Cost Per Lead Framework Using CAC

Have you grappled with the question – what is a healthy cost per lead for my SaaS company? Yes, I have searched the benchmarks, but I found through my research that the CPL targets varied wildly depending on the source. While the CPL benchmarks provided me with a useful range, I wanted a framework to validate and model an efficient amount of Marketing dollars to generate X amount of leads.  

The framework I put together for solving a CPL target is Customer Acquisition Cost (CAC) as the driver for an efficient marketing investment, while the variable input is the lead conversion rate. I used a CAC target to solve for the marketing investment, in order to ensure the unit economics are healthy. While each company’s unit economics will vary, I recommend using a CAC target that is equal to the average annual selling price of your customer contracts in order to ensure the business is operating at a break-even customer acquisition cost in the first year.

Check out the step-by-step process below.