Part Two – The Metrics That Will Put A Smile On Your CFO’s Face: What Is The Cost Per Lead?

In this part of my series on lead generation metrics, I focus on the definitions of general lead tracking including total leads by campaign, total impressions by campaign, total cost per lead by campaign, and average close rate by lead and campaign.  The last metric is very important and will help focus your time and resources on what efforts are most profitable.

Total Lead Generation and Tracking

1.  Total Leads Generated By Campaign

How do you define your leads? Is a lead one activity such as capturing their e-mail address? Or, is a lead a combination of activities such as capturing their e-mail address, they visited your web pages, and they attended a webinar? However you choose to define your lead, once this important decision is made, you will ensure that each lead is tracked by specific marketing campaigns.  Samples of a marketing campaign are: pay per click, SEO, e-mail, and so forth.

2.  Total Impressions Generated By Campaign

An impression is defined as the number of eyeballs that viewed your marketing campaign.  Traditionally this is one of the most important goals of a marketing campaign to create awareness of your product or service.  You should track this on a weekly basis.

3.  Total Cost Per Lead By Campaign

This is a simple mathematical formula: The total cost of the marketing campaign divided by the number of leads. If you are still using Excel spreadsheets to report your results, I recommend that you report your activity weekly.  On the other hand, if you have a dashboard and have integrated your marketing into a marketing automation system, you can be studying (and reporting your results) in real time.  That puts you in a very strong position to react quickly to successes and issues that arise from your lead generation campaigns.

I’ve learned that cost per lead is one of the more frequently questioned topics.  When I pitch clients they are always asking me, “What is your client’s cost per lead?” I think the best way to answer that question is to respond, “My clients think in terms of IRR (Internal Rate of Return) and marketing allocation (Marketing allocation is revenue divided by cost).  Cost per lead varies according to each campaign. For example, here is how I answer the “What is your cost per lead” question:

For a marketing campaign that uses e-mail, the average cost per lead is about $160. Which, on average, is five percent of their (the client’s) marketing cost based on their closing rate. But, what else you may be getting at is how your marketing investment translates to your Internal Rate of Return. For example, if your royalty is $1,000 a week and the franchisee signed a 10-year deal, then you can best determine the value of your marketing campaigns based on the internal rate of this return….”

4.  Average Lead Close Rate By Campaign

Average Lead Close Rate By Campaign needs to be tracked very closely because it is the baseline for every marketing campaign. Your CRM will track this for you.  So, as part of your marketing planning, make sure that your CRM is vertically integrating all leads by campaign, revenue, and IRR. And, make sure you integrate the entire lead record based on your initial criteria: name, address, company name (if necessary),     e-mail address, phone number, sales volume, title, etc.


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