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Difference Between Cost Per Lead Cost Per Acquisition.

2024-06-18 | 574 Print PDF

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Difference Between Cost Per Lead and Cost Per Acquisition.

The cost per lead is a similar term misused as cost per acquisition, this is why we have digital advertisers who want to know what is Cost per Lead (CPL) vs. Cost per Acquisition (CPA). Cost per lead (or CPL) is the total cost of generating a lead. This is in contrast to cost per acquisition (CPA), which is the total cost of acquiring one paying new customer or a closed deal.

You can note that the latter is more specific on the leads that are converted as paying customers or generate sales from that lead. In most cases, Cost Per Lead is represented as Cost Per Conversion and is used to measure the performance of your campaign results.

A good example will be that of the Google Ads campaign setup, the conversion metric is an important aspect of your ads performance and you are expected to include codes on your landing page to measure the conversion by tracking the action taken, another means to measure conversion is to set them up as goals on your Google analytics set up.

If you want to calculate the cost per lead of a campaign you will need to have the total budget and then divide that by the total lead submission you have, the result you get will be your cost per lead. Whereas, for the cost per acquisition, you will need to have the total ads budget divided by the total number of leads that translated to sales.

You can use the cost per acquisition formula to also determine the cost per sale of your campaign, from here you can formulate the campaign's success, whether it is profitable or not, having such information can guide you as a campaign manager to understand how to optimize your campaigns.

Most customer's goal for their campaign is to translate leads into sales, hence making it a very tasty job function for a campaign manager to execute, as their job role is to only manage and optimize campaign ads for targeted lead submission, converting these leads into paying customers is the job of a sales representative, who's job is to convert by persuading the leads into being a paying customer.

They can do this by either offering incentives, registering them into a loyalty program, staging a FOMO (Fear of missing out), limited offers, etc, this job function should be designated to a salesperson who can be an in-house body of the company or as a 3rd party, either way, the campaign manager is not responsible for converting leads into customers. If your campaign generates sales via the campaign manager ads effort then the sales team still needs to manage and segment these leads into categories.

A campaign manager can easily use A/B testing on a campaign by creating two versions of the same campaign under AD Group, spreading the marketing budget between the two ad groups to select the one with the best performance within a short experimental duration.

Below is a more succinct media that explains what the cost per lead is, and the channels with the lowest cost per lead.

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