Why Cheap Leads Are Usually Expensive (And What to Measure Instead)

Every agency in the country quotes cost per lead. It's easy to measure, easy to make look good, and it's the wrong number to run a business on. I'll give you the whole argument in one line and then explain it: you can't put a lead in the bank.

The trap, with real numbers

Picture a roofer running two months of ads, both costing a grand.

Month one brings in fifty enquiries at £20 each. Looks brilliant on the report. Trouble is, they came from a wide, cheap campaign catching everyone idly wondering what a new roof might cost. Two of them turned into jobs.

Month two brings in twelve enquiries at £83 each. Looks four times worse. But they came from tight searches by people with an actual leak over their bed. Six turned into jobs.

So month one cost £500 a job and month two cost £167 a job. The "expensive" month was three times better. If you'd judged it on cost per lead, you'd have killed the campaign that was making you money and kept the one that wasn't. I've watched people do exactly that.

The number that actually matters

Cost per booked job. Total spend divided by jobs you actually won. It's harder to measure and it takes longer to know, and it's the only one that's connected to your bank balance. To use it you need two things: your close rate, and what a customer's worth to you — which I work through in working out what a customer is worth.

Why cheap leads are cheap in the first place

Lead prices are mostly set by how close someone is to buying. Cheap clicks are cheap because everyone else already figured out those people rarely buy. "How much does a new roof cost" is somebody browsing — cheap to reach, and worth about as much. "Emergency roof repair Wolverhampton" is somebody who needs you today — pricier to reach, and worth every penny.

So when an agency proudly drives your cost per lead right down, ask them what changed. Usually they've just widened the net — more people, further from actually buying. The graph looks lovely and the diary stays empty.

Shared leads are this problem on steroids

Those lead-selling sites often look dead cheap per lead. But the same enquiry gets flogged to four or five firms at once, so you're in a race to ring first and then a race to the bottom on price. The lead was cheap and the job, if you even win it, is barely worth having.

What to track without buying any software

You don't need a fancy dashboard. A notebook by the phone does the job. For every enquiry, jot down three things: where they came from (just ask — "how did you find us?"), whether it turned into a job, and roughly what it was worth in profit. Three months of that tells you more than any piece of software, and you'll almost always find one source quietly doing most of the real work while you were paying attention to something else.

Give it long enough to be fair

Two weeks isn't long enough to judge any of this, especially for work where people take their time — nobody books an extension the same day they enquire. Give it ninety days before you draw conclusions, and be a bit suspicious of anyone who wants you cracking open the champagne in week one.

What to ask your agency

How many of last month's enquiries actually became jobs? What did each booked job cost us in ad spend? Which campaign produced the jobs, not just the enquiries? And what are we deliberately not bidding on, and why? If those get you vague, waffly answers, that tells you plenty on its own. There's a fuller list in questions to ask before you hire anyone to run your ads.

Cheap leads feel like winning. Booked jobs are winning. Measure the second one, even though it's more effort, and treat any number that improves while your diary doesn't with real suspicion. Book a free chat and I'll show you exactly what we'd report back to you.