Insights — Demand Generation & PPC — 3 min read
What Is a Good Cost Per Lead?
There is no benchmark worth copying. There is only what a customer is worth to you, and what proportion of leads become one.
Business owners ask what a good cost per lead is in the hope of a number. The honest answer is that a £300 lead can be excellent and a £20 lead can be ruinous.
Work backwards from the customer
Take your average order value, your gross margin and the number of orders a typical customer places before they stop buying. That gives you the gross profit a new customer generates. Decide what share of it you are willing to spend on acquiring them — for most SMEs, somewhere between 10% and 25%.
Then divide by your conversion rate
If you can afford £600 to win a customer and one lead in six becomes one, you can afford £100 a lead. If one in twenty converts, the same business can only afford £30. Conversion rate is doing more work in that calculation than any advertising decision.
Why benchmarks mislead
- A £50,000 project and a £400 order cannot share a target.
- Repeat-purchase businesses can pay far more than one-off ones.
- Competitive sectors set the floor price of a click regardless of your margin.
- A lead from a search term with buying intent is not the same asset as one from a downloaded guide.
Improve the ratio before arguing about the price
Faster follow-up, better qualification and a stronger quote process raise the proportion of leads that convert — which raises what you can afford to pay, which lets you outbid competitors for the best traffic. That is how the advantage compounds.
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