💡 WHAT IS A GOOD CPL?

How to find the right Cost Per Lead for your business.

Author

Stefano Iodice
August 05, 2024

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GM ðŸ’¡ This is Lead Memo, the Lead Gen newsletter helping you take control of your own marketing.

In Today’s Memo:

  • Action Plan: What is a good CPL? 💡

  • Audio Memo: The Math Behind Your Cost Per Lead 🎧

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ACTION PLAN
What is a good CPL? 💡

How to find the right Cost Per Lead for your business!

Welcome back to another action plan and audio memo. Today, I’m breaking down the math behind calculating what a good cost per lead (CPL) is for your business. Understanding this will help you maximize your ad spend and scale your business effectively.

Every business is different, and so is their ideal CPL. Whether you’re spending tens of thousands of dollars a day or just 50 bucks, the crucial factor is your cost per acquisition (CPA) goal. Your CPA goal is what you’re willing to spend to acquire a paying customer, not just a lead. This needs to be backed into your calculations to determine a good CPL for your business.

Here are two key numbers to figure out:

1. CPA Goal: This is your target cost to acquire a customer.

2. Sales Conversion Rate: This is the percentage of leads that convert into paying customers.

Let's walk through an example.

If your CPA goal is $200 and your conversion rate is 5%, you’ll need a $10 CPL to meet that goal. But, if you have a 10% conversion rate, you can afford a CPL of up to $20 and still meet your CPA goal. If your conversion rate drops to 2.5%, you’ll need a CPL of $5.

The math behind a 10% CVR

The math behind a 5% CVR

The math behind a 2.5% CVR

A higher conversion rate allows you to afford a higher CPL, which gives you a competitive advantage. Finding leads at a cost below $10 is challenging for most businesses. If you have a high conversion rate and a well-tuned sales team, you can afford to spend more on each lead. This allows you to bid higher in auctions, secure better ad placements, and ultimately generate more leads.

To sum up, your CPA goal and sales conversion rate are the two metrics that determine your CPL. For a detailed breakdown, check the write-up below. It includes key metrics like total spend, total leads, connect rate, contact rate, and average ticket. All these factors contribute to determining your ideal CPL.

Remember, a higher CPA goal and conversion rate allow you to bid higher, beat the competition, and scale your business effectively. Figure out your cost per acquisition and average conversion rate to determine the CPL you need to target for your business to thrive.

THANK YOU
Happy Money Monday💡

Need help finding your target CPL?

Shoot me an email: [email protected]. I’d be happy to help!

Stefano