Cost per lead is the wrong number to optimise for
Cheap leads are easy to buy. The number that decides whether your marketing works is cost per qualified enquiry, and most accounts aren't set up to see it.
- Paid media
- Lead quality
- Measurement
Most accounts I'm asked to look at are optimised towards the cheapest possible conversion the platform can find. That is usually a form fill. If you tell an ad platform to find you form fills at the lowest possible price, it will do exactly that, and it will be very good at it.
The problem is that it has no idea what happens next.
What the platform is actually optimising
An ad platform sees one thing: whether the event you told it to value happened. It doesn't see the enquiry that never answered the phone, the number that was typed wrong, the prospect who wanted a different product, or the lead your team sat on for two days.
So when you optimise for cheap conversions, you get a system that has been very precisely tuned to find people who will fill in a form. Not people who will buy.
I've watched this go wrong in a specific, recognisable way: cost per lead falls month after month, the report looks excellent, and somewhere in the business somebody says the leads have got worse. Both statements are true. They're measuring different things.
The number that actually matters
Cost per qualified enquiry.
It is harder to measure, requires a definition that only your sales team can give you, and needs a loop back from whoever handles the enquiry to whoever runs the campaigns. That loop usually doesn't exist.
Worth being blunt about the trade-off: you will almost always pay more per lead when you optimise for quality. If you're currently paying for volume at a low unit cost and most of it is worthless, then a higher cost per lead with a better conversion to opportunity is an improvement, even though the headline number got worse.
What has to be true before you can optimise for it
Three things, in this order:
- A written definition of a qualified lead. Agreed with the people who speak to enquiries. Not a marketing definition of "engaging", but a sales definition of "worth a call".
- Tracking that distinguishes the two events. A form submission and a qualified lead are different events. If both feed the same conversion action, the platforms will optimise for the wrong one.
- A way to get the outcome back to the campaign. Whether that's offline conversion import, a CRM field, or a manual reconciliation each month.
Without all three, you are guessing, and so is the algorithm.
A practical starting point
If you can't build the full loop this week, do this instead:
- Agree the definition of qualified, even if it's a judgement call at first.
- Pull last month's leads and mark them yourself. All of them. It won't take long.
- Compare cost per lead against cost per qualified lead, broken down by campaign and by channel.
That last step is usually uncomfortable, because the campaign with the best reported cost per lead is frequently not the one bringing in the business. You don't need automation to find that out. You need an hour and a willingness to look.
What not to do
Don't ask the platform to optimise towards a proxy you haven't validated: time on site, pages per session, or engagement of any kind. You'll just be buying a different flavour of the same problem, and it will be harder to explain to whoever signs the budget.