What is a lead worth for your business and where are the best ones coming from?

Most business owners know that lead generation is the lifeblood of their company. However, you are not alone if you are unsure exactly where these leads are coming from, let alone know their value and the true cost of obtaining each lead.

There are many reasons why we may not know this information. For a start, often as business owners we are so busy. Busy doing all the things, we forget to take time to reflect on our numbers – all of them! Often we don’t track them as well as we could and attribution can sometimes be tricky, (i.e. is Google via organic search really the right source, if a person has been following you on social media for some time? When they complete that contact form that says how did you hear about us really the true reflection?). One method that can be relied upon is being able to track this information inside Google Analytics is really important to help you make wise decisions around what are the most profitable lead generation channels for your business.

So we are faced with 3 key points.

  • Understanding where your leads are coming from
  • Understanding the value of each lead and also 
  • Understanding what each lead costs you


Traffic and Lead Acquisition

Let’s look at how you know where your leads come from 

At its simplest, Google Analytics can tell you this. Often it might be as easy as looking at where people come from when someone has landed on your thank you page once your lead generation form has been completed.  Make sure you understand the source ( ie Google) and the medium ( ie CPC for Google Ads).  We really should be across where our website traffic actually comes from, not just looking at the website traffic.

We often spend far too much time worrying about what we should be sharing on social media, without being conscious of where our leads are really coming from and what those precious leads are worth.


How to calculate the Value of your Leads


Yesterday, I did an audit on a client site around lead generation.

We discussed what a conversion for a particular service was worth. We then broke down how many client calls on average they won, to determine their hit rate. This allowed me to calculate the value of each lead to her business (in an overall sense, anyway!) 

It works like this. 

On average, when they secure this kind of business their service fee is around 8000. 

They know that when they look at the total number of leads they receive, that approximately 1 in 5 of the appointments booked, convert.

So, effectively, each lead is worth

$8000/5 = $1600

An alternative way of calculating this would be

Total Revenue (For this service) / Total number of leads = Value per Lead

This number can then be used to determine their return on ad spend (ROAS) for Google Ads or Facebook Ads. It is so much easier with any actual online sales/transactions where you can clearly see the revenue generated from the conversion.  It is worth understanding this metric, rather than just knowing the cost per lead. Cost and Value of leads work together. 


How to determine the cost of your leads

Determining your cost per lead will depend largely on what platform you have used to get that lead. What I mean by that is, when we think about our costs per lead for say Facebook Ads or Google Ads, we can clearly see those costs. We can see our ad spend inside the platform and we then just need to add on the costs to get the ads created/reviewed/managed by someone else, or ourselves. 

So a calculation for this might be

(Cost to Create Ad + Cost of Ads)/Number of Leads = Cost per Lead

Costs per lead calculations will be different when looking at email marketing ( ie the cost is like to be the cost of the email marketing platform + the cost of the work to create the campaign ) 

(Cost to Create Campaign + Monthly Fee of email marketing tool)/Number of Leads = Cost per Lead

It won’t take you long to determine where you should be putting your time, energy and money when you look at the results and calculate the numbers. 

Some of your numbers are likely to be at best averages. Does that matter? Not in my view, it is a good start and over time you will get better at determining this information. 

Once we dive into the value of each lead, the cost of a lead and where they come from, we can unlock powerful insights about where we should be spending our time in regards to our Digital Marketing.


For example,

Why are you spending so much time creating social media content? When perhaps you should be spending more time creating some long-lasting website content? 

Or spending time crafting a great lead magnet that builds your list?

So back to my client. 

It came as no surprise to discover that the top converting traffic to their lead gen page came from 3 key sources.

  1. Google Ads
  2. Organic Search
  3. Email


Social Media does not convert for this client. 

So does that mean that social media content is a dud? No, but the purpose of social media for them is brand awareness and community/education. It is a presence, but not the main game.

It’s really important to think about where you put your online energy – as budgets tighten, you need to make sure that your marketing efforts are actually where they need to be.

If we know where leads are really coming from and we also know what the value of each lead is to our business, this informs where we need to focus our attention and efforts. The cost per lead in each platform channel will also help to inform these activities.

Need some help determining where your leads are really coming from and what to do next? I’d love to chat to you about how the team at Adventure Digital can help.


Leanne O'Sullivan

Digital Sherpa & CEO
I help businesses grow through strategic digital marketing.​ I am the founder, CEO and Digital Sherpa of Adventure Digital – a marketing agency based in regional NSW, servicing clients all over the Australian eastern seaboard. I’ve made it my life’s mission to help you grow a sustainable, enjoyable and profitable business.

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