The Basic Lead ROI Formula

Calculating ROI from purchased leads is straightforward once you have the right inputs. Here's the core formula:

ROI = (Revenue from Converted Leads - Total Lead Cost) / Total Lead Cost x 100

Or more simply: for every £1 you spend on leads, how many pounds do you get back?

To use this formula, you need three numbers:

  1. Total lead cost — how much you spent on leads in a given period
  2. Number of conversions — how many of those leads became completed cases (mortgage applications, placed policies, etc.)
  3. Revenue per conversion — your average income per completed case (proc fees, commission, etc.)

Worked Example: Mortgage Leads

Let's work through a realistic scenario for a mortgage broker buying leads over one month:

  • Leads purchased: 40
  • Cost per lead: £25
  • Total lead spend: 40 x £25 = £1,000
  • Conversion rate (lead to completed application): 12%
  • Completed cases: 40 x 12% = 4.8 (round to 5)
  • Average proc fee per case: £600
  • Total revenue: 5 x £600 = £3,000

ROI = (£3,000 - £1,000) / £1,000 x 100 = 200%

In this example, for every £1 spent on leads, you received £3 back — a 3x return. This is a healthy ROI for purchased mortgage leads.

Worked Example: Life Insurance Leads

Insurance ROI calculations are slightly different because revenue comes from both initial commission and ongoing trail commission:

  • Leads purchased: 50
  • Cost per lead: £15
  • Total lead spend: 50 x £15 = £750
  • Conversion rate (lead to placed policy): 14%
  • Placed policies: 50 x 14% = 7
  • Average policies per converted client: 1.6 (due to cross-selling)
  • Total policies placed: 7 x 1.6 = 11.2 (round to 11)
  • Average initial commission per policy: £120
  • Total initial commission: 11 x £120 = £1,320

ROI (initial commission only) = (£1,320 - £750) / £750 x 100 = 76%

This already shows a positive return on initial commission alone. The real value comes from trail commission over subsequent years, which can double or triple the lifetime return.

Worked Example: Equity Release Leads

  • Leads purchased: 20
  • Cost per lead: £50
  • Total lead spend: 20 x £50 = £1,000
  • Conversion rate: 8%
  • Completed cases: 20 x 8% = 1.6 (round to 2)
  • Average proc fee per case: £2,200
  • Total revenue: 2 x £2,200 = £4,400

ROI = (£4,400 - £1,000) / £1,000 x 100 = 340%

Despite the higher cost per lead and lower conversion rate, equity release leads can deliver excellent ROI because of the substantially higher revenue per case.

The Full Cost Picture

The basic formula above only accounts for the direct lead cost. For a more accurate ROI calculation, you should also factor in:

Your Time

Following up leads takes time. If you spend an average of 30 minutes per lead (across all leads, including those that don't convert), and you value your time at £50/hour, that adds £25 in time cost per lead. For 40 mortgage leads, that's an additional £1,000.

Using our mortgage example with time cost included:

  • Total cost: £1,000 (leads) + £1,000 (time) = £2,000
  • Revenue: £3,000
  • Adjusted ROI: (£3,000 - £2,000) / £2,000 x 100 = 50%

The ROI is lower but still positive. This more realistic calculation helps you decide whether the return justifies the investment of both money and time.

Technology Costs

If you use a CRM, call tracking software, or an auto-dialler specifically for lead management, apportion a percentage of those costs to your lead ROI calculation. For most brokers, this is a relatively small addition — perhaps £50-£100/month.

Support and Admin

If you have staff handling initial call-backs, appointment scheduling, or paperwork, their time should be factored into the cost. This is particularly relevant for firms buying higher volumes where lead management becomes a team activity.

Common ROI Calculation Mistakes

Only Counting Immediate Conversions

This is the most common mistake. If you measure ROI after 2 weeks, you're missing leads that convert over the following weeks and months. Mortgage leads can take 2-3 months from enquiry to completion. Insurance policies may take weeks to go on risk. Equity release cases often take 3-6 months from first contact to completion.

For accurate ROI, measure over a full sales cycle — typically 3-6 months depending on your product type.

Ignoring Cross-Sell Revenue

If a mortgage lead also results in a protection sale, or a life insurance lead leads to an income protection policy, that additional revenue should be attributed to the original lead. Many brokers significantly underestimate their lead ROI by only counting the primary product.

Judging on Small Samples

Conversion rates are probabilistic, not deterministic. If you buy 10 leads and convert 0, that doesn't mean the ROI is negative forever — you might convert 3 of your next 10. Evaluate ROI over at least 50-100 leads to get a statistically meaningful result.

Not Accounting for Lifetime Value

A mortgage client may remortgage with you in 2-5 years. A life insurance client pays trail commission for as long as the policy persists. The lifetime value of a converted lead is usually significantly higher than the initial transaction value, but most brokers only measure first-transaction ROI.

Using the ROI Calculator

Rather than calculating manually each time, use our Lead ROI Calculator. Input your specific numbers — cost per lead, estimated conversion rate, average revenue per case — and it will calculate your expected ROI, break-even point, and cost per acquisition.

The calculator also allows you to model different scenarios: what happens to ROI if you improve your conversion rate by 2%? What if you negotiate a lower cost per lead at higher volumes? These 'what-if' calculations help you make informed decisions about scaling up or adjusting your approach.

When ROI Isn't Positive — What to Do

If your lead ROI is negative or marginal, don't immediately blame the lead quality. Consider these questions first:

  • Are you following up fast enough? Slow speed to lead is the most common cause of poor ROI.
  • Are you following up enough times? Most leads require 3-5 contact attempts.
  • Are you measuring over a long enough period? Short measurement windows understate ROI.
  • Are you counting all revenue? Include cross-sells and trail commission.
  • Is your conversion process strong? Compare your numbers to the benchmarks in our conversion rate guide.

If you've optimised all of these factors and ROI is still poor, then it may be that the lead source, type, or pricing doesn't suit your business model. In that case, test a different lead type, negotiate pricing, or consider generating your own leads.