How a £50 enquiry becomes a £143 qualified opportunity
Cost per lead is the number most marketing reports lead with. It is also the one most likely to mislead the person paying for it. The figures below are a worked example, not client data.
A business spends £5,000 on advertising in a month and receives 100 enquiries. The report says the cost per lead is £50. Everyone in the meeting nods. Fifty pounds sounds reasonable, it is lower than last quarter, and the line on the chart is pointing the right way.
Then somebody asks the sales team how many of those hundred were worth a conversation.
The answer is 35. The rest were outside the service area, below the minimum job size, students, suppliers, existing customers with a support question, or people who never picked up the phone again.
| Advertising spend | £5,000 |
|---|---|
| Enquiries received | 100 |
| Cost per enquiry | £50.00 |
| Of which genuinely qualified | 35 |
| Cost per qualified opportunity | £142.86 |
Nothing about the campaign changed between the first number and the second. The spend is the same and so are the enquiries. The only thing that moved is the denominator, from everything that arrived to everything that was worth having. The honest price of an opportunity was never £50. It was £143.
Why the cheaper number gets reported
Nobody is lying. The £50 figure is accurate. It is simply answering a question the business owner did not ask.
Cost per lead is the easiest number to produce, because the advertising platform counts form submissions and calls without any help from the business. Whether an enquiry was any good is known only to whoever answered it, and that knowledge usually lives in somebody’s head, an inbox or a CRM that marketing never sees. So the report stops at the last point where counting is automatic.
The trouble is that a target shapes behaviour. If a campaign is judged on cost per lead, the rational way to improve it is to make enquiring easier and the audience broader. Both tend to produce more enquiries for less money. Both also tend to lower the share that are worth anything. The number on the report improves while the thing it was supposed to represent gets worse.
Five stages, five different prices
“Lead” is carrying too much weight. Between a stranger filling in a form and money arriving in the bank there are at least five distinct stages, and each has its own cost:
- Enquiry. Somebody got in touch.
- Qualified lead. They are a plausible customer: right need, right place, right size.
- Appointment. A real sales conversation took place.
- Proposal or quote. The business put a price in front of them.
- Customer. They bought.
Carry the same £5,000 through all five and the picture changes again.
| Stage | Volume | Cost per |
|---|---|---|
| Enquiry | 100 | £50 |
| Qualified lead | 35 | £143 |
| Appointment | 21 | £238 |
| Proposal or quote | 14 | £357 |
| Customer | 5 | £1,000 |
The figures are invented for illustration, and the ratios will differ in every business. The shape will not. The cost rises at every stage, and the only figure that can be set against what a customer is worth is the last one.
Whether £1,000 to win a customer is good or bad depends entirely on the margin that customer brings. For a firm whose average job leaves £4,000 of gross profit, it is an excellent trade. For one whose average job leaves £600, it is a slow way to go out of business. The £50 figure cannot tell those two situations apart.
The cheap channel is not always the cheap one
The distinction matters most when money is being moved between channels. Take two campaigns with the same budget.
| Campaign A | Campaign B | |
|---|---|---|
| Enquiries | 100 | 60 |
| Cost per enquiry | £50 | £83 |
| Qualified | 35 | 45 |
| Cost per qualified opportunity | £143 | £111 |
On a cost-per-lead report, B looks two-thirds more expensive than A and is the obvious candidate for a budget cut. Measured one stage further down, B is the cheaper source of real opportunities by a clear margin. A business steering by cost per enquiry would move money towards the channel that is costing it more.
What to ask for instead
None of this needs new software. It needs the people who take the enquiries and the people who buy the advertising to look at the same sheet. In practice:
- Write down what “qualified” means. Two or three plain criteria that anyone answering the phone can apply in a minute.
- Record the outcome of every enquiry, even in a spreadsheet, with the source beside it.
- Report cost per qualified opportunity alongside cost per lead, and once there is enough volume, cost per customer.
- Set that against gross profit per customer, not revenue.
- Judge channels on the furthest stage you can measure reliably, not the first.
The first month of doing this is usually uncomfortable. It can show that a channel everybody liked is mostly producing noise, and that a smaller, more expensive-looking one is carrying the pipeline.
That discomfort is the point. A lead is not valuable because it was cheap to acquire. It is valuable because of what it is likely to become, and the only way to know that is to follow it past the form.