Cost per lead measures the wrong finish line
Cost per lead tells you what a form fill cost. Your client pays you for customers. Two ads with very different lead costs can produce customers at very different prices, and the cheaper lead is often the more expensive customer.
In MARVIN's sample agency, Apex Dental runs both kinds of ad:
| Ad | Spend | Leads | CPL | Customers | CAC |
|---|---|---|---|---|---|
| $49 Exam UGC | $3,100 | 155 | $20.00 | 3 | $1,033 |
| Implant Patient Story | $3,600 | 72 | $50.00 | 19 | $189 |
Judged by cost per lead, the $20.00 ad wins easily. Judged by what a customer costs, the $50.00 ad wins: its customers cost $189 each, against $1,033.
The formula
CAC = ad spend ÷ new customers, where both numbers come from the same ads over the same period. A customer is whatever your client counts as a sale: treatment accepted, contract signed, case retained.
LTV:CAC compares what a customer is worth to what they cost. When revenue is recorded against the same customers in your pipeline, it works out to revenue from those customers divided by the ad spend that acquired them. A result of 10:1 means every ad dollar returned ten dollars of revenue.
Four traps
- Counting customers the ads didn't produce. Referrals and repeat customers make paid acquisition look cheaper than it is. Attribute each customer to the ad that produced the lead.
- Mismatched time windows. This month's spend and this month's closes are different cohorts when sales take weeks. Use a window long enough to cover your client's sales cycle, and compare like with like.
- Ignoring the middle of the funnel. Unreached leads, no-shows, and lost consultations are part of what a customer costs. They show up in CAC even when CPL looks healthy.
- Averaging across clients. The same CAC can be excellent for a client with a $10,000 ticket and unprofitable for one with a $500 ticket. Compare each client with its own history and average ticket.
How MARVIN calculates it
MARVIN joins Meta spend at the ad level to the bookings, shows, closes, and revenue in your GoHighLevel pipeline, so CAC and LTV:CAC are available for every client, campaign, ad set, and ad. To see where a high CAC comes from, read Find where a client's funnel leaks.