7 Ways to Reduce Your Cost Per Lead

How can we end the war between sales and marketing?

One of the easiest ways to do this is to reduce the cost per lead.

This one of the Key Performance Indicators that can dramatically impact your bottom line.

The cost per lead varies widely between markets and different businesses.

What is Cost Per Lead?

There are different ways to define this.

I’ll simply define with the following formula:

Cost per lead = Cost per click / Conversion rate

Your cost per lead is the cost per click on an ad divided by the conversion rate of the ad.

The conversion rate, in this case, is a lead.

It’s different than the more commonly defined term conversions or sales.

The best way to reduce the cost per lead is to lower the cost per click (CPC) or lower the conversion rate or both.

In this post, I’ll go over 7 ways you can reduce your cost per click and your conversion rates.

1 – Define the Psychographics of Your Customer

A lot of businesses make the mistake of running lead generation campaigns without first understanding the psychographics of their customers.


What are Psychographics?

Psychographics is defined by the following:

“Psycho-graphics is the study of personality, values, opinions, attitudes, interests, and lifestyles. Because this area of research focuses on interests, attitudes, and opinions, psycho-graphic factors are also called IAO variables.”

When you understand the psychographics of your customers/clients you’ll have a much stronger foundation.

This understanding will allow you to write better copy, provide more relevant content, allow you to speak their language, and give you the real reasons why your customers buy.

How to Build a Psychographic Profile for My Customers?

There are several ways to do this.

The best way is to simply talk to your customers and interview them.

You can ask simple questions like where they are from, what they did over the weekend, what hobbies they have etc.

You can also conduct customer surveys and look at your website analytics.

To read more on building psychographic profiles for your customers check out these two posts below:

2 – Make Sure your Ad Sends the Right Message

If you have a good understanding of your customer and how they interact with your website then you know what messages to send with your ads.

A lot of this comes down to being aware of what stage of the sales cycle your prospects are.

For example, someone searching “how to buy widget x” is at a different stage than someone searching “what is widget x”

The first search is in a buy now mode while the second search is still in awareness stage of the buying cycle.

You should make an offer on the first search while offering an educational piece of content on the second search.

The most important thing to remember is to answer the question they are searching for.

With PPC, you can target a lot of searches that are in the buying mindset.

With social media this is different.

If you are doing paid advertising on social media you should remember that the behavior of the traffic is different than on search results.

Social media is like a party.

People don’t generally like to be sold at parties.

3 – Make Sure Your Ad Matches Your Landing Page

How many times have you searched for a specific product and when you clicked on the ad you were taken to the website homepage where the product is nowhere to be found?

An example of message mismatch below:


One of the biggest mistakes that companies make on PPC is directing their ads to their homepage.

Over 98% of ads drive traffic to a page that doesn’t match the message of the ad.

This creates confusion with the website visitor.

If a person clicks on an ad for a certain keyword and then they’re taken to your homepage.

But they find that the keyword is not there, how do you think this affects their behavior?

By not giving them what they want, they simply disappear.

Each ad should have a specific landing page with a single offer.

This reduces hesitation and gives a clear path to the desired action you want them to take.

This creates a feeling of a message mismatch.

It’s a deadly mistake that will increase your costs.

Ideally, you would create a single landing page for each keyword.

But this can take too much of your time if you have hundreds or even thousands of SKUs.

You have to create separate landing pages for each keyword group.

3 – Provide An Indoctrinating Sequence

Most companies fail to provide an indoctrinating sequence.

This important step serves as the opportunity to tell your prospects who you are and what you can do for them.

Digital Marketer provides what questions you should answer in your indoctrinating sequence:

  • Who are you?
  • What do you stand for?
  • Why are you different?
  • What should they expect from you?
  • How often?
  • What should they do next?

Your new prospects should receive this sequence in the beginning once they’ve opted into your list.

Here’s an example of a sample email you can send out to your prospects:

welcome email

This email has all the right elements of a welcome email.

It answers the following questions:

  • Who they are.
  • What they can do for you.
  • It builds authority and credibility.
  • It sets the right expectations.

Once you’ve sent this out you can continue your indoctrination sequence.

You can send videos or webinars that answer more questions and educate your prospects.

A well-defined indoctrination sequence can be used to increase your conversion rates.

4 – Understand Different Traffic Behavior

It’s important to understand the behavior of your traffic.

Different channels of traffic behave differently.

A person coming from an organic google search will behave differently than an Instagram click.

This also goes back to making sure your ad message and your call to action match.

5 – Reduce Landing Page Friction

There are several things you can do to reduce landing page friction.

Conversion expert Michael Aagaard defines friction as the following:

“4 years of research and hundreds of split tests have taught me a lot about conversion optimization. One of the most important lessons is that friction kills conversion. The good news is that reducing friction is one of the most effective ways of increasing conversion. The bad news is that it can be difficult to spot sources of friction if you don’t know what to look for.

The best definition of friction I’ve come across is the one MarketingExperiments offers. In their methodology, friction is defined as a psychological resistance to a given element in the sales or sign-up process (Source: MarketingExperiments.com).

Friction has a negative impact on the decision-making process of your prospects and will tip the decision towards “No”. The less friction the prospect encounters, the more likely he or she will be to accept your offer. So the more you can reduce friction, the more you’ll be able to tip the decision back towards “Yes”.”

The goal of any landing page is to have the highest conversion rates.

Your landing page should make it easy for your prospects to take whatever action you want them to take.

Here are some ways to reduce friction on your landing page:

  • Have a single CTA.
  • Make sure your landing page offer match your ad’s message.
  • Optimize for Mobile Viewing.
  • Forms should be above the fold.
  • Use clear actionable language.
  • Use directional cues.


6 – Add Qualifying Elements

Your sales and marketing teams should work together and come up with a lead scoring system.

A lot of businesses have a disconnect between sales and marketing.

Most sales teams have a good understanding of what makes a lead qualified.

Marketing should take the cues and build an in-house qualifying metric that separates good and bad leads.

A lead scoring system can look something like this:

lead scoring

Marketo recommends the following criteria on before passing your marketing lead to your sales team:

  • Target company. The prospect must work somewhere that could purchase your solution. Look for businesses similar to those who have already purchased solutions like yours.
  • Right person. Ideally, your contact should be able to make the decision, or at least, have access to someone who does, like a VP or Director (e.g. “access to power”).
  • Relevant pain. Does the decision maker feel financial pain? If you aren’t talking to the decision maker, ask: “who else experiences this challenge besides you?”
  • Defined timing. Is the prospect willing to evaluate your solution in a defined time period of time, and is there a specific next step: a discovery call, a demo, etc.

You can do this in several different ways by adding the following things:

  • Surveys.
  • Questionnaire Forms.

7 – Improve Your Website Speed

One of the best ways to improve your conversion rates is to have a fast loading site.

Users don’t have patience for a slow site.

speedBy having a fast site you’ll have more users stay on your page which will increase your conversion rates.

There have been a lot of experiments that show an increase in page speed will increase your conversion rate.

Auto parts retailer autoanything.com cut load times in half.

This resulted in a 9% increase in conversion rates:



What’s the easiest way to stop the conflict between sales and marketing? 

Reducing your cost per lead. 

You want your conversion rates to increase by ensuring that people stay on your website.

Engage with users and send ads that are appropriate for them to entice them to take action.

So try out some of the 7 pointers in this post and you’ll notice that your cost-efficiency per lead will be hugely impacted.

About the Author

My name is Mauricio and I'm the founder The Cardenal Group. I write about online marketing, sales, and entrepreneurship.

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