How to explain cost per lead to a client

Cost per lead is the month’s ad spend divided by the number of people who got in touch because of the ads: spend ÷ contacts. If the account spent $412 and 53 people called or filled in the form, each contact cost $7.78. That is the whole calculation, and the only place an error can hide is in what you count as a contact.

“Lead” is marketer talk; with the client, “contacts” or “enquiries” lands better — that is the wording the script below uses.

Count the same things every month. If phone calls and website forms both count, always count both, and never add numbers from two currencies or two platforms into one figure. If a period is half-finished or the call tracking was down, say so instead of publishing a number you would have to take back.

The fastest way to lose a client is to explain CTR, impressions and quality score before breakfast. The owner of a local service business thinks in jobs and phone calls. Every metric you report has to arrive as one of three sentences:

• What it cost: "Your ads spent $412 in September."

• What came in: "53 people got in touch — 41 called, 12 used the website form."

• What that means: "Each contact cost about $7.80, a little less than last month."

Everything else — click rates, campaigns, ad variations — is for you, not for them. Bring it only when a decision needs it.

A rising cost per contact is the moment the client decides whether to keep paying you. Have the answer ready before the meeting, and make it a checklist rather than a defence:

• Where did the extra spend go? One campaign or the whole account?

• Did contacts drop, or did only the price of them rise?

• Did the phone actually get answered? A missed call still counts as a contact, so look at response before blaming the ads.

• Was last month unusually cheap? Compare against a longer stretch before calling this one a problem.

Then say what you will check and when you will come back with an answer. That sentence does more for the relationship than a good number would.

Some months the data will not support a cost per contact: the call tracker was offline for a week, the form spam got through, or the export is missing days. In that case the worst move is to fill the gap with a guess. Say “we can’t compute this month fairly — here is what we can see, and here is what we’ll do differently next month”. A client can forgive a missing figure; they cannot forgive discovering that one was invented.

This is the principle Tailon is built on: numbers computed from the totals you upload, and anything that cannot be computed labelled with why — never a zero pretending to be data.

Put it in the monthly note, in this order, and stop there:

“This month your ads spent $412 and brought 53 enquiries — 41 phone calls and 12 through the website. That’s about $7.80 per enquiry, slightly less than August. Two things I’m looking into before next month’s report: the gutter campaign, and whether every call was answered. The data can’t tell us how many enquiries became jobs — that part only your books know.”

Notice the last sentence. Offering the client a report that claims their enquiries were all paying jobs will win one meeting; telling them honestly where the data stops will win the year.