Your cost per lead determines how much you have to spend in order to attract new customers. Unfortunately, for many brands, there are unexpected factors influencing those numbers—including several things that may be artificially inflating your customer acquisition cost. By evaluating these key drivers of cost per lead, you can get a better idea of how to reduce your costs and more effectively target leads that are likely to purchase your brand.
Factor #1: Targeting Precision
In order to keep your cost per lead low, you must effectively target an audience that is genuinely interested in the products or services you’re offering. For example, home builders need not only customers who are interested in the types of projects you specialize in, but also those who are in the right geographic area and have the right budget. If you’re failing to narrow your targeting to those customers, it can significantly increase your marketing costs without bringing in more leads—and that means an increased cost per lead.
Improving Targeting Precision
Start by making sure that you have a strong idea of who your target audience is and where you can find them. You want to know where they’re most likely to connect with your brand, what websites they’re browsing, and how they find solutions to their problems. With that information in hand, you can choose where and how you market your brand to target their specific needs.
Modern AI tools can help narrow your target market, segment your leads, and give you a better idea of where to focus your efforts so that you can make data-informed decisions.
Factor #2: Irrelevant Ads or Content
If your ads aren’t reaching your target audience, it could be that they do not contain the information potential leads need in order to decide to connect with your brand. Today’s customers often have highly limited attention spans. In general, you have eight seconds or less to grab their attention and keep them on your website, convince them to finish watching an ad, or draw them to click through.
Irrelevant ads and content don’t just drive customers away from it. They may also damage customer trust, decreasing the odds that they will choose to connect with your brand when they have similar needs in the future.
Improving Ad Content
Developing effective ads starts by collecting data about your current customers and leads. You need to know:
- What information do they need to decide to connect with your brand (Is it the cost of services? Examples of the work you can do?)
- What those customers’ pain points look like
- How your brand can answer customers’ pain points
- Where you fit into the industry and how you compare to your competitors
The better you know your customers’ needs and how your brand can meet those challenges, the better prepared you are to craft ads that meet customers’ expectations and provide them with valuable content that ultimately leads them to connect with your brand.
Factor #3: Ability to Connect With Customers
Today’s customers expect connection and empathy when they reach out to your brand. They aren’t just looking for static websites that provide them with brief insights. Instead, they’re seeking detailed answers to their questions and a genuine connection and communication with your brand to show that it can meet their needs.
If your brand isn’t providing those essential connections, chances are, customers are turning to competitors who are. Furthermore, failure to connect with your customers can significantly increase your overall cost per lead, since you’ll have to put more effort into reaching out to them.
Increasing Connection
Verse makes it simple to connect with customers and provide them with real-time answers via SMS, the most popular channel. It’s not just another text advertisement. Instead, through Verse, potential leads can carry on a two-way text conversation that gets them real answers to their questions as they need them. Whether leads are looking for more information about whether your company is the right one to help them with a specific project or they’re evaluating the potential cost of a service, those text conversations let them know that your brand is there to provide them with the support they need.
Factor #4: Available Tools
Many of your advertising efforts rely on human effort. You need people to help handle customer service inquiries, especially in-depth issues that require a great deal of attention. You need creative individuals who can help produce those ads, and, of course, you must pay the actual cost of marketing. Those costs can add up fast.
In many cases, failing to take advantage of modern technology can substantially increase your costs. You can end up using slow, time-consuming methods and tools that may substantially increase your overall costs—and as a result, see your cost per lead rise exponentially.
Selecting the Right Tools for Your Brand
AI is a powerful tool that can make a big difference in your overall marketing efforts. AI solutions like Verse offer an efficient and cost-effective way to improve your customer service without substantially increasing your overall costs, allowing you to bring in more leads and better provide for your current customers.
Keep in mind, however, that AI-powered solutions are not a straight replacement for human customer service agents. Using human agents in partnership with AI solutions can keep your cost per lead low while still providing a high standard of service and care.
Factor #5: Market Saturation
In areas with a high degree of competition, with a market saturated by others in your industry, it can prove much more difficult to reach potential leads than in a market with large openings within your industry. Furthermore, a saturated market on digital platforms means higher cost per click ratios, which can further increase your overall marketing costs.
Managing a Saturated Market
If you’re dealing with a highly saturated market with a great deal of competition—particularly if you’re dealing with a high cost per click that is interfering with your marketing budget—there are several strategies you can use to decrease your costs.
- Get to know your niche. Know what your brand has to offer that others within your industry do not. Are you a luxury provider that can provide solutions other brands might not be able to? A budget provider that will help potential leads reduce their costs? Do you have a specialty that you want to highlight? The better you know your niche, the better you can slide into it—and the easier it becomes to target precisely the customers you need.
- Do your keyword research. Sometimes, you may have little choice but to target high-volume keywords. However, you may be able to reduce your costs by using other keywords: specific variants that reflect the business you do, but not necessarily the business performed by your competitors; local keywords; long-tail keywords that will help draw customers to your site. Pay attention to those variants and focus on lower-cost options.
- Choose your platforms wisely. Know which options members of your specific target audience are using, and focus your marketing options there instead of pushing into expensive platforms that may not be as popular with your target market.
By navigating a saturated market with care, you can often better manage your marketing budget and decrease your cost per lead.
Factor #6: Leads Falling Away Before Contact
To bring a potential lead into your sales funnel, you must collect contact information from them. They need an incentive to give you their email address, phone number, or other contact information. Without it, you may have customers checking out your content or visiting your website who fall out of your sales funnel before making that vital connection. Not only does that mean an increased cost per lead, but it also means you miss out on the opportunity to connect with those customers.
Gathering Contact Information from Customers
Potential leads are more likely to give you their contact information—and therefore allow you to bring them into your sales funnel—if you provide them with some type of incentive for it. That means:
- Gated content that customers receive when they connect with your brand
- The opportunity to connect more deeply with your business
- A reason to sign up for your brand
A solution as simple as Verse, which allows customers to connect to your brand via text, can go a long way toward increasing customer loyalty and encouraging them to provide you with their contact information. As a result, they’re more likely to stay in your sales funnel—and you have the chance to reconnect with them if they do seem to fall away.
Select Tools That Improve Communication and Decrease Cost Per Lead
Your cost per lead can vary dramatically depending on your industry, your specific market, and the tools you’re using.
At Verse, we understand the importance of connecting with customers as you bring them into your sales funnel. Book a demo to learn more about our human-backed AI texting solution that can help you bring in more leads, qualify them, and ultimately turn them into satisfied customers.
