Cost Per Lead
Definition
How much you spend in marketing to generate one enquiry or contact. Helps you understand which channels deliver affordable leads.
What is Cost Per Lead?
Cost Per Lead (CPL) measures how much you spend to generate one lead - someone who's expressed interest by submitting a form, calling, or making an enquiry.
It's a key metric for businesses that don't sell directly online and need to generate enquiries first.
How to Calculate CPL
Marketing spend / Number of leads
Example:
- Monthly ad spend: £2,000
- Leads generated: 50
- CPL = £2,000 / 50 = £40
What Should CPL Be?
Your acceptable CPL depends on:
- How much a customer is worth (CLV)
- What percentage of leads become customers
- Your profit margins
Working Backwards:
- Customer worth: £1,000 profit
- Lead-to-customer rate: 20%
- Needed 5 leads per customer
- Maximum CPL: £200 (£1,000 / 5)
In practice, you'd want CPL well below this to maintain healthy margins.
Typical CPL by Industry
| Industry | Typical CPL |
|---|---|
| Legal | £50-150 |
| Home services | £20-60 |
| B2B services | £40-100 |
| Education | £30-80 |
| Real estate | £20-50 |
CPL by Channel
Track CPL separately for each marketing channel:
- Google Ads: Often higher CPL but better quality
- Facebook Ads: Often lower CPL but varies in quality
- SEO: No direct cost per lead (but ongoing investment)
- Referrals: Usually lowest CPL
CPL vs. Lead Quality
A £10 lead that never converts is worthless. A £100 lead that becomes a £5,000 customer is a bargain. Track both CPL and lead-to-customer conversion rates.