How we reduced the Cost-per-Lead by 87%

What is Cost-per-Lead and why is this metric important?

What is Cost-per-Lead

Cost-per-Lead (CPL) is a marketing metric that measures the cost a company incurs per generated lead. A lead is an individual or company that has shown interest in a company’s products or services by, for example, filling out a contact form, making an inquiry, or subscribing to a newsletter. It is important to reduce Cost-per-Lead as it has an impact on your entire pipeline.

The calculation of the Cost per Lead is done by dividing the total costs for marketing campaigns or activities by the number of leads generated during a specific period. The formula is:

Why is CPL important?

1. Efficiency of marketing expenses: CPL helps marketers understand how effective their marketing expenses are. A lower CPL means fewer costs are incurred for generating a lead, indicating efficient utilization of the marketing budget.
2. Return on Investment (ROI): CPL is an essential component of ROI calculation. It enables companies to assess the value of their marketing campaigns and determine if expenditures are proportionate to the generated leads.
3. Optimization of marketing campaigns: By monitoring CPL, marketing teams can optimize campaigns to increase efficiency. If CPL is too high, adjustments can be made to the target audience, advertising platforms, or messaging to reduce costs and generate more qualified leads.
4. Better understanding of the target audience: Analyzing CPL can provide insights into the effectiveness of engaging and converting different target groups. This allows marketing strategies to be better aligned with the needs and preferences of potential customers.

Overall, Cost per Lead is an important metric in marketing that helps companies optimize their marketing strategies, improve campaign efficiency, and maximize the profitability of their investments.

Reduce Cost-per-Lead: Our Journey Since 2020

At LeadRebel, we embarked on customer acquisition in mid-2020. As is typical at the outset, we made several mistakes and invested (relatively) significant funds into channels that did not yield results.

However, incorrect channels were not our sole issue. Here’s a list of what, in hindsight, we did wrong:

1. PR Campaign: We spent approximately 5000 euros on a PR campaign that brought us exactly 0 leads. Yet, it did provide us with some valuable backlinks that likely positively influenced our long-term SEO. However, these links were definitely not worth 5000 euros.
2. Cold Outreach: Initially, we spent around 5000 euros per month on this. One of our sales reps delivered almost nothing, while the other generated a decent number of leads. The problem? We hadn’t established Product-Market Fit (PMF) at that time, and our prices per unit were too low. Consequently, after 3 months, we ceased cold outreach.
3. Affiliate Platforms: We listed ourselves on two German/European affiliate platforms, spending approximately 3000 euros. This resulted in some moderately good backlinks but hardly any leads. Eventually, we completely shut down these campaigns.
4. Agency-based Cold Outreach: In contrast to point 2, this time we engaged an agency for cold outreach to acquire partner agencies for us. Outcome: around 15 prospects, 1-2 partners with some revenue. Duration: 3-4 months, costs around 4-5 thousand (in total). Hence, this approach also did not yield worthwhile results.
5. Incorrect Ads Agencies: Google Ads remained an essential lead source for LeadRebel. Unfortunately, it took us a long time to find our strategy. We changed 4 agencies that managed our campaigns, and NOT A SINGLE ONE provided the desired results. Ultimately, we began managing our campaigns in-house, and surprise! It worked. Fairly, it’s worth noting that these are solely our experiences, and there are undoubtedly many cases where the collaboration between an agency and a client works significantly better.

The list is extensive, but these examples illustrate how quickly money can be misspent without tangible results.

Our cost per lead fluctuated between 130 euros/lead (in 2020) and 160 euros/lead (in 2022) during this period. These figures aren’t bad, and many companies would desire such CPLs. However, at LeadRebel, we were dissatisfied because the significant increase in the number of leads was only achieved with a disproportionately high increase in the marketing budget. Considering our low monthly subscriptions, we had to:

1. Radically reduce lead costs.
2. Decouple the number of leads from the budget amount.

The Lead Cost Revolution

In the latter part of 2022, our lead costs began to decrease. Crucial factors contributing to this change were:

Self-management of our Google Ads campaigns and their continual operation.

1. These points are essential.
   1. Firstly, there’s always an inherent conflict of interest between an agency and a client. The agency aims to acquire and manage as many clients as possible with minimal staff or time investment, giving priority to companies with a high advertising budget. Often, campaigns are managed by individuals merely “doing their job.” In contrast, agencies have less “skin in the game.”
   2. One frequent mistake we made was turning off ongoing campaigns in summer and December. Once campaigns are running smoothly and effectively, they shouldn’t be turned off completely. Perhaps the budget can be reduced (but not drastically, as it might disrupt the campaign’s optimization process without success), but they shouldn’t be halted entirely.

Once we began self-managing our campaigns, the number and quality of leads significantly increased, while the cost per lead decreased considerably.

2. Nothing has a greater long-term cumulative effect than SEO. We never made SEO a primary part of our strategy, rather an ancillary effort. Yet, even that was enough to generate increasing organic traffic over the years, resulting in a higher number of leads. These leads cost us virtually nothing! The number of organic leads increased by a factor of 3.5 from 2022 to 2023! And this was achieved with minimal link budget and reduced expenses for copywriters and translators in 2023 compared to 2022 (thanks to ChatGPT).
3. Email marketing. We’ve frequently discussed this marketing technique on our blog, but the impact of email marketing on our pipeline is hard to overstate! Finding a more cost-effective and efficient advertising technique is challenging. It’s worth noting that everyone must research the legal aspects of what’s permitted and what isn’t. Overall, successfully implementing an email marketing process (after several attempts) was a game-changer for us.
4. LeadRebel for more efficient utilization of our own sales. I must confess, we often neglected our own product. Sometimes we lacked staff to check our visitors daily, sometimes we had no sales reps reaching out to these companies. In 2022, we finally and permanently addressed this issue. Now, our dashboard is checked at least twice daily, leads go straight to our Slack channel, where sales reps take over and contact the leads via LinkedIn and calls. Since then, LeadRebel has become an integral part of our own sales pipeline, and many product improvements stem from our own experiences with it.

Overall, there’s a cumulative effect in marketing, as I mentioned regarding SEO. It might not always be as pronounced as in SEO, but it still has a positive impact on other channels. Every click on your ads that doesn’t immediately convert leaves an impression on the clicker. When the need for your product arises, your website or offer returns to potential customers’ radar.

The same goes for other channels, be it LinkedIn, social media in general, email marketing, or any other lead sources.

The Results of Cost-per-Lead Optimization

To sum it up, here’s an overview of what we’ve achieved through all these measures:

From September 2023 to December, the average cost per lead dropped to 17 euros! If you divide 17 by 130, you’ll see an 87% decrease in the cost per lead.

You can see the entire progress here:

Reduce Cost-per-Lead

We are aware that the number of leads and the cost per lead are not the sole important metrics. The quality of leads and the corresponding conversion rate are equally significant. Additionally, there are other KPIs that need to be kept in mind.

However, we are particularly proud of our performance. The combination of increasing lead volume along with significantly decreasing costs per lead gives us a competitive advantage. This enables us to enhance the rest of our sales pipeline and operate much more successfully as a company overall. You can also reduce the cost-per-lead by applying our tips or possibly even generating better ideas.

P.S. Our Offer to You

In conclusion, a short advertisement: If you are interested in more leads, optimizing your lead funnel, or seeking related advice, feel free to contact us at info@leadrebel.io. Besides our software, we also provide consulting and lead generation services. You can find more information here: https://leadrebel.agency.