Lead Generation Cost: Should it Be a Marketing Cost or a Sales Cost?

When I started Big Leap Strategy in 2022, I dove headfirst into the world of digital marketing for educational clients—schools, engineering colleges, design institutes, you name it. And almost every conversation circles back to the same point: how many leads can we generate, at what cost per lead (CPL), and how much can we bring down that CPL? These discussions got me thinking—should lead generation be considered a sales cost instead of a marketing expense? After all, the ultimate goal of marketing is to drive sales revenue. So why do we split these budgets in the first place?

Understanding Lead Generation

Lead generation is all about attracting and converting prospects into potential customers. For our education clients, this often means running SEM (Search Engine Marketing) campaigns to capture the interest of students looking for specific programs. These activities are crucial for keeping a steady stream of leads, which we then nurture until they’re ready to enroll.

Lead Generation as a Marketing Cost

From a marketing perspective, lead generation involves a lot of different activities: keyword research, ad creation, landing page optimization, bid management. These tasks are typically handled by the marketing team and are all about generating interest and capturing leads.

Example: SEM Campaigns for an MBA Program

Take an education client offering an MBA program. Their marketing team runs targeted SEM campaigns to attract potential students. This involves creating compelling ad copies, selecting the right keywords, and optimizing landing pages. All these activities cost money, which we usually consider marketing expenses.

However, while these campaigns do generate leads, the focus is often on immediate results rather than long-term brand building. Many education clients zero in on lead cost metrics, scrutinizing the CPL and expecting quick returns on their investment. This short-term focus can sometimes overshadow the benefits of branding activities that could lower lead costs over time.

Lead Generation as a Sales Cost

But let’s look at the sales side. The sales team is responsible for converting those leads into enrolled students. This means follow-up calls, personalized emails, and meetings to address any questions prospective students might have. The resources and efforts here can be substantial, suggesting that some lead generation costs could be classified as sales expenses.

Example: Follow-Up with Prospective Students

After capturing leads through SEM, the sales team at an education institution spends a lot of time and effort nurturing these leads. They might organize webinars, conduct campus tours, and provide detailed program information. These activities, though crucial for conversion, add to the overall cost of lead generation and are often seen as part of the sales process.

The Need for a Balanced Approach

While the debate over whether lead generation costs should be marketing or sales expenses continues, it’s crucial to recognize the need for a balanced approach. Focusing solely on immediate lead generation through SEM without investing in branding can be shortsighted. Branding activities, though not directly tied to immediate leads, play a significant role in reducing long-term lead costs by boosting brand recognition and trust.

Real-Life Example: Integrating Branding with SEM

An education client offering online courses decided to blend branding activities with their SEM efforts. Initially, they were hesitant to allocate budget for branding, focusing primarily on lead generation. However, they gradually invested in content marketing, social media engagement, and PR campaigns to enhance their brand presence.

Over time, the results spoke for themselves. The enhanced brand recognition led to higher click-through rates (CTR) on their SEM ads and a lower cost per click (CPC). Prospective students were more likely to engage with the brand, resulting in a higher conversion rate and ultimately reducing the overall lead generation cost.

Conclusion

In conclusion, lead generation costs should ideally be shared between marketing and sales, with a significant emphasis on branding activities. Education clients, in particular, need to understand that while SEM is great for immediate lead generation, long-term investment in branding can significantly reduce lead costs and boost overall marketing effectiveness.

At Big Leap Strategy, we specialize in creating balanced approaches that drive immediate results and long-term growth. If you’re looking to optimize your lead generation strategy while building a strong brand presence, let’s connect. Our experts can help elevate your institution's brand and achieve your enrollment goals. Contact us today to learn more about how we can work together for your success.

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