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?