As a business owner, you must know the importance of calculate cost/lead cost generation. It is a highly efficient way to generate new consumers, increase brand awareness and ultimately, increase your revenue.
Lead generation is one of the many ways of digital advertising/online advertising pricing model. There display advertising has been a steady growth in the amount of money spent by marketers on it, and this figure is expected to reach US$3.2 billion by late 2023.
Cost-per-lead (CPL) is a metric that businesses use to gauge their lead generation efficiency. It indicates how much a brand spends on its marketing efforts to attract a single lead.
However, not every lead has the potential to be a customer, and you have to qualify them to avoid wastage of time, marketing efforts, marketing team, and money.
Read ahead to see the importance of Cost per lead (CPL) and how you can calculate the amount you are willing and afford to ad spend on a customer.
It might seem more straightforward to choose a budget to ad spend on your quality leads instead of coming up with a strategy to select the best Cost per lead (CPL). While you can certainly do that, a target cost per lead (CPL) derived randomly will end up giving you unexpected results.
If you’re looking for tangible results, you don’t want to do that. It is essential to align the business goals you want to achieve with a target Cost per lead (CPL) as they differ from one to another, and a set percentage won’t be of any good. For instance, a profit-maximizing goal and doubling the annual revenue goal requires separate Cost per lead (CPL).
By being aware of your goals, you can decide how much you want to spend on them, according to their relevance and importance. It makes it easy to come up with various marketing strategies and carefully allot its budget.
The target Cost per lead (CPL) influences several marketing decisions, making it essential to choose it wisely and avoid wrong optimizations.
To calculate an optimal Cost per lead (CPL), you have to understand your businesses’ needs. Set the record straight with your goals and then proceed.
Of course, you want to target the right leads and spend money on getting beneficial outcomes, but before that, it is important to look at your marketing budget to check if the cost to acquire a customer falls in that range. To determine this cost, calculate a new customer’s average lifetime value.
Customer Lifetime Value predicts how much monetary benefit your new customer can provide your business with. While companies involving ecommerce don’t see customers returning, things get complicated if your business relies on local lead generation. Here customers can subscribe to services like Netflix or continually hire you for your services. Your CLV is based on all of these factors.
For instance, if a customer pays $19.99 every month for three years, that customer isn’t worth the same amount because that is just the money you get initially. In fact, they are actually worth $59.97, making it worthwhile to spend more than $19.99 to add a customer. Of course, you will lose some money initially, but the profits will be worth it as your relationship progresses.
Even though there are various methods to calculate the average CLV, here’s one of the easiest way to do so is:
Mean monthly revenue of a customer/churn rate = CLV
Let’s apply this lead formula to a practical example. Assume your company is a business widgets supplier with monthly delivery subscription models that other firms can also take advantage of.
In this case, use your company’s mean monthly revenue and divide that number by your monthly mean number of customers. For example, your monthly average revenue from a customer is $70 if 100 customers give $7,000 monthly.
To determine the churn rate, use the data for a specific month by subtracting the repeat customers from the whole number in the same month. Divide this value by the entire customer base of that month. For example, if you get 100 customers in a month and 90 are recurring customers, you get a churn rate of 0.1 or 10%.
Using these values, you can get the CLV with the help of the formula. For this example, the CLV is simply $700 ($70 / 0.1).
After figuring out your CLV, find out the actual profit margin. You have to calculate the cost to look after the new customer you get, for the entire time they’ll do business with you.
For instance, if the cost to take care of an existing customer’s requirements is $7 monthly for spending approximately ten months with you, it will provide fulfillment costs of $70.
Additionally, you have to consider more fixed costs of your business and divide those by the average monthly customer number. For instance, considering the same example, if rent, utilities, salaries, etc., amount to $5,000 monthly, that turns out to be $50 per customer monthly.
To calculate the mean profit per customer, a customer’s fixed and fulfillment costs can be used as in the equation below.
CLV – (Mean monthly costs of a customer / churn rate) = Profit of a customer
In this hypothetical example, the mean CLV was $700, and it costs $7/month to look after a customer for the business to proceed. For a customer, the monthly total average cost turns out to be $57. For a customer’s lifetime, this amounts to $570 ($57 / 0.1).
Subtract this value from the average CLV to get a profit of $130 ($700 – $570).
After calculating the amount, you can spend to convert a lead into a customer, work backward and figure out the cost you can bear to achieve this.
In an ideal world, we could consider the possibility of finding new customers out of all the leads, but those who have chased leads know how hard that can be. Use the following formula to calculate the amount you can spend on every new leads:
(Monthly sales closed / Monthly leads) * Profit of a customer = Maximum CPL
In the hypothetical scenario above, if you get 250 leads every month and close 50 out of those, you can spend $26 on every lead ($130 * (50 / 250)). If you spend more, you’ll lose money on each customer.
In addition, running and tracking metrics on a remarketing campaign means bounced traffic may not yet be a complete loss to you.
Even though you know your budget for a customer, it doesn’t solve the mystery of how much your target cost per Lead (CPL) should be, which ultimately comes down to your business goals.
Understand what your ultimate goal is. Is it to make tremendous amounts of money or reel in potential investors by showing you can get customers? The target cost per lead (CPL) for both cases will be different because you should be prepared to have some loss initially in the former case so you can build a solid customer base. Here, you will have a profit margin that is lower than the target CPL.
Of course, this is not a recommended business practice, but it is a clear indication of the importance of using the optimal Cost per lead (CPL) according to your goals.
Now that we have figured out how much you can and are willing to spend on your target cost-per-lead, let’s get to an essential part of this process: all the customers are not worth the exact cost.
Using the average CLV to choose a target Cost per lead (CPL) is a great approach, but what happens when you find more valuable customers to your brand? In this case, you have to assess what the right Cost per lead (CPL) will be according to the different customer types.
Let’s look at the ACME Widgets case because they sell the best widgets, and their average CLV is a whopping $24,000!
If you use the above hypothetical scenario calculations with the $24,000 mean LTV, a high acquisition cost per lead will be affordable for you.
However, it helps to know what types of buyers you have. In the case of ACME, there are three critical types of buyer personas, including Widgets Classic, Widgets Pro, and Widgets Infinity, with average LTVs of $1,750, $72,000, and $1.59 million, respectively.
These buyers with different LTVs enable you to spend differently on them. You can spend much more on Widgets Infinity leads than Widgets Classic on any day.
Not only this, your entire marketing campaigns/ad campaign varies with the different types, which you work on when you decide the optimal Cost per lead (CPL).
Compartmentalizing leads makes things simpler and enables you to spend wisely than choose some strict acquisition cost. For instance, Classic, Pro, and Infinity’s acquisition costs are $1k, $12k, and $202k, respectively.
These different buyer personas help you understand the amount needed in turning a lead into a customer. It will allow you to be more strategic in your approach towards the right Cost per lead (CPL).
For instance, an Infinity customer may require a target Cost per lead (CPL) Compaigns that is 80 times more than that of a Classic customer, but the higher cost shouldn’t budge you too much as Infinity would be a lot more profitable in the long-term.
If ACME Widgets would’ve stuck to an average figure to spend on every new lead, they probably would’ve closed most of the marketing channels and google ads that got them Infinity leads which would be detrimental to their business. Marketing channels are the most important thing!
For effective marketing campaigns that include a lead generation strategy, you have to invest time, cost-effectiveness, money, and effort to get valuable results.
Picking the right target cost-per-lead requires accurate thought and calculations so you can focus on the customers appropriately and optimize the right aspects of your paid marketing plan. This is particularly true if you’re manually doing the work and not automating your bidding on keywords in PPC. One of the most important things to recognize in this entire process is your business goals to identify the optimal Cost per lead (CPL) that your marketing campaigns/lead generation campaigns requires. Additionally, you have to consider your customer base to make the right decision.
Know the search engine optimization leads you want to focus on because not all of them are the same. Once you have this idea, it’ll be easy for you to make an informed decision rather than picking random figures and wasting your time and money!
Engage our PPC management services today and find out how we can help you dial-in your cost-per-lead!
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When this apartment complex client partnered with PPC.co, their goal was clear: generate more qualified leads through Google Ads. In just 60 days—from January to March 2025—we transformed their paid acquisition performance. Total conversions more than tripled, jumping from 10 to 32, while the overall conversion rate soared by over 300%. At the same time, we drove down the cost per conversion by 44%, delivering significantly more leads at a much lower cost.
By strategically combining Performance Max and high-intent Search campaigns, we not only increased lead volume but improved overall efficiency and ROI. This rapid and measurable improvement underscores the value of data-driven optimization and expert campaign management.
This case study is a testament to what can happen when a well-structured campaign meets expert strategy and continuous optimization. Whether you're launching a new property or looking to boost occupancy in a competitive market, PPC.co delivers real results—fast.
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Whether you’re a life coach or a business coach, you need a steady flow of leads to stay profitable. It’s not enough to post on social media. No matter how popular you become, being well-liked and even loved doesn’t guarantee clients.
For coaching businesses, pay-per-click (PPC) campaigns can be a powerful way to attract high-intent leads – people actively looking for transformation, accountability, and clarity. But you can’t just throw some ads up on Google and expect results. You need a strategy that uses the right targeting, messaging, and structure to avoid expensive lessons in trial and error.
In this guide, we’ll break down the essentials of building cost-effective PPC campaigns designed specifically for coaches who want conversions, clients, and growth.
The first step to creating any high-performing PPC campaign is identifying what your potential clients are searching for online. PPC ads show up in search results (Google, Bing) and social media feeds (Facebook, LinkedIn, TikTok) based on the phrases users type into the search bar when looking for content.
To get your ads seen by your ideal clients, you’ll need to tap into their innermost thoughts – like a burned out executive searching TikTok at 2:00 a.m. for “how to find my purpose” or “how to get a promotion.” You’ll want to target searches that indicate the user is unhappy and is looking for a solution that coaching can help them achieve.
Not all keywords are equal. You’ll get more leads that convert by targeting keywords that indicate a user is ready to take action. Use tools like Google Keyword Planner, Semrush, and Ubersuggest to find keywords with strong intent. High-intent searches might include phrases like:
· Business coach for entrepreneurs
· Life coaching to reduce stress
· Life coaching to find my purpose
· How to grow my small business fast
· Career transition coaching
These and similar phrases related to your coaching business will be the foundation for your paid ad campaign on any platform.
The customer journey consists of three stages that lead someone into the buying stage:
· Stage 1: Awareness. The prospect is aware they need help, but they don’t know exactly what they need or how to get it.
· Stage 2: Consideration. The prospect has named their problem and are actively looking for a solution.
· Stage 3: Decision. The prospect knows they want to work with a coach, and they’re in the process of deciding who to work with.
If you’re running a full marketing campaign with email marketing, you’ll want to run ads that address leads in all three stages. The people you capture in stages one and two will need to be nurtured over time through email. Leads you capture in stage 3 can be more easily turned into a paying client faster. If you aren’t capturing emails yet, only target leads in stages two and three for the best results.
No matter what type of coach you are, your ideal clients will have a variety of goals and pain points. Not everyone will share the same concerns or desires. For example, some business owners want to grow their business and open new locations, while others want to build a stronger team or increase their revenue. Some life coaching clients want better relationships while others want to find their life purpose. When you run ads, your target market needs to think, “this ad is for me.” Generic copy won’t cut it.
You’ll need to run a different ad campaign aimed at each client avatar. To get the most conversions, you’ll need to reach one avatar at a time. Speaking to one avatar in your ads and landing page copy allows you to go deep into their needs, fears, hopes, worries, and concerns. The more specifically you can connect with people, the more likely they are to convert.
To figure out what your ideal clients want, think about their struggles and the potential keywords they might be searching on various platforms. For example, a lot of people are unhappy at work. In this case, potential keywords they might be searching for include:
· How to find a job that doesn’t suck
· How to handle conflict at work
· How to win respect at work
Once you know the pain points you want to target, craft your messages so they speak to emotional triggers. People respond to a sense of urgency (“Burned out? Don’t wait”), personal growth promises (“Find your life purpose in 90 days”), and emotional relief (“Stop second-guessing yourself”). Speak to where your ideal client is right now and show them you can take them where they want to be.
Using this information, you’ll craft ads with headlines, copy, and corresponding landing page copy that speaks directly to your ideal clients. For example, your ads might look like this:
Problem/Keyword search: How to find a job that doesn’t suck
Ad headline: Hate Mondays? Let’s Fix That.
Ad copy:
You spend 90,000 hours of your life at work. Shouldn’t more of them feel fulfilling? Learn how to reconnect with purpose and enjoy what you do. Book your free clarity call now.
Problem/Keyword search: How to handle conflict at work
Ad headline: Tired of Office Drama? Here’s Your Way Out
Ad copy:
Learn strategies to set boundaries and manage work conflict like a pro. Click for a free strategy session.
Problem/Keyword search: How to win respect at work
Ad headline: Feel Invisible at Work? Let’s Change That
Ad copy:
You’ve got the skills. You put in the hours. But the recognition never follows. Sound familiar? Respect isn’t about being louder – it’s about confidence, clarity, and strategy. Book your free consultation and finally be recognized for your full value.
Just like each of your ads target a specific avatar, your landing pages need to do the same. Don’t send traffic to your homepage. Your landing page should reflect exactly what your ad promised.
If your ad says, “Executive Coaching for Burnout Recovery,” then the landing page should address burnout, speak directly to executive professionals, and offer a call-to-action (CTA) for a discovery call.
Effective landing pages consist of the following elements:
· A dedicated page made just for your ad
· A seamless transition from ad to landing page
· A clear headline that addresses the pain point directly
· Testimonials or results from real clients if possible
· A strong CTA, like “Book your free 30-minute breakthrough session”
· A clickable phone number or link to book a call immediately
Remember, you’re not selling coaching services. You’re selling a better version of your prospect’s life. Make sure your copy reflects that.
Coaches often underspend on ads, thinking they can game the system with just $5/day. That’s not an effective strategy. What you may not realize is that setting a low budget actually reduces the number of people who see your ad. Your ad visibility increases the more you spend.
Start with a modest, but meaningful budget of at least $1,500-$2,000 per month. The good news is your cost per click (CPC) will be significantly lower than other industries, like legal and insurance. However, if you’re not sure how to set a PPC budget or handle bidding strategies, hire a professional PPC agency to manage your ads. It’s the easiest way to avoid costly mistakes.
Your ads should target the right people at the right time.
First, think about your ideal client who is looking for your services.
Who hires coaches? Usually, it’s:
· Entrepreneurs who feel stuck or overwhelmed
· People who want to start a business, but don’t know where to begin
· Mid-level professionals seeking career growth
· High achievers facing burnout
· People at a personal crossroads (divorce, job loss, mid-life crisis, etc.)
Once you pinpoint who might be looking for your services, you’ll need to choose the right advertising platforms. Your main options are:
· TikTok Ads
· Instagram Ads
· Pinterest Ads
Advertising on each of these platforms comes with pros and cons – some are specific to coaching services. For example, while Pinterest is likely cheaper than Google, Pinterest leads might not be committed. However, TikTok and YouTube users frequently search for solutions to specific problems.
You might be surprised to learn that TikTok is a gold mine for coaching businesses. It’s not just an app for teens. Over 71% of TikTok’s users are between 18-34 years old, and 32% are 25-34 years old.
Unlike other platforms, TikTok doesn’t function like a typical social media platform where the purpose is to build a community. It’s more like an outreach platform and people are constantly discovering new content creators. The algorithm’s goal is to get as many people watching content for as long as possible. To achieve this, users are given content based on their interests, not just from people they follow. You don’t need followers or viral content to get seen. Each video stands alone in the algorithm and has an equal chance at getting attention.
People use TikTok to find insights and advice on just about everything you can imagine, including personal and business-related situations. While you can run ads on TikTok without a following, it helps to have an established account with solid content. You’ll build more momentum this way, and you can boost your native content to earn more trust across the platform.
Additionally, TikTok ads can target users based on hashtag interactions. People use hashtags on TikTok to find content more than any other platform. If you’re not advertising on TikTok, you’re missing out on clients.
Coaching clients aren’t impulse buyers, and they need to see your face and personality to know if they want to work with you. Wherever you run ads, you can expect people to click on your account to check you out. You’ll get more conversions by publishing short, engaging videos that show your authenticity and provide inspiration and support.
Whichever platform(s) you choose to advertise on, make use of custom audiences to target your potential leads as specifically as possible.
Everyone wants clarity, but not everyone wants to pay for it. That’s why you need to block certain searches using negative keywords. You don’t want your ads to show up for people who are just curious, looking for freebies, or looking for unrelated services. They’ll just click on your ads, waste your ad budget, and potentially waste your time if they sign up for a free call.
Suggested negative keywords for coaches include:
· Free coaching session
· Coach training program (these people want to be coaches, not hire one)
· Sample coaching questions
· Coaching worksheets pdf
Defining these and similar negative keywords will keep your clicks high-quality and your cost per lead low.
It can be exciting to see how many people are viewing and clicking on your ads, and there is a time and place to assess impressions and clicks. However, unless you’re focused on optimizing your ads, forget click-through rates (CTR) and look at how many calls you’re getting booked, how many contact forms are being submitted, and how many email addresses you’re collecting through your lead magnet downloads.
It’s crucial to know which campaigns are bringing you results so you can cut the ones that aren’t working.
People don’t usually buy high-ticket coaching packages the first time around. They need time to research, investigate, and consider their options. You might get some clicks and email signups from your ads that don’t turn into paying clients right away. That’s where remarketing comes in.
Set up ads on Google and Facebook to follow users who have already clicked on your ads and visited your website. Since these ads will be displayed only to people who have already interacted with your brand, you can use different value points to engage them, like testimonials, free guides, and limited-time offers.
Facebook retargeting options are pretty specific compared to other platforms. Since Facebook and Instagram are both owned by Meta, you can target people who have interacted with your Instagram page, too. You can even upload a list of your existing email subscribers from your segment that hasn’t yet converted and target them with relevant ads.
At PPC.co, we help life and business coaches run PPC campaigns that turn clicks into clients. Whether you’re scaling a coaching business or launching your first coaching program, we’ll help you connect with the people actively searching for your services.
Contact us today for a free digital marketing consultation and let’s start turning your ads into paying clients.
