What is the Cost of an Online Lead?

With HubSpot’s State of Inbound showing that a lead costs dozens of dollars for North American B2B companies, how can you calculate the cost of online leads and also drive said costs down?

Calculating costs

In general, the cost of online leads is driven by the cost of the traffic acquisition in addition to the cost of the call-to-action used, split by the number of leads generated. Stated as an equation:

(A + B) / C where

A = cost of traffic acquisition

There are many ways to acquire an online audience but they are mainly split in to two categories: organic traffic and paid traffic.

Organic traffic is traffic you paid for in sweat and persuaded to visit to your site through your actions. Typical activities include blogging, tweeting, and distributing content on social sites or other content sharing sites.

Paid traffic is much easier to scale, but that convenience comes at a cost. It is comprised of different types of advertising mediums including (but not limited to) Google Ads, placing banners on industry specific blogs, and distributing content through content networks such as Outbrain or Zemanta. For paid traffic, the typical payment method is pay-per-click, so you pay by the size of your audience.

B = cost of call-to-action

When you have acquired the traffic and it’s on your site, you need to get that audience to leave you their contact details so that you can begin nurturing a relationship with them. If a visitor is leaving his details in a Contact Us page that you setup in minutes, the cost of that page is negligible.

However, that visitor might have turned into a lead by signing up for a webinar you’re hosting with a major analyst firm. The cost of that Webinar might be thousands of dollars, so you need as many leads as possible coming from that webinar (live or recorded) to drive the average cost per lead for that call-to-action down. In the range of call-to-action costs, white papers and e-books are quite cost effective as they typically only require in-house effort, while calls-to-action such as an analyst report reproduction or webinar with a guest speaker are on the costly side of things.

C = numbers of leads generated

Once you know the costs of getting your audience to your site and creating a call-to-action, all you need is the number of leads generated per CTA to calculate the average cost of a lead per that action. As time goes on and you can acquire more leads per CTA, the cost will go down for that specific CTA. The more you can reuse a specific asset, the higher potential ROI you can get. For example if you author a whitepaper and you can also turn it into webinar slides, you just got two calls to action for the price of one.

Driving costs down

Lowering the cost of acquisition

  • The more organic activities you can do to acquire your audience, the cheaper the cost of traffic.
  • Use contributed articles to pitch your case studies and news to publications as other ways to gain organic (unpaid) exposure.
  • A press release can be an affordable alternative to paid traffic if that release is picked up by enough outlets.
  • Look into lowering your paid traffic costs by going after cheaper/niche keywords or industry specific blogs. The smaller the niche you target, the greater likelihood of lower advertising costs.

Lower the cost of calls-to-action

  • Build your own, where time is the only investment.
  • Build for reuse. If you can build a series of blog posts and turn them into an eBook, that means that eBook costs you almost nothing since you blog in any event.

Increase conversion

  • The more leads you get per activity, the lower the cost is per lead.
  • Optimize your landing pages so they convert well.
  • Build specific calls to action that target specific groups. The more specific the target audience, the higher probability of a high conversion rate. For example, targeting all WordPress site owners versus targeting site owners of cyber security companies with fewer than 100 employees who are running on WordPress are two very different things
  • Make some noise. Be sure to attract attention to your newest CTAs. From social media to PR, there are many cost effective alternatives to make sure your audience knows that action exists

The cost of online leads is usually high, but not as high as event leads or outbound leads. You just need to make sure you calculate your ROI right. It’s worth noting that I didn’t touch on lead quality, which is a different article for a different day. Assuming all leads are of similar quality, watching your ROI will help you track and optimize your CTAs in a way that will help you drive costs down.

For further reading, learn how to cut your cost per lead by up to 75 percent.

This article originally appeared on BrightInfo.