factor?
What is cost per lead (CPL)?
Cost per lead (CPL) is a key performance indicator used in digital marketing to measure the cost-effectiveness of lead generation efforts. It is calculated by dividing the total cost of a marketing campaign by the number of leads generated: CPL = Total Campaign Cost / Number of Leads
What is cost per lead?
Cost per lead is often conflated with a similar metric known as cost per acquisition (CPA) — the average cost it takes to convert a prospect to a customer from a given marketing campaign. Let’s say you put $5,000 into a Google Adwords campaign, and it generates 50 new leads. In this case, your cost per lead for the campaign would be $100.
How do you calculate cost per lead?
Calculating your cost per lead uses a simple formula. Take the total amount you spend on marketing and business development, divide it by the number of leads you won during that time period, and voilà: you have your figure. How can you reduce your cost per lead?
Why is cost per lead important?
When broken down by channel, it enables you to focus on the highest performaning areas. Note that cost per lead is sometimes also used to refer to a marketing pricing model where a B2B business pays a defined price to buy leads. Calculating your cost per lead uses a simple formula.
