Cost per lead is the number most often quoted and the least useful in isolation. A source producing leads at a low cost per lead can easily be the most expensive source a firm uses once signed cases are counted. Cost per retained case is the figure that supports a real budget decision.
The basic calculation
Total acquisition cost for a source, divided by the number of cases retained from that source in the same cohort. The difficulty is not the arithmetic. It is deciding what belongs in the numerator and how to define the cohort.
What belongs in the cost
- Media spend and vendor fees attributable to the source.
- Any per-lead cost paid to a provider.
- Intake labor allocated to working that source, if you track it.
- Technology costs directly tied to handling the volume, if material.
Many firms start with media and vendor cost only. That is a reasonable simplification as long as it is applied identically across every source being compared.
Defining the cohort
Cases signed this month may come from leads generated over several previous months. Comparing this month’s spend to this month’s signings will understate cost when volume is growing and overstate it when volume is shrinking. The cleaner approach is to group by lead generation date: take all leads generated in a given month, and measure how many of those leads eventually retained, along with what that month’s leads cost.
This requires patience. A cohort is not final until enough time has passed for the typical decision cycle to play out, which differs between workers’ compensation and personal injury and between markets.
Look at the intermediate rates too
Cost per retained case is an outcome. The intermediate ratios explain it:
- Contact rate: leads reached at least once, divided by leads received.
- Consultation rate: leads that reached a substantive conversation, divided by leads contacted.
- Retention rate: cases signed, divided by consultations.
When cost per retained case rises, one of these three usually explains it, and each points to a different fix. A falling contact rate is often an intake or verification problem rather than a source problem, and is worth checking against your response time data before changing vendors.
Segment before you conclude
A blended figure across all states, case types, and campaigns can hide the fact that one market is performing well and another is subsidizing it. Segment by market and case type wherever volume is large enough to support the comparison.
Compare against case value, not against other firms
Benchmarks published for “the industry” are of limited use because case values, fee structures, and competitive intensity vary enormously by market. The relevant comparison is internal: what a retained case is worth to your firm, and what you are willing to pay to acquire one.
If you want to review these numbers alongside available volume in your markets, book a consultation.