Lead Value

Lead value describes how much a single lead is worth to your business on average. It connects marketing and sales: from the lead close rate and the value of a customer, you get how much you can spend per lead.

Formula

Lead value = average customer value × close rate (lead → customer)

For customer value, you can use the revenue of the first order, the contribution margin or the customer lifetime value – depending on the question you want to answer.

Example

A solar company earns an average contribution margin of $4,000 per installation. Out of 100 leads, 5 become customers.

Lead value = $4,000 × 0.05 = $200

With a cost per lead of $80, that leaves $120 per lead on paper. If the CPL rises to $250, the company loses money on every lead – even if the campaign brings in plenty of inquiries.

Use the free lead value calculator to work out the value for your own numbers.

Lead value by source

A single average across all leads often hides big differences. Leads from a Google search campaign might close twice as often as leads from a Meta reach campaign. If you assign both the same lead value, you may be putting budget in the wrong place.

To know your lead value by channel, campaign or ad, you need to attribute deals and revenue to their source. LeadMetrics connects leads with deals from your CRM and payments from Stripe, CopeCart or Digistore24, and shows revenue and deals per campaign.

Using lead value to steer campaigns

Ad platforms optimize for the signals they receive. If every lead counts the same, they go after the cheapest leads. With the Conversion API you can send lead, deal and purchase events with value and currency to Meta, Google Ads, TikTok and LinkedIn – so the algorithms learn which leads are actually worth something.

Common mistakes

• Outdated close rates: Check your close rate regularly; it changes with your offer and your sales team.
• Too short a time frame: With long sales cycles, many leads are still open and artificially drag the rate down.