We all spend money on marketing campaigns, advertisements, and agencies in order to generate leads for our businesses. Without leads, our businesses won’t thrive for long. Today, we’ll discuss the lead generation cost that is important for our businesses.
What Are Lead Generation Costs?
As we all know that most businesses don’t want to spend much on gathering leads and they rather prefer to get them for free but effective marketing campaigns require funds to cover the cost of lead generation. For example:
- Using sales intelligence software
- Buying sales lead lists
- Outsourcing lead generation agency
- Paying for lead ads on LinkedIn, Facebook, and social media
- Funding incentives and immediate rewards
- Hiring and training marketing specialists
Using sales intelligence software:
You won’t need any manual labor involved in this method and it speeds up the process of generating leads but you’ve to make sure that you’re choosing the right provider with verified data.
Buying sales lead lists:
They may be a boost your company needs to grow but lead quality output is usually low. The trick here is that you need human resources to evaluate the contacts on the list in order to verify.
Outsourcing lead generation agency:
You don’t have to build a B2B telemarketing team in-house, you can try to outsource the service to lead generation companies. The downside is that marketers making outbound calls on your behalf may not be familiar with your product or service. It may result in low conversion rates.
Paying for lead ads on LinkedIn, Facebook, and social media:
It is one of the most expensive costs of lead generation. It requires a team of marketing specialists to run and monitor the campaigns and a budget to cover digital ads.
Funding incentives and immediate rewards:
Whether it is a white paper or a gift card, you usually obtain high-quality leads but you have to act quickly to convert them.
Hiring and training marketing specialists:
You’ll need to get a knowledgeable team of lead generation experts who know your product inside out to properly gather the leads. But it takes time to hire and train them correctly.
How Much Should A Lead Cost Your Business?
Lead generation is an essential part of every consumer’s journey to becoming a paying customer. It remains a top priority for the majority of marketers so before you jump into any decision to add more funds to your lead gen spending, you should know your cost per lead (CPL) like the back of your hand. Otherwise, you risk paying more per lead than they are worth.
What Is CPL(cost-per-lead)?
CPL(cost-per-lead) is what it costs to get one lead. For example, if you spend $1,000 on a social media campaign and you get 10 leads, your CPL is $100.
Here’s how to calculate a lead cost for any marketing campaign:
Total Marketing Spend / Total New Leads = Cost Per Lead (CPL)
You can use a CPL calculator to do the math. It will also help you calculate how many leads you need to obtain profit.
What Is A Good Cost Per Lead?
The lower the lead cost, the more effective your marketing campaign is. It means you’re attracting more leads for your sales team for less money.
Let’s follow a simple lead cost example.
If your customers spend on average $3,000 on your products or services from the time they first become your paying customers to the time they churn, and your gross profit is, say, 50% it leaves you with $1,500.
Next, consider the rate at which your sales team closes deals. For the sake of simplicity, let’s assume they convert one in 10 leads, so their conversion rate is 10%.
In this example, one lead generates $150 of gross profit for your company.
You can now determine how much you’d like to invest in generating leads and still hit revenue goals.
Average Cost Per Lead By Industry:
Here’s a rough breakdown of the Average CPL by the industries;
How Can You Lower The Costs Of Lead Generation?
- Expand your prospect’s database
- Improve your landing page design
- Narrow down your target audience
- Use inbound marketing methods
- Eliminate poorly performing channels
Expand your prospect’s database:
It’s one of the simplest ways of achieving your goals. But instead of creating a contacts database manually, use tools to get actionable B2B contact data.
Try chrome extensions for example. Use tools like LeadStal to access and export email addresses and direct dials of your ideal customer.
Improve your landing page design:
Try to build your landing page in such a way that gives out a crystal clear image of your business page and its motives. If you’re paying for traffic on Facebook or other channels, make sure your landing page is optimized for conversions.
Test before you launch it and make feedback from your peers.
Narrow down your target audience:
Without creating an ideal customer profile, It’s hard to get the optimal CPL. Narrow down your targeted audiences and figure out what type of company is most likely to need your products and services which will improve the cost-effectiveness of our lead gen efforts.
Use inbound marketing methods:
Attracting leads organically is a great way of collecting bottom-of-the-funnel leads who are more likely to convert. You can offer different types of content for every stage of the funnel and nurture contacts through to the sale. It causes less friction than paid advertisements.
Eliminate poorly performing channels:
Research and find out which of the channels that you’re using is not performing its task well enough. Whatever method of capturing leads you choose, always monitor the cost of leads in each campaign.
It will help you focus your resources on the most effective ones and get rid of those that drive up the cost per lead.
There’s no simple answer to how much leads cost. Here are a couple of things to remember:
- There are several methods of generating sales leads and they usually require a set marketing budget to be effective
- You should always analyze your customer base and the profit it generates to determine lead costs
- In some industries, lead costs are higher than in others but the sole average cost per lead by sector shouldn’t dictate your spending
To Wrap It Up:
We have discussed the main points of how to calculate and how much costs are needed in “Lead Generation” businesses. We’ve mentioned that there’s no fixed cost in this business as it keeps fluctuating.
We hope it was helpful for you to understand our breakdown and you might use it in the future. Why don’t you read more of our blogs? Read “10 Fabulous Local Lead Generation Courses?”
Thank you for reading and being with us. Good Luck!