The ultimate goal of every marketer is to generate as many leads as possible, for as little cost as possible. But if your cost per lead is high, the amount of leads you can get within your budget is capped.
Regardless of what channels you’re using, optimizing your cost per lead should be a priority.
But where do you start? Don’t worry – we’re going to show you how to optimize your spend across all kinds of digital channels.
There’s a general strategy for reducing CPL that you can apply to every channel, tweaking as necessary. It’s fairly simple, too:
- Define your target CPL
- Identify where your cost is highest
- Find where most of your leads come from
- Determine where you’re spending budget but not getting results
Sounds easy, no? Don’t worry, we’ll give you a little more detail about how to do these things. Your approach will change depending on which channel you’re looking at.
Decreasing CPL in Email Marketing
When it comes to email, improving your cost per lead is all about improving your campaigns’ performance, rather than decreasing cost.
That said, it does depend on your email service’s model. You’ll either have unlimited sends and paying a flat monthly fee based on how many contacts are in your database, or paying per send.
In both cases, having extremely targeted contacts helps. In the first case, you can remove lower-potential contacts (like ones that never engage with your emails, or aren’t quite your target audience) to reduce cost.
By and large, though, getting lower CPL from email means improving your campaigns themselves in order to get more conversions. We have a whole separate article on that; if you need to improve your email CPL, check out our ultimate guide to cold email copywriting.
If you’re still finding that traditional email marketing isn’t delivering the results you’re looking for quickly enough, consider looking at email lead generation.
It’s a different approach to email marketing that can generate leads faster and at a much lower CPL.
Google Ads (PPC)
Google Ads is an extremely powerful channel for lead generation, but it’s also very easy to spend your entire budget (or more) all in one go if you’re not careful.
If you’re using Google Ads, chances are you could be using your budget more optimally. Here’s a way you can get the most out of our budget. You’re going to make broad changes initially, then refine them.
First of all, if you’re not using Target CPA automated bidding, try it.
Google encourages users to lean on the automated bidding, and while there are powerful strategies around manual bidding, nobody knows Google’s system better than Google themselves.
The downside to it is that it will take some time to learn, during which you won’t see much movement, but once it’s in place and has gained momentum, it does a lot of the work for you.
Now, onward to wrangling your keywords.
Optimizing Your Keyword Strategy
First, take a look at your keywords across a time period of at least a few months. You’re going to classify your keywords into a few different groups.
- High conversion numbers but high CPL: These are strong keywords that are likely very competitive, with a high cost-per-click.
- High conversion rate but low clickthrough rate: People aren’t clicking your ads for these, but those that do tend to convert.
- High conversion rate and low CPL: These ones are doing great.
- Low conversion numbers and low spend: People aren’t even clicking these ads.
- Low conversion numbers and high spend: These keywords are being clicked plenty but not getting leads.
Note that there’s a distinction here between conversion numbers (the actual amount of conversions you’re getting) and conversion rate (the percentage of people who clicked your ad and converted).
Further, only keep keywords that have enough data to be statistically significant. If a keyword only got 10 impressions, 8 clicks and 4 conversions, that looks good – that’s 80% CTR and 50% conversion rate – but it’s not actually worth keeping around.
This strategy for CPL optimization is based on focusing your budget solely on your best keywords. We’ll work backwards up that list of groups you just made.
Your first step is to cut out all the keywords that aren’t generating conversions, i.e. the last two groups.
Whether they’re not very relevant or impactful, or not performing as well as you’d expect, it doesn’t matter. Axe them, at least for the moment – now is the time to be ruthless. Once your CPL is where you want it, you can start adding them back in and seeing how they perform.
Leave the third group alone – if a keyword has a good conversion rate and low CPL, even if it isn’t generating a lot of leads compared to other keywords, it’s worth keeping around.
The first two groups are where you can strategize more. Let’s look at the second group – keywords that tend to convert well when people actually click on them.
That indicates that your post-click strategy – your landing pages and forms – is pretty spot on here. The problem is that people just aren’t clicking your ads. This can be a few reasons for that:
- Your ad copy might not be great. That’s a fairly easy improvement to make: try different copy, make sure you’re using extensions effectively, and other typical strategies.
- The keyword is a bit generic but your copy weeds out people who aren’t interested. In other words, the keyword is a bit general and gets a lot of search traffic, but your copy stops people who aren’t the target audience from clicking, mostly. If this is the case, they’re okay, but keep an eye on it – it’s easy to get cost spikes if more people start clicking on it.
- You aren’t bidding enough, and your ads aren’t beating competitors and making it to the top spots. Target CPA bidding will generally solve that for you once it’s out of its learning phase.
If a keyword’s impression share and ranking are both high, the problem is probably your ad copy.
If your impression share is low, it’s likely that the keyword is a bit generic and there’s a lot of competition for that keyword. If your impression share is high but your ranking is low, check your bid strategy.
That first group – keywords that convert well but also cost a lot – is where you need to get creative. These are competitive keywords, so their cost per click is likely higher.
If you’re using manual bidding, you can try to simply bid less, knowing that you’ll lose impression share and ranking, and attempt to get clicks when you can.
If you’re using Target CPA bidding, you can’t do that – and really if these keywords perform well, you’d like to get the most out of them, right?
Hold that thought for a moment – to handle this group, you need to analyze some other data.
Analyzing Your Schedule
Here’s what we’re going to do: we’re going to look at what days and times you’ve got the best conversion rates, and use that to develop a schedule for your expensive keywords.
Google Ads has a reporting tool that lets you see what your conversion rate is like at each hour of each day of the week. If you’ve just been letting your keywords run 24/7, that’s actually beneficial here.
If not, you can work with the data you have (because of course your conversion rates will be 0% for days/times your ads didn’t run), or you can open up your schedule for a while to collect more data.
Presumably you’d like to optimize your CPL now, not spend a month gathering more data, but more information is never a bad thing.
Make a note of the days that have the best average conversion rates. Then go look at each of those days and note what times of day have the best conversion rates.
Now let’s go back to your group of big, expensive keywords.
Implementing Your Strategy
The first step is to take those keywords and put them in their own campaign. That way, you can give them their own budget.
Only run those keywords on your best-performing days. Don’t restrict the time of day yet – let them run all times of the day for a while.
Determine how much monthly budget you want to give to these keywords, and divide that up by however many days they’ll be running this month. Make the result your daily budget for their campaign in Google Ads.
Once they’ve been running for awhile, go see what times of day they’ve been getting the best conversions and conversion rates. If that correlates to your best times of day that you noted before, you can try restricting them to only show during those times.
Here’s what happens when you do that: let’s say you gave them a daily budget of $100. If they’re running all times of the day, Google will be spreading that $100 across the day.
If it spends all its budget early in the day, there won’t be any left over to pursue potential leads later.
If they’re only set to run at the times when you get best results, you’ll end up with fewer impressions – but more money will be going towards generating those clicks. With Target CPA, Google will be able to serve the ads to more high-conversion-potential searches.
All in all, what you’ve done here is removed wasted spend, focused your budget on the best keywords, and curbed how heavily your most expensive ones can spend.
Optimizing Cost on Social Media
We’re going to focus on Facebook/Instagram here.
Although it’s also a paid advertising platform, it works differently from Google Ads. Your cost comes from impressions, rather than clicks, so you’re while your ads are running, you’re spending.
It’s also based on audiences you configure, rather than keywords. Making sure you’re targeting the right audience is a major factor in the success of your ads (and your marketing in general).
What this means is that if your audience targeting is too broad, you’ll be generating huge amounts of impressions – and a lot of cost – but not necessarily getting the clicks or conversions you need.
Facebook’s recent algorithm updates have thrown marketers into a new, largely unmapped world of advertising. Options that worked four months ago no longer even exist in the platform.
Fundamentally, improving your Facebook/Instagram CPL can be boiled down to two factors:
- Make sure you’re targeting the right audience
- Create content that will resonate with that audience
Something to keep in mind is that you want to make sure that the various audiences you have configured don’t overlap. You should exclude overlapping elements from each others’ campaigns – otherwise you’re competing with yourself for impressions.
If you’re seeing a lapse in engagement, it might be due to audience burnout. If your ads have been served to the same audience time and again, they’ll be sick of seeing it – and the members of that audience who are going to click and convert on your ad will largely have done so already.
If that’s happening, tweak your audience setting so you’re targeting a new pool of very similar people.
Assuming you have your audience dialed in well, you need to look at your ad content. This is a combination of the body copy, the creative, and the headline.
Once you have a combination that’s working even decently, you need to begin A/B testing different content. This will be heavily dependent on your target audience – it might mean trying something new with your images, or different language in your body copy, for example.
A big tip is don’t be afraid to make changes if something isn’t working. Yes, you’ll send your ads back into the learning phase, which can be scary.
But as the algorithm and engagement trends fluctuate, when your campaigns re-learn, they’ll re-optimize for what works best now, instead of what worked best before.