In the digital world, lead generation has become an integral part of every viable marketing strategy. Pretty much everyone in the business world is generating, acquiring, nurturing, qualifying, and talking about leads these days.
But at what cost?
Let me introduce you to cost per lead (CPL), one of the most important metrics when it comes to marketing and sales.
What is CPL?
In the simplest of terms, CPL is the amount of money you spend in order to generate a single new lead for your business.
It’s used to measure and monitor the effectiveness of marketing campaigns. If you’re spending more money on acquiring a new lead than you’re earning from having that particular lead become a paying customer, you must be doing something wrong, right?
Of course, before we can even talk about the cost per lead, you must define what a lead is for your business. Most businesses define a lead as a person who has voluntarily given them at least their name and a contact method such as email or phone number.
Now that you don’t have to Google “CPL meaning” to find out what we’re talking about, let’s see how you can easily calculate your own cost per lead and check how profitable the entire process has been for your business.
How to calculate cost per lead
For a basic calculation, you don’t need a fancy cost per lead calculator. You simply take the total amount of money that you have spent on lead generation during a certain period and divide it by the number of leads you have generated in that same period. Here’s the cost per lead formula:
Cost per lead (CPL) = Total marketing spend / Total leads generated
Let’s do it on a practical example. Imagine you spent $2,500 on marketing in the month of April and you managed to generate 250 leads from those particular marketing efforts during the same month. The math goes like this:
2,500$ / 125 leads = $20/lead
This means that your average cost per lead is $20.
How would that compare to industry standards? Below you will find a breakdown of average costs per lead by industry.
Average cost per lead by industry
The table below shows an overview of average CPLs by different industries.
|Industry||Cost per Lead on Average|
|Business Services||$ 132|
|Media & Publishing||$ 108|
|Travel & Tourism||$ 106|
|Consumer Products||$ 105|
As you can see, many of the industries have what I would say is a pretty expensive average cost per lead. Of course, CPL can depend on many factors, including the marketing channel that was used and how qualified a lead is, but still, our years of experience in lead generation have taught us that there’s a much cheaper way.
How about $2.32 instead of $160 per lead in finance?
For more than 15 years, Hail Financial Group has been offering all-around financial solutions such as retirement income planning, financial risk and tax reduction, insurance strategies, long-term care, estate planning, and more.
The problem was that they were using direct mail as their main channel for lead generation and the cost per lead was more than they were able to afford. So, they needed to come up with a more effective lead generation system.
They turned to online quizzes.
They created two quizzes – a Social Security Quiz and Retirement Readiness Quiz.
Combined with a compelling lead magnet and well-targeted Facebook ads, they were able to reduce their cost per lead by 77% and generate 1,377 qualified leads at just $2.32 per lead.
To learn more about how they did it, check out the full case study.
What about health leads for as low as $0.19/lead?
As you could see in the average cost per lead report above, the health industry is one of the most expensive ones. Still, health professionals have been using online quizzes to generate leads for less than $1/per lead.
Change Your Energy is an online education platform focused on helping people lead healthier lives through simple exercises and techniques that change their energy. They were looking for a cost-effective way to increase demand for their Chakra Healing Course for Beginners.
After they’ve experimented with several different types of quizzes, they found success with the “What Chakra Type Are You” quiz. Its engaging questions and meaningful outcomes helped them increase user engagement and generate 6,617 leads in 6 weeks at only $0.19 per lead.
Let’s examine yet another example of a low cost per lead in the health industry.
Kathy Smith, a well-known name in the world of female fitness, created a quiz to help women find out the reason behind their potentially lower energy levels. She advertised her quiz on Facebook, where the takers were asked to answer 12 simple questions about their habits and energy.
The results? 5,791 health leads generated at $0.57 cost per lead.
Another fitness expert, Danny Johnson, successfully used online quizzes to grow her email list of potential clients looking to improve their health by 6,191 people in only 1 month at just $0.24/lead. Read the full case study to find out how she did it.
Ok, now that you’ve gained some insight into industry trends (and the cost-effective alternatives), let’s check how different marketing channels fare when it comes to the average cost per lead.
Average cost per lead by marketing channel
The table below shows an overview of average CPLs by different marketing channels.
|Marketing Channel||Average Cost per Lead|
|Events & Tradeshows||$ 811|
(TV, Radio, Print)
|Public Relations||$ 294|
|Video Marketing||$ 174|
|Search Engine Advertising||$ 110|
|Content Marketing||$ 92|
|LinkedIn Advertising||$ 75|
|Display Advertising||$ 63|
|Social Media Advertising||$ 58|
|Email Marketing||$ 53|
|Online Retargeting||$ 31|
|Search Engine Optimization||$ 31|
Sources: Marketing Charts, Hubspot, Socedo, Integrated Marketing Association
As you can see above, the traditional marketing forms (such as TV, radio, and print), along with events and tradeshows, have the highest cost per lead compared to other marketing channels and lead generation methods.
There’s one method, however, that didn’t find its place in the report above, but the one that makes a cost-effective alternative to the mentioned channels. Yes, I’ve already introduced you to the power of quizzes, but here’s one more example.
Conscious Kids Club was on a mission to ensure all children are able to live a life of abundance and happiness. Their goal was to increase their email list and create a tribe of people who support their mission.
To achieve that, they created a Behaviour Assessment Quiz, which they advertised on Facebook. Using this quiz, they were able to collect 31,421 leads in only 4 months at $0.19/per lead, which is a 3X reduction in cost per lead compared to their previous lead generation methods.
As you could see from the numerous case studies I’ve shared here (btw, there’s more where that came from), quizzes can help you significantly reduce your cost per lead, regardless of the industry, and more and more businesses have been using quizzes as a cost-effective alternative to traditional lead generation methods.
If you would also like to turn an engaging online quiz into a lead generation machine, by embedding it on your website or using it in a Facebook ad, get your FREE 14-day LeadQuizzes trial now and launch your quiz within minutes.