The CPL, also known as the cost per prospect, is a performance indicator which illustrates the profitability of a campaign in relation to the cost of acquisition per lead. A typical scenario would involve comparing the CPL of a Google Ads campaign with the CPL of a social media campaign.
This indicator represents the average budget impact of acquiring a new client. It’s calculated by multiplying your cost per lead by the sales close rate. For example, if a campaign generates leads at an average cost of $20 (CPL), and you evaluate that one sale is completed per every three leads, your customer acquisition cost would be $60.
The customer lifetime value allows you to calculate the net benefit of acquiring a client, considering the duration of that client relationship. This indicator allows you to determine, among other things, the customer acquisition cost (CAC) that needs to be maintained for a marketing campaign to remain profitable. For example: in the domain of cloud computing software (SAAS), where software is typically offered and billed as a recurring subscription, CLV is calculated by multiplying the duration of an average subscription by its price and then subtracting the variable cost linked to the subscription.
Similar to CLV, calculating ROI affords you a holistic picture of the profitability of your marketing campaigns. This is an essential indicator for choosing between different project options and budgets because it helps you determine the best option in which to invest.