“Cost-per-lead” – That’s a frequently-heard term in the digital marketing business. There’s only one problem. It doesn’t really mean much in terms of customer acquisition. A business can be swimming in leads, and still go broke without a successful way to determine which of those leads are valuable, and then convert.
Not every lead is created equal and because of this, a cost-per-lead model can be a complete bargain in one case, and then a total waste of your budget in the next instance. This disparity in value can severely obscure the cost of a lead. What seems to be an extremely high-cost lead may, in reality, offer a high enough customer conversion rate to make is much more worthwhile than apparently “cheaper” solutions.
When you approach the idea of customer acquisition through leads, think about your conversion funnel. A great lead can fall much deeper in your conversion funnel than a simple throwaway lead pulled from an unqualified list. In turn, this will lead to a much higher conversion rate and also higher revenue gathered by your customer acquisition program.
These stronger leads may also clue you in to the potential lifetime value of the customer. A one-off customer obtained through a quickie lead just doesn’t see as likely to generate as much revenue over time as a customer actively interested in your service brought in through a top-tier lead.
A strict cost-per-acquisition model can better serve an online customer acquisition model. Carefully consider and assess the value of each lead you receive and the potential leads you stand to acquire. Only then weigh the potential costs of each lead. This understanding can stop you from acting as a “lead collector,” gathering and valuing leads, which without conversion have no inherent value!
Any business or marketer prepared to operate on a cost-per-acquisition model can leverage the real costs of lead generation strategies and spend a marketing budget most wisely. In almost every case, a focus on strong leads can win you not only the most numerically but also the most profitable customers for the cost, spelling out continued profits for your business over the long haul.
Author: Brandon Rhodes works for Response Mine, an interactive marketing agency specializing in qualified lead generation and customer acquisition programs.
