Successful marketing, as most industry leaders will know, can, when done properly, bring many financial rewards for any business. But, how do you know if your marketing campaigns are successful? Are they working as well as they should? What is it that makes your marketing spend bring in that all-important Return on Investment (ROI)?
Knowing your Cost Per Lead (CPL) is the key to understanding just how successful, cost-effective and lucrative your marketing is. In this blog we look deeper into the reasons why being aware of your CPL is vital for keeping your finger on the pulse of your marketing success.
To start at the beginning, let’s look at the difference between sales and marketing teams within a business. While they have their similarities in bringing in potential leads and converting them to sales for your business, the job of your marketing team will be to showcase your service and bring potential customers (or leads) to your door, while the sales team will be the ones who convert that interest into a sale.
Both teams have equally vital functions in the whole process of making your business a success, but they have to work as efficiently as possible together in order to bring the maximum benefit. By monitoring your CPL, you can see just how large, small, or insignificant those benefits are.
What is Cost Per Lead?
For a marketing team it’s vital to understand where their target customers are and what it is that they want. This way it makes it easier to decide where the marketing budget is best spent.
By being in the right places at the right times, a good marketing team will make your business be seen by the right people. As a very basic example, if most of your target customers only use LinkedIn (often B2B audiences), it may not be worthwhile targeting Instagram for your social media campaign. If your audience is young B2C consumers, this approach may well need to be the other way round.
Once you’ve decided where the best place to market your product is, this is where the concept of Cost Per Lead comes in. Essentially you divide the marketing spend by the amount of new leads that your business brings in. New leads can be defined as the number of people who visit your website from an advert, those who email or call in with an enquiry, or all of the above.
Once you have these figures, you can work out how much money your business is spending per lead.
Say, for example you spend around £1,000 on marketing, via channels such as Google Ads, social media marketing, or email campaigns. You then bring in 100 leads from this. The simplest way to work out your CPL is to do the maths – 1000 / 100 = £10 per lead.
Then you can get into more detail, by looking into factors such as your industry, the competition, the behaviour of your target audience and the cost of what you’re offering.
If your product is worth £1,000, then that form of marketing is bringing in rewards of up to £100,000 (if each lead converts to a sale). If your product is worth £1 and the marketing campaign is only bringing in 100 leads, then you’re onto a loss. It’s also important to ask yourself, what are those leads doing once they’ve shown interest – are they going to buy into your product, or are they going away? Why are they doing this, if so?
By knowing the behaviour of your potential leads, you can look to tweak your marketing campaigns accordingly. Successful marketing is all about monitoring the efficacy of your campaigns. You need to know that your marketing is making an impact. By doing so, your business will gain every chance of achieving the most success.
If you need any further help or support with your data driven marketing campaigns, get in touch with a member of our team for more details.