Stop me if you have heard this one before: We want the cheapest lead possible.
One consistent theme that I hear from startups and international brands is people asking for a cheaper lead each month and year over year.
However, that is the faster way to waste money and, in some unfortunate events, go out of business. There are a couple of reasons why you don’t want the cheapest lead:
- Paying Customers: A cheap lead looks great early on but as you spend money each month and see fewer leads convert into a customer, it becomes increasingly hard to justify your spend on paid advertising.
- Wasted Time: If your leads are not converting then this means you are wasting a lot of time on business development that is not helping your business grow. You want to spend time on the leads most likely to convert.
Let me give you a real-world example. We spent the last eight months working with a SaaS startup that competes with Shopify, WooCommerce and Magento in the e-commerce space. We took on the SaaS startup when their cost per lead (CPL) was $49 and their cost per acquisition (CPA) for a paying customer was $1,734.
The startup wasn’t happy as the number of leads that turned into customers was inconsistent from month to month, and they were wasting thousands of dollars on keywords that were not converting. Worst of all, the data they had was a mess to sift through due to a poor strategy.
This meant we had to get the advertising spend under control, make sure we had proper data to work with and truly understand the type of customer who was going to convert. When we did all of the above, we achieved the following, even though we doubled their CPL in the process