One of the potential drawbacks of cost per lead marketing is that it can become quite expensive. Furthermore, many companies neglect to match the amount they spend on CPL to their customer lifetime value. Fortunately, there are many ways to hone in on a more effective CPL strategy. The goal should be to reduce costs while maintaining or even increasing the amount of resulting sales.
When using a CPL system, you will have certain parameters that you can use to determine what leads are sent to you. This an extremely important part of the process as it is where the majority of inefficiencies arise. After all, if you aren’t clearly defining how to target the right leads, you will receive a lot of poorly qualified leads and will have a poor conversion rate.
One way to improve your targeting criteria is to identify negative qualities. If you find that a certain group match the profile of your ideal customer except for one trait that makes them unlikely to buy, you could choose to exclude those with that trait. For example, if you sell high-end tires, you may target drivers of performance cars. However, if you know that owners of one particular car tend to stay loyal to a different brand of tires, you could opt to exclude them.
You should also carefully examine the way that you are profiling your customers. It is better to have several sets of criteria that are all high leverage than a single, broad definition that does not accomplish the same conversion.
CPL is typically priced to match the quality of targeting. If you find that improving targeting is not increasing cost efficiency, try the reverse. A reduction in your spend per lead may actually improve you customer acquisition cost. For example, if you sell phones and you are currently spending $20 per lead to match a carefully defined set of criteria with a 50% conversion rate, you may find that spending $5 per lead will achieve a 25% conversion rate. This would half your new customer cost.
Bidding in a CPL campaign is all about matching the amount you spend per lead to your conversion rate in order to achieve optimal efficiency. Often being more specific will improve your efficiency; however, sometimes the opposite is true. Try a few A/B tests in order to hone in on the right setup.
Review Your Past Campaigns
One of the best ways to glean useful information about what will work and what won’t is to do a review of your prior efforts. This should illuminate that sweet spot of cost against conversion. Furthermore, this can help to find where your problem areas are. Perhaps you will find that you are targeting all age groups; however, primarily people under 30 buy your product. The reality is that most CPL campaigns are poorly optimized at the start. Fortunately you can improve this situation as you gain more and more data. However, the catch is that you have to spend the time to review what you’ve learned.