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What CPA value do you place on a lead (email)?

by olimits7
2 replies
Hi,

I broke my site into 3 main conversion types:

1. newsletter signup (lead)
2. registers on the site (lead)
3. becomes a customer (sale)

With 1 and 2 I don't make any money since they're not a customer yet; just an email lead.

I calculated my LTV based on my current customer base, and I know what my CPA is at the customer conversion level; so I know how much I need to budget towards advertising this way I'm not spending to much to acquire a new customer.

However, my issue is how much should I be spending on leads? I know a lead can eventually turn into a customer, but it's difficult for me to assign a conversion value to this since I don't know when and if they will ever turn into a profitable customer. And because leads have no immediate monetary value to them it's hard for me to calculate an accurate amount that I should be paying for just a lead.

I took a look at some old test Adwords and Facebook Ads I ran, and I see that my CPA for a lead was calculated between $17-$27 per lead. Now if this was the CPA of customers then I have no problem paying this much because of the LTV net profit I calculated. However, paying $17-$27 for just an email lead is not something I want to do.

Before I start ramping up my advertising, I want to be able to best control my costs and make sure I'm tracking as much as possible this way I know I'm not spending too much for a lead.

Does anyone have any experience with this? What conversion rate amount worked for you at the lead (email only) level?

Thank you!
#cpa #email #lead #place
  • Profile picture of the author williamrs
    The only way for you to have exact numbers is by testing.

    You will have to capture a certain amount of leads, then expose them to the products and see what conversion rate you get. You may also use products on the back-end to improve the customer value.

    After this test, you should be able to determine a conversion rate on both front and back-end. Then, use that number to calculate the value of each customer and the maximum that you can pay per lead.

    Of course, these numbers may vary according to the type of campaign and traffic source, but do it with one traffic source at a time and you should be able to measure everything.

    Anyway, I have to agree with you that $17+ for an email is incredibly high. If you are sneding people directly to your site, though, you can see numbers like that. I suggest you to always use landing pages to capture leads. I do lot's of lead gen for local business and I always use landing pages when working with paid traffic. It should help you lower that big CPL.
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  • Profile picture of the author olimits7
    Thanks for the reply!

    Yes that makes sense. I guess I need to gather some tracking data first to see what conversion rate I'm looking at for leads that convert over to customers.

    Yes, I'll definitely give that a try. I guess one of my top goals should be to lower my lead conversion rate by using optimized landing pages. And even if these leads are not converting to customers at least I will be maximizing the total leads I receive and at the same time lowering my CPA for each lead.
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