When running a lead generation campaign, the ultimate goal is to generate the right quantity of leads that convert into sales at a very high rate, thus generating the ROI that you need to qualify the campaign as a success. With this in mind, it's very tempting to focus on very cheap lead generating campaigns. The thought process is that if you generate the raw material (leads) cheaply enough, there will be a bigger margin on each sale. Makes sense, right? Wrong!

This is a shortsighted approach that doesn't take into account the full sales process. At the end of the day, the big question you'll be responsible for answering is, "How much revenue was generated compared to the amount you paid for the leads?"

While the cost-per-lead is an important factor, you'll need to look beyond that and take a hard look at the quality of the lead. This includes both the conversion rate and the average revenue per sale. For example, I know that my leads generated from paid search turn into paid business at a substantially higher rate than many of my other campaigns. With this in mind, I pay more for these leads than any other lead, but I make the highest margin.

To illustrate this, take the following example where campaign "A" generates 100 leads at a cost of $15 per lead and has a 20 percent conversion rate with an average sale of $150. Then take 100 leads from campaign "B," which has a conversion of 35 percent and average sale of $215, but costs $25 per lead.

Campaign "A" cost = $1,500. Revenue = $3,000. The ROI ratio is 2:1
Campaign "B" cost = $2,500. Revenue = $7,525. The ROI ratio is 3:1

Which campaign do you want to run?