In digital marketing, lead generation has become one of the most valuable marketing strategies for 2022.

Long gone are the days of cold calling or going door to door to obtain new customers. Nowadays, it’s all about acquiring leads through digital marketing efforts like SEO, social media, email, and content marketing.

Once you’ve generated new leads, you can educate them about your business, nurture them through the sales funnel, and convert them to paying customers. Insights into the data collected from your digital marketing efforts can be used to lower lead generation costs in the future.

In this quick guide to lead generation, we’ll break down what this vital marketing strategy is, how much lead generation costs, and the key metrics you’ll need to start tracking.

Lead Generation

In digital marketing, a lead is defined as a potential customer that is interested in your business’ products or services. This prospect, as they are often referred to by marketing professionals, has already made a point of contact with your company.

Lead generation is the act of initiating the point of contact with interested customers. This means you’ll need to capture some type of personal information, such as an email, phone number, or social media account.

There are a variety of ways this point of contact can be made, including:

• Social media
• Newsletter sign-ups
• Live chat widgets
• Live events
• Referrals
• Online surveys

The goal of lead generation is to support customers through the buying process and help them make a purchase decision. In digital marketing, this includes generating website traffic, converting qualified visitors into leads, and converting leads into paying customers.

What is Cost Per Lead (CPL)?

Cost-per-lead (CPL) is the most important metric when it comes to lead generation. It measures your marketing efforts’ effectiveness and ensures you’re acquiring new leads at a price that’s profitable for your business.

Put simply, CPL is the amount of money it costs to generate a single new lead. The average cost per B2B lead varies widely depending on the industry type, its competitiveness, and what target customers you’re looking to acquire. The formula for calculating cost per lead is:

Total marketing spend/Total # of leads generated= Cost per lead (CPL)

How Much Does Lead Generation Cost?

There’s no one-size-fits-all answer for how much lead generation costs and how much you should spend per lead. Your overall marketing costs depend on what lead generation strategies you employ and how strong of leads you acquire.

The costs associated with lead generation include:

• Media placement and distribution: the cost of placing your ads on social media, search engines, etc.
• Campaign development and creation: the internal costs of producing your marketing campaign
• Customer incentives: discounts, gifts, and freebies used to entice potential leads
• Media agencies: the cost of hiring a digital marketing agency to help establish a successful lead generation strategy

Lead generation costs are also dependent on the products you sell, the type of company you run, and the industry you’re in. In 2019, the average cost per lead was $198 (source). Let’s dive deeper into two key factors that affect the cost of acquiring new leads:

Return on Investment of Customer Acquisition

How much you should spend per lead depends on the return on investment (ROI) of your customer acquisition efforts. Higher ROI means you can spend more per lead, while lower ROI means you’ll need to pay less per lead to make a profitable sale.

Qualified Leads

When it comes to leads, quality is more important than quantity. It’s much better to have fewer, highly-qualified leads who are more likely to become paying customers than to waste your hard-earned marketing dollars on a large pool of leads who aren’t likely to convert.

To be successful with your lead generation efforts, you’ll need to understand two key types of leads: Marketing Qualified Leads and Sales Qualified Leads.

A Marketing Qualified Lead (MQL) has engaged with your business but still needs to be nurtured by your marketing efforts to become a paying customer. While MQLs have shown some interest in your products or services, it’s unclear at this stage if they are real prospects.

A Sales Qualified Lead (SQL) is an MQL who has shown a real interest in your business and has been responsive to your marketing efforts. SQLs are highly valuable, as they are ready for a direct sales pitch that will help them convert to paying customers.

If your business needs help with lead generation, Asset Digital Communications can help! Our customized digital marketing solutions will help your business determine how much to spend on lead generation and generate more high-quality leads that convert.