Your Cost Per Lead Is Mostly Meaningless

Your cost per lead could mean something, but not without knowing a whole lot more. So what a lead actually means to your business is going to vary drastically depending on your industry and your sales funnel. But ultimately, the goal is the same, right? You are collecting leads because you hope to sell to them.

That might happen right away with a sales call. Or it could be weeks or months down the road through drip campaigns and soft sales. Honestly, my customer journey surprises me sometimes. It is often years, sometimes a decade, before someone on my list finally buys from me.

Let’s walk through this. Say you spent $500 for 100 leads, so $5 per lead. Is that good? I do not know. And honestly, you should not know either without asking more questions.

What did you do with those leads? Let’s say these people enter a funnel where your goal is to sell a $100 product. You spent $500, so to get a 2X return you need to make $1,000 from that initial ad budget. That means you would need 10 of those 100 leads to convert, which is a 10% conversion rate. That would give you an average value of $10 per lead.

This is all a perfect world scenario. And that is what you are really after here. Not cost per lead, but value per lead.

Now let’s switch it up. Say you are selling a $50,000 service. Maybe you are scheduling sales calls. A single lead could be worth $50,000. You might be willing to pay $25,000 to get enough leads to make just one sale. That still gives you a 2X return. If you are paying $500 per lead, you only need one of those 50 leads to convert.

Cost per lead is not nearly as helpful without context. That is the first layer. But let’s go deeper.

Now let’s say you are not getting the return that you want. What do you do? Always start by looking at what happens after the form submission.

What happens next? How quickly do you follow up? If it is a phone call, do you send a text first so they know it is coming? Are they reachable? How many leads never respond?

Is your sales script effective? Are your people closing?

Or maybe it is a longer funnel, more emails, less urgency, kind of like mine. What is the open rate? What is the click rate? Honestly, these are the things I am looking at most since I know the sale might not happen in that first month.

Are emails bouncing because of typos or junk addresses? That tells you something about lead quality too.

Then you can start asking, why are these leads low quality? Are they in the wrong location or industry? Are they bots? Are they unable to afford your offer?

You can address a lot of that right in the form. Use questions that disqualify people early. If you are using Instant Forms, use conditional logic to screen them out. On website forms, you can even fire a completed lead event only for those who meet your standards, sending them to a unique thank you page that triggers that event. That way Meta learns from the right leads, not just any submission.

Of course, you cannot ignore your ad itself. Is your copy too broad? Are you attracting people who are not a fit? If so, be specific. Call out who your product is for and who it is not for. You want to attract the right people and repel the wrong ones.

Why? Meta is going to learn from the people who complete the form. Your targeting starts with your messaging.

And finally, the offer. A common example is giving away an iPad to build your list. You are going to get a lot of entries and your cost per lead will look amazing, but those people do not care about your product. They want that iPad. You are going to get unqualified, disengaged leads who never buy.

Make sure that your offer appeals to your ideal customer’s unique needs and pain points.

So here is the bottom of the glass. Do not get distracted by cost per lead alone. It is not the number that matters. It is what happens after the form is submitted that does. The value of a lead depends on how you follow up, how well they convert, and what they are ultimately worth to your business.

If you are not getting the results you want, look deeper. Fix the offer. Refine the form. Qualify better. Improve your outreach.

Getting a lead is just the beginning. The real work and the real value comes after the action.