What it means
A lead is someone who has raised a hand: filled in your form, rung you, messaged your page, asked for a price. Cost per lead is the total you spent to get them, divided by how many you got. It says nothing about whether any of them bought.
Why it matters to a small business
It is the first number that tells you whether an ad is working while there is still time to change it. Sales can take weeks to land, especially for a trade or a clinic, but enquiries arrive the same day, so cost per lead is the signal you can act on this week rather than next quarter.
You spend £240 on local ads over a fortnight and 16 people fill in your enquiry form.
£240 divided by 16 leads
£15 a lead. Whether that is good depends entirely on what a customer is worth to you, which is why this number never travels alone.
The bit people get wrong
A falling cost per lead is not automatically good news. Loosen your targeting and you will buy cheaper enquiries from people who were never going to book, and the number improves while the diary empties. Always read it next to how many of those leads turned into work.