Cost per lead (CPL)

Definition

Cost per lead (CPL) is a marketing metric that measures the cost incurred by a company or marketer to get a single lead.

What is cost per lead?

CPL is an essential metric for marketers and businesses as it helps them evaluate the efficiency and effectiveness of their lead generation efforts. By comparing the CPL across different marketing channels or campaigns, companies can determine which channels or campaigns are delivering the most cost-effective results..

The formula to calculate CPL is:

CPL= Total costs / Number of leads generated

A low CPL indicates that a marketing campaign or channel is efficient in getting leads at a relatively low cost, whereas a high CPL suggests that the cost of getting leads is high compared to the value those leads may bring to the business. 

Ultimately, while CPL is a crucial metric for assessing the cost-effectiveness of lead generation efforts, it should be considered alongside other performance indicators to gain a comprehensive understanding of ROI and overall business success.

Example of cost per lead

Let’s say a company runs an online advertising campaign on social media platforms to generate leads for its new product. The total cost of the campaign amounts to R1,000. Over the duration of the campaign, the company manages to generate 100 leads.

Using the formula for CPL, it can be calculated as:

CPL = R1,000 / 100 = R10

In this example, the cost per lead is R10. This means that on average, the company spent R10 to get each lead through its campaign.