Cost Per Lead

For owners and managers of HVAC, plumbing, and electrical companies, marketing is one of the most significant investments you make to grow your business. But how do you know if your marketing dollars are working effectively? One of the most powerful benchmarks you can use is Cost per Lead (CPL). This metric helps you evaluate the efficiency of your marketing campaigns and make informed decisions about where to allocate your budget.

What Is Cost per Lead and Why Does It Matter?

Cost per Lead is the amount you spend to generate a single qualified lead. It’s a simple yet critical metric because it directly connects your marketing spend to tangible results—new opportunities for revenue. By tracking CPL, you can compare different campaigns, channels, and strategies to see which ones deliver the best return on investment.

How to Calculate Cost per Lead

The formula for CPL is straightforward:

Total Marketing Spend ÷ Number of Leads Generated = Cost per Lead

For example, if you spend $5,000 on a campaign and generate 100 leads, your CPL is $50. But while the math is simple, the interpretation requires nuance. What’s considered “good” or “normal” varies widely based on your industry, service type, and advertising channel.

What Is a Good CPL? It Depends.

There’s no universal benchmark for CPL because HVAC, plumbing, and electrical businesses operate in different markets with different customer acquisition costs. For instance:

• HVAC companies often see higher CPLs during off-season months because demand is lower.
• Plumbing services may have lower CPLs for emergency calls but higher CPLs for large remodel projects.
• Electrical contractors might experience wide CPL ranges depending on whether they target residential or commercial clients.

Advertising type also matters. Paid search campaigns typically have higher CPLs than organic SEO efforts, but they may deliver faster results. Social media ads, direct mail, and referral programs all have different cost structures and lead quality.

What Should Be Included in Your Total Cost?

When calculating CPL, don’t just include ad spend. A true picture of cost should factor in:

• Agency or consultant fees
• Creative and design costs
• Software subscriptions for marketing tools
• Internal labor costs for managing campaigns

Including these elements ensures you’re not underestimating what it really costs to acquire a lead.

Not All Leads Are Equal: Adjusting for Quality

A lead is only valuable if it converts. That’s why it’s important to segment your leads by type and quality. For example:

• Inbound vs. outbound leads: Inbound leads from SEO may convert at a higher rate than outbound cold calls.
• Emergency vs. planned service leads: Emergency calls often close quickly, while planned projects may require longer nurturing.
• Residential vs. commercial leads: Commercial projects typically have higher revenue potential, so a higher CPL may still be acceptable.

By weighting your CPL based on lead quality and conversion potential, you can create a more meaningful benchmark tailored to your business goals.

Why This Matters for Your Growth

Understanding and optimizing CPL helps you make smarter marketing decisions. It allows you to identify which campaigns deliver the best ROI and where you might be overspending. Ultimately, it’s about aligning your marketing investment with your revenue goals.

Ready to Take Control of Your Marketing Performance?

At Contractor Excellence Consulting & Coaching, we specialize in helping home service companies like yours master the numbers that drive growth. If you want to learn how to track, interpret, and improve your Cost per Lead—and other key benchmarks—schedule a free discovery call today. Let’s work together to make your marketing dollars work harder for you.