Sales Analytics — For Cost Per Lead, it’s Not the Number, it’s the Spread
Had an interesting discussion yesterday about some common sales intelligence metrics and analytics, thought I’d share a short tidbit with you.
Someone asked whether it’s more important to focus on the Cost Per Lead (CPL) versus the Cost Per Opportunity (CPO).
CPL is the cost in direct marketing spend to generate an inquiry, no matter how raw or unqualified.
CPO is the cost of creating an actual, viable, closable opportunity that enters a buying cycle.
Here’s the trick: The real gauge of value isn’t necessarily the actual number of either one—it’s the disparity between the two.
If your cost per lead is very low, it’s usually a good thing, right? It means we’re generating a lot of leads at very economic cost.
But what’s the difference between it and the cost per opportunity? If the difference in numbers is significant, it tells you that you’re generating lots of low quality leads that really have no chance of closing—and thus a lot of your marketing budget is getting wasted.
Obviously you want both metrics to be as low as possible, but pay attention to the spread, as it will give you some significant clues about how effective your marketing actually is.