A Cheap Cost Per Lead Is a False Metric

I've spoken to so many business owners that get hyped up on getting a cheap cost per lead.

I was speaking to a business owner over the weekend where they were getting a lot of leads, but they were barely having any qualified conversations.

A cheap cost per lead looks good on paper for the first two months, but it gets extremely tiring because you soon realize the quality of that lead isn't all what you've paid for.

And this is very common with marketing companies.

They'll just do what they said they were going to do and provide you more leads.

And that is good, but you as a consumer and you as a business owner should also know what you're purchasing for.

If you're just purchasing leads, then you're probably not going to have a good experience.

Because if let's say you're generating 200 leads a month and out of those 200 you're barely having five good conversations, then you're just wasting your time, your staff's time on phones all the time.

People are just coming in and not necessarily with super high intent to buy.

And there's just a lot of time wasting. There's a lot of cash being spent and just a lot of unnecessary work being done.

So here are a few questions you need to ask your marketing agency.

Number one is how are we qualifying the lead?

We just don't want phone numbers and emails. We want to have these three to four variables in place, questions in place.

And if they answer this incorrectly, we want them disqualified.

Now do keep in mind, this is going to, of course, increase your cost per lead, but I want to make something super clear as well.

If you're spending $2,000 a month on ads and you're only having five good quality conversations, then your cost per qualified conversation is $500 per qualified conversation.

So that should wake you up already.

So don't necessarily worry about what the cost per lead is because that is just a fake number.

You need to start getting towards the real number, which is qualified lead.

Second question you need to ask your marketing company is, why are we using images? Let's only stick to videos.

Image campaigns are good, but they always attract very low intent people.

This also depends on the business, but always use videos.

Because let's say if you're posting videos and your image is performing way better than your videos, that means your video ad is just not good enough.

So you need to keep testing videos, keep testing until you find a good one.

And something you need to do from your side is on a weekly or bi weekly basis, or even at the very least monthly basis, you need to meet with your marketing company to talk about numbers, like what's going on in the back end, what needs to improve, because this is stuff that actually improves results logically.

If you're getting true to the numbers and if you're having good quality conversations, this is what brings in results because we're just talking about actual results.

Whenever a business owner sits down and talks to me, it's always an honest conversation.

Let's say, if we're providing them good quality conversations and they're verified and they're not able to close them, we just tell them like, hey, it's the sales process.

I give them the contact information and they improve the sales process and then start closing more deals.

Sometimes you just need to have straightforward conversations.

Here's what most people don't understand.

A cheap cost per lead looks good on paper. But it's a fake number.

Because if you're generating 200 leads a month and only having 5 good conversations, then you're not paying $10 per lead.

You're paying $400 per qualified conversation.

That's the real number.

And that's what you should be optimizing for.

Not cost per lead. Cost per qualified conversation.

So here's what you need to do.

Ask your marketing agency: How are we qualifying the lead?

We don't just want phone numbers and emails. We want 3-4 qualifying questions in place.

And if they answer incorrectly, we want them disqualified.

Yes, this will increase your cost per lead. But it will decrease your cost per qualified conversation.

And that's what matters.

Second question: Why are we using images? Let's only stick to videos.

Image campaigns attract very low intent people. Videos attract higher intent.

If your image is performing better than your video, that means your video ad is just not good enough.

Keep testing videos until you find a good one.

And finally, meet with your marketing company weekly, bi weekly, or at least monthly.

Talk about numbers. What's going on in the back end. What needs to improve.

This is what actually improves results.

And if you're getting good quality conversations but not closing them, it's the sales process.

Fix the sales process. Close more deals.

Sometimes you just need to have straightforward conversations.

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