What does it really cost you to bring in new business?
It’s a question every business owner needs to answer, and the good news is it’s not rocket science. By tracking your cost per lead (CPL) and cost per client (CPC), you can measure how much you’re spending to generate interest and how much you’re investing to actually land a new client.
Once you know these numbers, you can make smarter marketing decisions, optimize your budget and maximize your ROI. Let’s break it down.
What is Cost Per Lead (CPL)?
A lead is someone who has shown interest in your business: maybe they filled out a form, downloaded a guide or subscribed to your newsletter. They’re not a client yet, but they took action and are in your marketing net.
The formula for cost per lead is:
CPL = Total Marketing Spend ÷ Number of Leads Generated
For example, let’s say a company runs an Instagram ad campaign for $500 and gets 50 leads. $500 ÷ 50 = $10 per lead.
Boom. You’ve got your CPL. Easy-peasy.
What is Cost Per Client (CPC)?
This is where things get exciting because now, we’re talking about conversions. Your cost per client (CPC) (sometimes called cost per acquisition, CPA, or customer acquisition cost, CAC) measures how much it costs to turn a lead into a paying client.
The formula for cost per client is:
CPC = Total Marketing Spend ÷ Number of Clients Acquired
Here’s another example:
Imagine a firm spends $2,500 across multiple channels (i.e., Google Ads, newsletters, SEO, etc.). From those efforts, they gain 25 leads, but only 5 convert into paying clients. In this scenario, their CPC would be $2,500 ÷ 5 = $500 per client.
Why These Metrics Matter
Without CPL and CPC, you’re essentially throwing money at marketing and hoping it sticks. With a clear understanding of these metrics, you can:
- See which campaigns are actually paying off
- Compare channels (email vs. paid ads vs. SEO) to find your winners
- Spend confidently because you know what it costs to acquire each client
- Scale smarter, not harder
When you consider CPL and CPC as something of a marketing compass, you can use them to help you find the most efficient path toward growth.
How to Lower Your CPL and CPC
The lower your costs, the better your ROI, so it’s in your best interest to try to keep your CPL and CPC low. Here are a few ways to bring those numbers down:
- Target smarter – Refine your audience so you’re reaching the right people, not just more people.
- Nurture your leads – Once you snag a lead, stay top of mind sending useful email campaigns, blogs and follow-ups that build trust.
- Tighten your sales process – The smoother the journey, the quicker leads turn into clients.
Go Forth and Grow with Confidence
CPL and CPC offer critical insight into where your money’s going, what’s working from a marketing perspective and how to get more bang for your buck.
At The Found Gen, we help small businesses not only track these numbers but also improve them, because spending smarter is the real key to sustainable growth. If you want help lowering your CPL and CPC, call us today to talk strategy.