Cost Per Lead (CLP)
Cost Per Lead (CLP)
It’s common knowledge that advertisement efforts are essential to the growth of your business. Without reaching out to your customer, your business would find it almost impossible to sell the correct amount of goods and services that you need to hit your sales goals. The cost per lead is an essential performance indicator that will greatly determine the effectiveness of your marketing and advertising. The cost per lead will greatly determine the amount of money needed to gain new customers and get them to engage with your business. This metric does not account for whether they buy from you or not. Instead, it only wants to determine how much traffic or market demand your ads generate.
A lead is a person who is likely to become a customer in future. Most customers will find your business through marketing and social media channels. However, they only become leads when they complete a specific action, such as submitting their personal information. The money needed for a business to get this customer to take this action is referred to as cost per lead. To calculate CPL, you can use the formula; cost per lead = total spend ÷ number of new leads.
When you advertise your business to people, you encourage them to do business with you or patronize your services.The CLP will let you know if you are spending the right amount on driving traffic to your business through means such as Google ads or Facebook ads. A high CPL will mean that your marketing campaign is ineffective, and your customers are more comfortable purchasing similar goods and services from a competitor. Most businesses aim for a low CPL because they consider it more ideal.
Businesses that spend a huge amount of their budget on advertising to customers should spend time determining their cost per lead. It will let them know how much they need to spend to gain new customers from marketing activities. You may also use the cost per lead formula when you want to determine your marketing return on investment. It will also help you determine if you are supposed to change your marketing strategy or not.