Understanding your cost per lead for advertising

Understanding your cost per lead for advertising

A wise man once said, “I know 50% of my advertising budget is working, I just don’t know which 50%.”

To successfully grow a business we need client acquisition strategies, but most importantly we need to know what the cost per lead (CPL) is for each strategy and understand how to maximise it. For most businesses this involves asking each customer how they heard about “company X”, but there are much more effective, less intrusive ways of getting a better understanding of how your marketing is working:

  • Separate phone numbers for different media

For each marketing type use a separate number that provides call reporting data. This means using a separate phone number for brochures vs TV vs coupons vs other advertising.

1300 numbers are great for this. They’re cheap, flexible and come with heaps of reporting.

Quick Tip: Keep the same phone number for all your on-line listings. This will help optimize your Google My business listing

  • A/B testing on web-sites and landing pages

Test everything and monitor results. Try different offers, price points, artwork and even try swapping colours. Different phone numbers or landing pages works great for this type of testing. A 10 per cent drop in your CPL for the same spend will make a huge difference to your bottom line.

  • Redemption codes for discounts/specials

If you’re using a number of ads on-line then redemption or promo codes are the best way of tracking your lead source and determine which offers are getting the best traction. There’s lots of plug-ins that your developer can install to enable you to do this.

  • Longer term data analysis to track the impact of brand building advertising

If you’re about to launch a brand building program such as a TV or outdoor media campaign, then determine the CPL on all your existing advertising before the campaign begins and compare this to the CPL you achieve once the brand building campaign is in full swing. If the

CPL on your existing advertising comes down, then you know that the brand building campaign is gaining traction and you can start to calculate the value of the campaign


Collecting data to help you understand your CPL is a great first step in business. It lets you focus your money and efforts on strategies that work whilst getting rid of unprofitable lead acquisition strategies. By the same token, understanding your CPL is only the first stage of understanding your revenue pipeline.

The conversion rate of leads to sales is what really drives the revenue pipeline and this must become the next point of focus for every business manager. Putting in place systems to track your CPL means that you’re already gathering most of the information required to calculate your conversion rate. Improving the conversion rate of sales to leads form the same advertising spend makes a huge difference to the bottom line, but we only know if we’re successful by carefully tracking our results.

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