The Difference Between Cost per Lead and Cost per Call

by on May 18, 2018

the difference between cost per lead and cost per call

Have you ever heard this sales pitch before?

“If we run your campaigns, we can guarantee 20 calls per week!”

Any kind of advertising campaign with the intent of providing direct lead generation should have call tracking in place. That’s how marketing companies can make claims about providing oh-so-many calls per day or per week. The question remains: are those phone calls actual business opportunities?

At VitalStorm, we don’t make claims regarding how many calls you will get per week, instead we focus on a strategic measurable indicator—Cost per Lead.

So, what’s the difference between Cost per Lead and Cost per Call?

Cost per Call

Cost per Call is when you take your total ad spend and divide it by every single call you get through a Pay Per Click (PPC) campaign. The catch here is that not every call that comes through a lead generation campaign is an actual opportunity for sale. VitalStorm knows this, because we listen to every call generated (that is greater than 30 seconds) from our PPC campaigns to determine the number of leads—new customers or repeat customers.

There are several different kinds of calls that come through lead generation campaigns that are not sale opportunities. For example, a customer who has already booked an appointment with your company may search for you again on Google to ask when the technician is going to arrive or ask about how to apply a coupon. These types of calls come through your PPC campaigns, but they’re not actual opportunities for sale. Or you can get vendor-to-vendor calls through PPC or job applicants—the list goes on.

VitalStorm defines a lead as a new customer or repeat customer asking for a service you provide within your service area. Our PPC Team takes the information from the calls generated from the ad campaigns to optimize the account and ensure we’re driving cost-effective, local leads. We have limitations to the kind of leads we drive, because you’ll always have the price-shoppers. But by taking the call data and applying it to the work we do in the campaigns, we ensure that we’re providing the best bang for your buck.

Cost per Lead

Cost per Lead is determined by taking the total ad spend and dividing it by the total number of leads. In every PPC account, we have a goal Cost per Lead for which we strive to measure success. Our goal is that for every three to four clicks, we get one lead. Generating one lead from every three clicks is more difficult to do in more competitive search markets, especially challenging if we’re strategically placing lower-to-get cheaper clicks. In some cases, specifically for HVAC companies in the spring or fall when searchers are less motivated by weather conditions to pick up the phone and solve their problem, it can take four and sometimes five clicks to get a lead from the ads.

The goal Cost per Lead is determined by the average Cost per Click in the market. For example, if our average Cost per Click for a Plumbing campaign is $25, that makes our goal Cost per Lead $75. In PPC, our keywords are competing against other PPC competitors in the marketplace, which can drive up costs. But keep in mind that we choose what keywords to run on and – more importantly sometimes—what keywords to not run on. We also choose the placement of the ads to get the most cost-effective Cost per Lead possible. It is standard practice at VitalStorm to ensure every change conducted by the PPC Team in the account is measured with a goal to see positive results that lead to an optimal Cost per Lead.

Current VitalStorm clients are encouraged to ask their Client Relationship Manager how to determine the success of their campaigns using our exclusive reporting platform called VitalStorm Metrics. We have several reports to showcase the call data, the campaign data, and provide the Cost per Lead for every campaign.

If you’re interested in PPC advertising that generates cost-effective leads, not just calls, give us a call at 972-961-7380. That’s what we’re here for.