Almost every marketing conversation I have with a new company starts with the same number. Cost per lead. What it was last quarter, what it is now, and how to get it lower.
I understand why. It’s easy to measure, it moves fast, and it gives a leadership team something to point at in a meeting. When I was leading marketing at Blue Raven Solar, I watched that number as closely as anyone.
I’ve also watched companies optimize their way into a corner. They push cost per lead down month after month, and somewhere along the way close rates slide, the sales team gets frustrated, and growth stalls. The dashboard looks great right up until revenue doesn’t.
When cost per lead is the only target, every decision bends toward volume. You bid on the cheapest clicks. You shorten the form. You run whatever offer gets the most hands raised, whether or not those hands belong to people who will buy. Each choice makes sense on its own. Together they fill the pipeline with people who were never going to sign.
This hits hardest in the industries I work in. A cheaper lead that rarely closes still costs your sales team hours.
Someone buying a solar system, a new roof, or enterprise software is making a big decision. It takes months, and several people weigh in. The real cost of a bad lead in that world is the time your best salespeople spend chasing it, and the good opportunities they don’t get to while they do.
What to watch instead
I look at three things alongside cost per lead.
Cost per closed deal, by channel. It’s slower to see and harder to attribute, which is exactly why it’s worth the effort. It tells you where your money actually turns into revenue, and it often ranks your channels in a very different order than cost per lead does.
What your sales team says about lead quality. Nobody learns faster than the people making the calls. If your reps have quietly stopped calling a source back quickly, that’s data, and it usually shows up months before the revenue numbers do.
Whether people already know who you are. A prospect who has heard of you, read something you wrote, or been referred by a customer closes differently from one who clicked an ad an hour ago. That difference is brand, and it never shows up in cost per lead.
Lead generation still matters
None of this means lead generation is the enemy. It pays the bills, and in most of the companies I work with, it has to. The mistake is treating it as the whole strategy.
The companies that win over time run two things at once: a demand engine that pays for this quarter, and a brand that makes every future quarter easier. I call that compounding demand, and it’s the subject of the next essay.
