Cost Per Lead (CPL) is an important metric as lead generation usually forms a major part of a marketing and sales team’s budget. A healthy pipeline of leads is good but a company needs to know if the way they are generated is efficient enough for them to be profitable. CPL is one of the metrics that helps in this space.
Why is it important?
The marketing and sales teams need to understand how efficient their efforts are in bringing new customers to the business.
CPL allows them to see if their effort is effective in acquiring customers and which channels are performing better.
CPL helps in measuring the A/B test efficiency.
What questions does KPI answer?
1) What is our cost to generate a new lead?
2) How effective are our marketing campaigns?
3) How well is our marketing and advertising performing?
KPI target
The target will vary per industry and per marketing channel, e.g. email vs event, etc.
Another great metric is the Cost Per Qualified Lead. It is best to calculate CPL per marketing channel. Acquiring new customers is more expensive than retaining existing ones. Hence, see the previous post on Customer Engagement (CE) KPI.
Data sources
Marketing department data
KPI Formula
CPL = Cost of Marketing Campaign / Generated Leads