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How do you work out cost per lead without any data?
Hi,
I sell bespoke wedding suits and am solely advertising on Google ads.
I’ve optimized my landing page as much as I could. As well as my keywords, I’ve been updating the negative keyword list every day.
It costs me £300 to produce a suit. And I charge £600 for a suit, so my profit is £300 excluding any other costs.
So far I’ve spent £400 on Google ads and have only received 2 leads who did not make any purchases.
A lead is someone who just requests a phone consultation.
With this information, would anyone know how I would go about figuring out my cost per lead? Ideally I would want to get £25 per lead.
My current daily spend is £25.
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1 Reply
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Cost per lead = Ad spend ÷ # of leads
You spent £400 and got 2 leads, so your cost per lead is £200.
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You are just starting to spend. I don’t recommend you to count o return of investment by now, focus on buying data for now, profit will como in a mid term
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If a lead to you is a phone consultation, your cost per lead is your spend divided by the number of phone consultations.
To determine the optimal cost per lead, you then need to work out your closing ratio for phone consultations. From there, you can note how many consultations it takes to get a sale.
Once you have *that* then you can begin to assess what daily budget you need based on your bandwidth and availability. You can further look to different bud strategies such as tROAS or tCPA based on your business need.
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Think about more what your average order value is.. that is, if you make a sale, what is the average amount of that sale… and note how much profit you would make off that! So even if you sell a suit.. maybe they pick the nicer material usually or you also sell accessories? What is your average sale?
Then what is your Net profit percentage? At the end of the day… do you do 10% in net profit percentage?
So if your average order value is £850 and you know that 10% is profit.. then you know that a sale
Is worth £85.Also.. how many leads does it typically take you before you make a sale without google ads? Is it 5? 10? Use that as a starting point when trying to figure out.. let’s say it is 5 leads before you make a sale..
But now you realize that it takes 5 clicks before you make a lead..
Say a click costs you £5… so in your daily budget.. you would hope that you would get one lead everyday..
So now a lead costs you £25, but it takes 5 leads before a sale.. so a sale actually costs you £125 in ad spend but you are currently only making £85 per suit…
Is that a problem?
It could be.. if you only ever sell one suit to one person at a time… if this were the case.. that you were only selling one suit at a time and they never bought again… then you would have to figure out a way to decrease the number of clicks before a lead, increase the likelihood a lead brings in a sale, or increase the number price of your suits to make
It worth it.But you are a bespoke wedding suit creator and with grooms comes groomsmen and fathers.. so maybe for every sale.. you actually bring in on average 3 suits from referral traffic so now you are actually making £85 x 3 (£255) per successful lead… of those referrals… one person may get (re)married and want one of your suits.. you may have this data or just kind of understand what typically happens..
Then you would also want to factor in.. what is the lifetime value of a customer.. do you make bespoke suits for business? If so.. what is the likelihood that they come back? Or are you typically a one and done (assuming no remarriages).
Hope this helps you in your path! Feel free to ask any other questions!
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Right now your cost per lead is £200, if you want your lead to be £25, you need a lot more data, and you gotta see what keywords convert better.
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I assume you have no true conversion tracking and are looking how to optimize to what is actually driving the calls? Setup call conversion tracking and web form conversion tracking and that should help. Also, at 25 a day, don’t expect a cpl of £25. You need a lot.kore data to optimize against over time.
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Hi mate. This is a space I know a fair bit about. I helped the manager of 6 stores of moss brothers relaunch after renovations and a few competitors closing around them on high street locations. Drop me a message or email me [email protected]. I’ll need to see your ads in more detail but happy to help.
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Your current cost per lead is $200
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This sounds like ecommerce, ideally you should have your revenue pulled into GA4 and imported into Google Ads, or if through shopify or another platform you may be able to import sales directly associated with Google Ads.
Your current performance is spending £400 to make £1,200 in sales, you’re currently at a 300%ROAS. Just doing a bit of math, to reach your ideal goal of £25 per sale, you’d want to focus on hitting 2,400%ROAS in the Google Ads dashboard this column would be (cost per conversion value) if you’re using autobidding setting the bid strategy to max conversion value > target roas then enter 2,400. It will take time to reach this if at all, lots of factors at play, if running standard shopping or search ads on manual bidding, you would start adding bid adjustments to locations, ad schedules, demographics, audiences, etc. And bid higher where you get closer to your target ROAS or lower if it’s cost is getting too higblh before making a sale.
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