Cost Per Lead vs. Cost Per Acquisition: What's the Difference?
Cost per lead and cost per acquisition are both valuable marketing metrics. Although they're similar, it's important to know their key differences.
Published August 22, 2022.
Cost per Lead (CPL) and Cost per Acquisition (CPA) are both key sales metrics eCommerce website owners should leverage.
Although CPL and CPA are related, not understanding the difference between the two or when to use either can lead to a misinterpretation of data.
This could impact future marketing campaigns as well as your Return on Investment (ROI).
Cost Per Lead Explained
CPL is the amount of money your business spends to generate a single potential customer. Gaining this information gives you insight into how effective a marketing campaign has been.
CPL is calculated by the total cost you spent on a particular campaign, divided by the number of successfully generated leads.
If an ad campaign costs you $500 to run and you generated 800 leads:
CPL = Total campaign cost / Number of leads
CPL = $500 / 800
CPL = $0.63
In other words, each new lead cost you $0.63.
Cost Per Acquisition Explained
CPA calculates the total cost to take a user down a marketing funnel and make a conversion, not just the cost of a lead.
To calculate CPA, the total media costs of a funnel are divided by the number of successful conversions the funnel produces.
For example, if you spent $100 on a graphic designer, $200 on an ad campaign, and $50 on an SEO guide, and made 5 new sales:
CPA = Total marketing costs / Number of conversions
CPA = ($100 + $200 + $50) / 5
CPA = $70
Which Metric Is More Useful?
CPL can be used to determine the success of a campaign, while CPA is best to determine the total marketing cost it takes to make a sale.
Both are equally useful, depending on what you use them for.