Med Spas, Why is Your CPL Increasing?

While it’s more cost-effective to spend marketing dollars on retaining your current clients, it’s also imperative to continually fuel your sales funnel and attract new business. You’ve heard the saying, “it takes money to make money”--and getting new leads is no exception. While we can all agree that good sales leads rarely come for free, we do believe that your marketing efforts should have clear goals and be data-driven, especially when it comes to your cost per lead.

Your cost per lead (CPL) is the amount you pay to acquire a new lead. You can calculate this by dividing your campaign expense by the number of leads you attained from that campaign. One key element to point out is that a lead is simply someone who may be interested in your service–not necessarily someone who made a purchase.
The best way for med spas to calculate their target CPL is to consider Customer Lifetime Value (CLV), expenses for the service, and desired profit. Use the formula:

CLV - Expenses + Desired Profit = Target CPL

As a benchmark, the average CPL in 2022 for the Beauty & Personal Care industry was $43.39, according to WordStream.

CPL is useful for a couple of different reasons. For one, it gives you a very defined goal that you can easily analyze performance against. For example, let’s say you have a target CPL of $50. If you plan on spending $5,000 on a marketing campaign, you can expect to get 100 new leads from this campaign ($5,000 expense ÷ $50 CPL = 100 leads). Do you have the time in your calendar, appropriate staffing, and space in your office to book 100 new leads?

Another way CPL can be useful is by comparing where your marketing dollars can be optimized. It is no secret that different paid media platforms (like Google, Facebook, Instagram, TikTok, and Pinterest) serve different purposes and audiences. You can expect the CPLs to differ across them as well. We recommend allocating more budget to platforms with lower CPLs.

If you have recognized that your CPL has increased year over year, you’re not alone. In fact, WordStream reported that the majority of industries experienced an average overall increase of 19% year-over-year in CPL (compared to 5% the previous year).

Why Your CPL Could Be Increasing

Different CPLs for Different Services - Just like how you can expect each platform to produce different results, each service you offer can produce a different CPL. If you think back to the target CPL formula (CLV - Expenses + Desired Profit), this makes sense because every service is going to have different expenses and likely not the same Customer Lifetime Value. To put in simple terms, you should expect a higher CPL on services that are more expensive to the client.

Competition - It is estimated that the medical spa industry will grow at a rate of 14.6% and become close to a $64 billion industry by 2032 according to Polaris Market Research. In other words, there is a lot more competition entering the space, resulting in higher costs to get your target market’s attention. You can also apply this logic on a more micro level to our precious point on different services. For example, you might be the only med spa in a 10-mile radius to offer microneedling. However, you can think of at least 5 other businesses that offer injectables in a 2-mile radius. Because there is more competition in the injectables space, you can expect to pay a higher CPL.

Unimpactful Creative Assets - Look at the ads you are running with the mindset of a prospective client. Would you buy your services? Are your ads eye-catching? Are you speaking to pain points? Is your frequency too high, leading to ad fatigue? Any one of these elements could cause your audience to not stop the scroll.

How to Lower Your CPL

While we singlehandedly can’t control things like inflation, increased competition, and rising costs to do business, we can control our paid media campaigns. Here are some adjustments you can make to lower your CPL:

Know Your Audience

Understanding your target market is crucial to any marketing campaign. For paid media, consider where (which platform) they are spending the most time. Within each platform, make sure your efforts align with this audience, like geographic location and interests.

Change Your Messaging

If you find your CPL is high and click through rate (CTR) is low, this may mean your creative assets (ad copy, images, videos) don’t resonate with your audience. Are you speaking to the customers’ pain points and showing how your services can alleviate those? More times than not, customers resonate with emotions more than product features. Of course, make sure your ads are frequently changed so that users don’t experience ad fatigue.

Differentiate Yourself

One way to stand out from the competition is to consistently share what differentiates your business in ways that benefit your customers. For example, do you have a convenient location? Longer hours? A larger space, and therefore more available appointments? Better prices? Add these benefits to your messaging.

A/B Test

Also known as split testing, A/B testing allows you to experiment with the end goal of identifying high performance. To A/B test, run two campaigns that are duplicates except in one category, such as creative assets, ad copy, or target audience. You should run this test for at least 14 days as most platforms take this amount of time to fully understand and optimize campaigns.

If your CPL is increasing, don’t panic! Consider these potential reasons and identify a strategy to combat the increase. Want to learn more about how we can help you do this? Let’s connect.