Your Cost per Lead Went Down. Is That Good News?
The number marketing reports most often only makes sense with a second opinion from sales.
Cost per lead gets more attention in marketing reviews than almost any other number. It is easy to calculate and fits on one slide, so it often stands in for the whole question of whether the marketing works, and when it goes down, the meeting relaxes. In my experience it deserves more curiosity than that, because a lower cost per lead can describe two very different situations.
Sometimes the campaigns have genuinely improved, with targeting closer to the people who buy and a landing page that explains the offer better. At other times the advertising platform has found cheaper people to show the ads to: people who click and fill in forms easily and are much less likely to buy. Both situations produce the same line in the report, and the marketing dashboard alone cannot tell them apart.
The view from the sales side
I saw how much the sales side changes the reading of this number while running campaigns for a credit brokerage that offered several types of loans in several cities. A lead for a mortgage and a lead for a personal loan cost different amounts to generate, take different amounts of work to qualify and bring very different revenue. An average cost per lead across all of them described almost nothing useful. We reported by city and by service line, and the decisions that improved the campaigns came from the feedback loop with the sales department. That loop showed which requests turned into real conversations with an adviser, and where the message of an ad did not match what the person clicking was looking for.
Part of that work was simply agreeing on definitions. Marketing and sales decided together what counted as a lead worth passing on and what counted as a qualified opportunity. Once those definitions existed, the cost per lead could be read next to the cost per qualified conversation. When the two numbers move in different directions, the gap between them is where the useful discussions happen.
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Spending less without losing quality
The reverse case is just as instructive. During the repositioning of a B2B manufacturer, a PPC and funnel audit showed that part of the budget was going to channels that produced contacts without producing business. We cut monthly media spend by about half and moved the remaining budget toward high-intent searches and partner leads. Lead quality held and then improved, at a time when the construction market was slowing down. A cost-per-lead chart would have shown little of that story, because the improvement was in what the leads were worth to the sales team.
Reading the number with a second opinion
When a founder asks me whether a falling cost per lead is good news, I ask for two numbers next to it. The first is the share of leads that sales considers worth working, measured with definitions both teams have agreed on. The second is the cost of a qualified conversation: the cost per lead divided by that share. It usually tells a founder more about where the money goes than the original figure.
A simple invented example shows why. Suppose the cost per lead falls from €20 to €15 while the share of qualified leads drops from 40% to 25%. The cost of a qualified conversation then rises from €50 to €60. The report shows a 25% improvement, while the business pays 20% more for each conversation that can turn into revenue. I would also look at quality by source and by product line before celebrating any average, since a cheaper campaign can change the mix of requests the sales team receives without anyone noticing for weeks.
What to bring to the next budget meeting
The tools most companies already have are enough for this. What matters is that marketing and sales agree on what a good lead is, tag requests consistently in the CRM for a few weeks and look at the two numbers together. A large part of my work as a fractional CMO consists of bringing the sales side into marketing decisions early enough that the budget follows the leads that become business.
The next time the cost per lead goes down, it is worth asking sales, before anyone presents it as a win, how many of those leads they would want more of.
