Your CPL Number Is Lying To You

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Read time: 3 minutes.

Welcome to the 211th edition of The Growth Elements Newsletter. Every Monday and sometimes on Thursday, I write an essay on growth metrics & experiments and business case studies.

Today’s piece is for 8,000+ founders, operators, and leaders from businesses such as Shopify, Google, Hubspot, Zoho, Freshworks, Servcorp, Zomato, Postman, Razorpay and Zoom.

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Most founders optimise paid budget against cost per lead. The number sits on the dashboard, looks acceptable, and the team keeps spending.

But CPL hides almost everything that matters about whether a channel is actually working.

[1] CPL Counts Inputs. Not Outcomes.

• A form fill is a lead. A no-show is a lead. A prospect with a 6 month timeline and no budget is also a lead.

• Some one I know paying $390 per lead. Another is sitting at $344 against a $160 target.

• Both look fine on a paid dashboard. Both are bleeding cash because the leads do not close.

• You cannot fix conversion by tuning volume.

[2] The Real Cost Of A Bad Lead

• Let’s say you paid for four leads. One was disqualified for timeline. One was a no-show. Only two are still in conversation.

• Adjust for show-up rate, qualification rate, and close rate, and the true cost per closed deal is often 8x to 15x your reported CPL.

• A clean £$390 CPL can quietly become over $4,000 per closed deal once the noise is filtered out.

• Founders are managing a number that is one tenth of the real one.

[3] What To Track Instead

• Cost per closed deal by channel. Nothing else matters at the budget level.

• Show-up rate by channel. Some sources deliver leads that ghost every single time.

• Qualified meeting rate by channel. A 40% rate on one source and a 12% rate on another is the real signal.

• First touch to closed-won cycle by channel. Long cycles distort every other number you track.

Final Words

[1] Pull every closed deal from the last 90 days and map each back to the channel and original first-touch source.

[2] Calculate true cost per closed deal for each channel. The ranking will not match your CPL ranking.

[3] Cut budget on any channel where cost per closed deal is more than 3x your average ACV. Reinvest in the channel that closes.

That's it for today's article! I hope you found this essay insightful.

Wishing you a productive week ahead!

I always appreciate you reading.

Thanks,
Chintankumar Maisuria