Determining cost per lead for your business is vital to understanding how much money you need to spend in marketing. Additionally, knowing how much a lead costs will help you understand how much a conversion costs. These are two vital numbers to excelling in your paid ads strategy.
Cost per lead can be determined in regards to either PPC (pay per click) or SEO (search engine optimization) efforts. We’ve talked about the difference and pros and cons between those two approaches previously. You can view that video here and read the blog here. Clarity on that will help you decide where to invest.
Let’s talk about:
- How much you are paying for your leads
- How much you should be paying or your leads
- Industry benchmarks for car services, bus companies, limo companies and other transport businesses
How Much Does SEO Cost Per Lead?
Here is how I would analyze how much a lead costs for an SEO investment. Here’s a scenario: we’re a company in Dallas paying $2,000/month for SEO on our website.
What else do you need to know?
ONE: How Much Organic Traffic Do You Get?
In order to get an actual number of cost per lead for SEO, you need to know how much organic traffic your website is getting per month.
In our scenario, let’s imagine that they start with 100 unique visitors a month. Through SEO improvements, over a course of time, they get 600 unique visitors a month. Averaged out, the visitors you’ve paid to get may be about 250 unique visitors a month. This is 3,000 extra visitors over the course of a year.
Remember, you don’t want to get this number from total traffic, because that will include a lot of referral sources (Yelp, Facebook, etc.). This number has to be established from organic traffic numbers.
TWO: How Many Visitors Become Leads?
After you’ve established how much traffic you get, you need to calculate how many of those visitors become leads. A lead is someone whose information you have. This is someone you can reach out to for marketing purposes.
In the scenario, if they have 3,000 extra leads a year and a 25% conversion rate, they’ve paid for 750 brand-new leads. For the $2,000/month SEO spend that they’re spending (at $24,000/year), then they’re paying a little over $30/lead.
THREE: Understanding SEO Timeline for New Leads
That’s a lot per lead, but the comparison year over year will change. SEO is unique like that. As you invest in SEO on your website, your conversion numbers can change a lot because SEO improves with time.
Say the traffic leads improve by a couple of thousand a year. Every time it improves, your cost per lead goes down.
FOUR: Hire the Right SEO Firm
The problem is that most businesses don’t do their due diligence in finding the right SEO company. Hiring an SEO company for your business can be a huge waste of time and money. If that agency doesn’t know what they’re doing, you won’t find out until you’ve spent a lot. Go here to learn about Limo Marketer’s SEO specialty work.
How Much Does PPC Cost Per Lead?
Next, let’s look at cost per lead for PPC, or paid ads. You’ll see this in your dashboard, but it’s important to understand where the numbers come from.
In the Google Ads dashboard, you’ll see it this way:
Your average CPC (cost per click) may be between $1-$4 (that’s the number for 95% of limo companies).
Divide the CPC by your conversion rate.
This is very easy to figure out. The equation may look like this: $2 CPC divided by a landing page conversion of 30%.
2/0.3 = 6.67
In this scenario, your cost per lead for PPC ads is $6.67.
This is why conversion rate matters so much. If your conversion rate was only 10%, you’d be paying $20 per lead. The conversion rate is about how your website or landing page converts.
Limo Company: Industry Standards for Cost Per Lead
This number is calculated with a few different metrics.
The number depends on your market size. It’s important to know that your ability to achieve these numbers hinges on whether you have a well-crafted Google Ads campaign. If you have a poor ad campaign, you won’t get anywhere near these numbers. Here are the trends on ad spend cost per lead for limo companies:
You can quickly figure out what you’re paying per click if you know the conversion rate. If your cost per lead is $20 and you’re converting at 25%, that means you’re paying $5 a click. In this industry, you don’t want to be paying that much per click unless you’re doing large vehicles, like charter buses. If you’re doing a limo service or airport car service, your cost per click should be between $2-$3. Your ad strategies should be bidding to low positions and trying out methods that keep that cost down.
Hire a Marketing Agency for Your Limo Company
A last point: if you’re paying an agency, you have to factor that cost into your numbers as well. If an agency is getting you 100 leads/month and you’re paying them $600/month, then you’re paying an extra $6/lead. That changes all of your numbers. Your actual price per lead will change when you calculate in your agency fees.
Keep in mind, even though it raises your cost, if you don’t have a good agency, you could be spending as much as 5x per lead. It’s very easy to try to DIY and end up with a low-conversion website, poorly crafted ad campaign and these can exponentially increase your spend.
Here’s the tip: if you haven’t had your PPC agency in six months, have an agency audit your business. Limo Marketer can help with this. Way too many companies way more than they need to per lead and that can add up month over month. Anytime you can reduce your ad expenses, it immediately feeds back into your bottom line.
Ready to pay the right amount with an expert strategy for your limo business? Go here to learn how Limo Marketer helps companies just like yours hit it out the park every time. Want tips to improve your own strategies? We give tons of the best advice and ideas away for free. Follow us on Facebook and subscribe to our YouTube channel.