Cost per lead (CPL) translates as contact compensation. This is a model that is mainly used in the context of affiliate marketing and other partner programs and in which a commission is always charged when a new contact (lead) is generated. For a qualified customer contact, the interest of the potential customer must be confirmed in a predetermined manner. In contrast to the cost per order model, however, the customer does not yet have to make a purchase. Below you can find out exactly what cost per lead is, how these costs are calculated and how high they should generally be for the advertiser.
Before we look at the cost per lead, the term lead should be clearly outlined. It is frequently used in online marketing and especially in the field of affiliate marketing and means something like contact. The term is derived from the English "to lead", which means "to lead". Its use comes from the fact that in the case of a successfully generated lead, the potential customer or user is led to the company's offer as part of the advertising measure. In order for the lead to be counted as such, the customer needs to take a specific, predetermined action. This can be the registration for a newsletter, the registration in a store or the download of an application. In this context, the term qualified lead is also used.
The advertising measures that are intended to generate new leads are usually associated with costs or a specific budget. Here we are already approaching the question "Determine cost per lead - how much can your lead generation cost?", because the total costs for lead generation must now be allocated to the individual leads actually generated so that the result is the cost per lead (CPL) figure.
In order to answer the question "Determine the cost per lead - how much can your lead generation cost?", it is first necessary to determine how the cost per lead is calculated in the first place. This calculation is very simple, because basically all you have to do is divide the costs for all leads by the number of leads actually generated. For example, if exactly EUR 2,000 was spent on advertising measures with the aim of generating 100 leads, this equates to exactly EUR 20 per lead
.The CPL is usually used when a company commissions an advertising partner, such as an online marketing agency, to generate new contacts. The remuneration model is defined when the contract is concluded with the advertising partner. This can be, for example, cost per click, cost per order or the cost per lead discussed here. A fixed price is usually determined for each qualified lead or a total price for a certain number of leads.
The next step is for the advertising partner to use suitable measures to generate the contractually agreed leads. There are numerous options available for this, including classic advertising banners, content marketing, social media entries and landing pages. For each successfully referred contact ("qualified lead"), he then receives the agreed remuneration.
In practice, cost per lead or cost per order billing models are always used when the focus is on interaction with a specific advertising medium and the contact is not always expected to result in the direct sale of a product
The primary task of cost per lead or cost per order is usually to acquire new customer data.
This data can then be used to carry out targeted acquisitions, for example. An approach that is particularly common for complex, consulting-intensive products such as insurance or innovations in the field of information technology.
With regard to the qualification of individual leads, the cost per lead method is particularly suitable for billing in email marketing, the use of contact forms or the download of applications. Leads can also be linked with tracking methods, which means they can also be used in affiliate marketing. The data obtained in this way can be used at the end of a project to answer the aforementioned question of determining the cost per lead - how much should your lead generation cost?
The advantage is that you can scale advertising measures better in this way. Compared to similar models such as cost per order, you only pay for successful referrals, but not for the measures or the advertising materials themselves that are used to generate leads.
How much leads should cost exactly can only be determined approximately. The actual costs depend, for example, on the size of the company itself, which products are sold and which target groups are to be addressed by the measures. Added to this is the cost of the advertising measures themselves: A few targeted posts on social media cost less than, for example, an elaborately designed landing page with photo galleries, videos and plenty of data material. The decisive factor is the total costs of the marketing organization. Examples of this
According to HubSpot's latest Demand Generation Survey, a lead currently costs just under EUR 170 on average across all industries. Significant upward and downward deviations are possible depending on the industry. The IT & services sector currently has the highest cost per lead at around EUR 314. Costs are significantly lower in the education sector, where the average cost per lead is only EUR 55. In financial services, a lead costs EUR 230, while in the medical sector it is EUR 240. The question of average costs can therefore hardly be answered in general terms, but depends on many different factors.