Every lead supplier wants to talk about cost per lead. It is a comfortable number for them: low, simple, and completely disconnected from whether you sell anything. The number you should run your business on is cost per closed franchise — total spend on a source divided by the deals it produced.

Why cost per lead misleads

A $30 shared lead and a $150 verified exclusive lead look like an easy choice until you follow both to the end. The shared lead needs hours of dialling to become a conversation, competes with other consultants the whole way, and closes rarely. The verified lead arrives as a conversation. When you divide each source's total spend by its closes, the "expensive" lead frequently wins by a wide margin.

Cost per lead measures what the supplier sold you. Cost per closed franchise measures what you actually bought.

How to calculate it

You need four numbers per source, per quarter:

  1. Total spend — everything paid to the source, including any ad spend and fees
  2. Leads received — what arrived
  3. Real conversations — leads that became an actual dialogue, not a voicemail
  4. Closes — franchises sold that originated from that source

Then: cost per closed franchise = total spend ÷ closes.

The intermediate ratios are diagnostics. Spend ÷ conversations tells you the sourcing quality. Conversations ÷ closes tells you about your sales process. But the headline number is the one that decides where next quarter's budget goes.

Worked example, with made-up numbers

Suppose in one quarter you spend $4,500 with a verified lead partner and close 2 deals: cost per close is $2,250. The same quarter you spend $1,500 on shared portal leads and close nothing, because the two promising candidates went with whoever called first. The cheap source's cost per close is infinite. This example is illustrative — your numbers will differ — but the shape of the comparison is one we see constantly.

Using it without fooling yourself

  • Give sources time. A source judged on three weeks of data is judged on noise. A quarter is the minimum.
  • Count closes back to the source honestly, including the deal that closed six months after the lead arrived.
  • Include your time as a separate line if you want the full picture — hours spent dialling shared leads are a real cost even if they do not appear on an invoice.

The quarterly ritual

Once a quarter, list your sources, their spend, and their closes. Sort by cost per closed franchise. Fund the top, fix or cut the bottom. It is a fifteen-minute exercise that most consultants have never done — and the reason some pipelines feel expensive while producing nothing.

For a deeper walkthrough of the full ROI model, see how to estimate ROI from franchise lead generation campaigns. And if you want a source that welcomes this math, talk to us.