Is Your Lead Gen Paying Off? Use This Simple Equation

By: John Greenhow, Founder of Clickt.ca

Are you questioning if your lead generation efforts are actually profitable? It's a common concern for businesses. Understanding profitability is key to smart marketing.

This article will cover:

• The lead generation equation for calculating customer acquisition cost.

• Optimizing the post-click experience for better results.

• The importance of post-click conversions in reporting.

Think of lead generation as a pipeline; clicks go in, and customers should come out. Let's plug in the numbers.

The Lead Generation Equation: Your Profitability Check

Customer Acquisition Cost (CAC) = Cost Per Click (CPC) / Total Post-Click Conversion Rate 

Your total post-click conversion rate is the percentage of clicks that become customers, tracked in your website and CRM. Break it down:

• On-Page Conversion Rate: Clicks to leads (form submissions).

• Lead Conversion Rate: Leads to deals.

• Win Rate: Deals to customers.

Ensure your CRM segments data by campaign/keyword.

CAC vs. Customer Lifetime Value: The Profitability Balance

Sustainable lead generation means your Customer Lifetime Value (LTV) significantly exceeds your Customer Acquisition Cost (CAC) (ideally 3x+). Consider: Does your current CAC drive value or drain resources?

Example: $4.50 CPC / (10% on-page rate * 40% lead rate * 30% win rate) = $375 CAC. Is $375 profitable for your LTV? Identify optimization areas: Google Ads, landing page, lead management, or deal management.

Optimize After the Click

• 1. Landing Pages & Copy: Focus on customer problems, not just your business. Clearly communicate who you serve, their problems/desires, your solution process, how to start, and your offer. Use customer language from interviews and online research.

• 2. Lead Response: Aim for a first call within 5 minutes and at least six call attempts. Test your system as a secret shopper. Ensure it's reliable and scalable. Invest in the necessary people and processes.

• 3. Reporting: Integrate CRM financial data into your Google Ads reports. Track performance thresholds, diagnostic metrics, and actual revenue. This provides a clear view of profitability.

Key Steps for Profitable Lead Gen

1. Audit the lead generation equation before launching.

2. Write customer-focused copy for landing pages.

3. Test your lead response system.

4. Include offline conversions in reporting.

Implement these steps to build a profitable customer acquisition system.

John Greenhow is the founder of Clickt.ca. During seven years as a Marketing Director, he learned that real success starts with understanding a business’s financial performance, not just what’s happening inside the ad account.

You can find him on LinkedIn