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Cost per lead: What should a charge cost?
Cost Per Lead –
According to HubSpot’s last Demand Generation Marketing Survey, a lead costs just under $ 200 on average across all industries. This article is about the Cost Per Lead (CPL) and how you can use this benchmark for your lead generation.
What is a lead?
When we talk about Cost Per Lead (CPL), we first need to be clear about a leader. A charge is a business contact who is fundamentally interested in your company or your products. A lead includes personal data (name, email address, company) and context-related data (interest).
A typical example of a lead in B2B online marketing is a user who has downloaded a white paper using a form on your website. You will receive the personal data and a context, namely the topic of the whitepaper. This lead is usually not yet qualified. That means we don’t yet know whether he has a problem we can solve and whether the leader also has the necessary financial resources.
In terms of qualification, we distinguish between:
- Lead: This is a user from whom we know personal data and an interest (context)
- Marketing Qualified Lead (MQL): This is a lead that corresponds to one of our buyer personas, and that has a problem that we can solve
- Sales Qualified Lead (SQL): This is MQL with a budget, it is someone who can decide the deal, and there is a specific time frame for the value.
In this post, we’re talking about leads. MQLs and SQLs can have multiple values compared to a leader and, of course, also cost various times.
Leads cost just under $ 200 on average.
According to HubSpot Demand Generation Benchmark Reviews, leads cost an average of $ 198.44 for the 350+ companies surveyed. There is a big difference in different industries.
IT & Services have the highest lead generation costs at $ 369.88 per lead, and leads cost $ 43.36 in the non-profit area. Cost per lead is also very different based on the size of organizations. Small businesses (2 to 50 employees) have an average cost per lead of $ 146.94. Large (1001+) cost of $ 348.93.
What do costs mean here?
In general, benchmarks like this should assume the total cost of a marketing organization to generate leads. That includes online marketing:
- Strategy creation and ongoing adaptation
- Web development (design of landing pages etc.)
- Content production (text, graphics, video, etc.)
- Campaigning (creation and implementation of campaigns)
- Ongoing optimizations, including SEO
- Promotion (Google Ads, Facebook Ads, etc.)
- Marketing automation
- Agency costs
- Personnel costs, including personnel-related expenses (rent, IT, etc.)
Divide this cost by the number of leads generated, and you get the cost per lead.
You can often find the Cost Per Lead statements that only compare channels or specific methods. However, under no circumstances can you compare these with the total costs of lead generation.
I tried to compare the Hub Spot study with other Cost Per Lead studies. I haven’t found German-language research. However, there are a lot of international studies. The order of magnitude of cost per lead is pretty much comparable, at least in the sources I found.
Which Marketing Tactics Work Best?
Not every euro invested in lead generation leads to the same result. The price per lead is one thing. Even more essential, however, is whether the leader also leads to sales.
How does that look in practice?
Let’s say a medium-sized B2B company wants to generate 100 leads per month.
- Marketing strategy including buyer personas, content strategy, brand attributes, and PR
- Content editing to continuously produce the content (blog articles, videos, white papers, etc.)
- Ongoing Google Ads and LinkedIn Ads campaigns
- Ongoing website development of landing pages
- Marketing automation software
- A campaign manager publishes content, continuously looks after Google Ads and LinkedIn Ads, takes care of influencers, pays attention to the implementation of brand attributes, does SEO, and constantly optimizes the lead generation process.
Our more than five years of knowledge with such B2B online campaigns shows us that the cost is around 7,500 to 10,000 euros per month if a company has a large part of these measures implemented by a good agency. Usually, there are also personnel costs from the company. Because even the best agency needs contact persons in the company and the best lead generation projects, agencies work with companies to achieve their goals. If we also consider these internal costs, the costs per lead in this example are between 100 and 150 euros. We are pretty much in the middle of the Hub Spot study.
What does a qualified lead cost?
Traffic, conversion, click rate, and cost per lead are popular KPIs in marketing. The Average Cost Per Lead highlight the ratio of the total expenditure of all marketing activities to the total number of leaders generated.
Example: Let’s look at a simple example. If you invest 1000 € in a PPC campaign and ten users leave their contact details, i.e., convert, your costs per lead are 100 €.
Cost Per Lead = € 1,000 / 10 = € 100
What does “Qualified Lead” mean?
Another word for “lead” is “customer inquiry.” If a prospect contacts your company for the first time and transmits their address data, we speak of a lead. So it is a potential customer who is interested in your product or service. In the first step of Excellent project management, this potential customer is then pre-qualified. That means you find out if it’s a real opportunity. Then one speaks of a qualified lead.
Leads come at a price. The big question on this topic is: Are these excellent leads that we can use to generate sales? Because many companies would like to pay 150 euros for a good leader if, in the end, 5% customers are developed, and a turnover of 50,000 euros can be made per customer.
On the other hand, you have to pay attention to the quality of a lead and the price. Quality again has a lot to do with how leads are generated and qualified.
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