Why Cost-Per-Hire Is Lying to You
Let’s say you are a director at a thriving London agency. You have just placed a candidate from a social media post, so easy. You celebrate a record-low cost-per-hire from a social media placement. Six weeks later, the candidate quits, the client is furious, and you return the fee. That ‘cheap’ hire just became your agency’s most expensive mistake
What’s the lesson? Not all hires are created equal, and cost-per-hire is a dangerously incomplete story.
It's easy to get lost in a sea of vanity metrics; clicks, impressions, and follower counts. But after four decades of advising recruitment agencies, we know that true profitability comes from measuring what really matters.
Here are the five metrics that cut through the noise and reveal the true ROI of your marketing spend.
1. Source of Quality Hire
Source of quality hire means tracking which channel (LinkedIn, your website, a specific job board) delivers candidates who not only get placed but also pass their probation period and receive positive client feedback.
This metric directly links your marketing spend to long-term revenue and client satisfaction. A channel might deliver cheap applications, but if they never convert to quality placements, it's a wasted investment. Measuring this answers the question “Where should I invest my budget to find candidates my clients will love?”
That’s not the full picture though. Another number that reveals wasted effort is your application-to-placement ratio.
2. Application-to-Placement Ratio
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This is the number of applications you need from a specific source to make one successful placement. A low ratio (e.g., 20 applications to 1 placement) indicates a high-quality source. A high ratio (e.g., 200 to 1) means your consultants are wasting countless hours screening irrelevant candidates, even if the applications themselves were 'free'.
With this metric, you can decide which channels are saving your team’s time and which ones are draining their resources.
3. Time-to-Fill by Channel
Knowing the average time it takes to fill a role, broken down by the source that provided the successful candidate will help you and your team focus your efforts in the right place.
Speed is critical in recruitment. If one channel consistently delivers quality candidates faster than others, it's not only more efficient but also improves your reputation with clients.
4. Offer Acceptance Rate by Source
The percentage of candidates from a specific source who accept a job offer when one is made. A low acceptance rate from a particular channel might indicate a mismatch in candidate expectations regarding salary, culture, or role seniority. It's a red flag that the channel is attracting the wrong audience for your niche.
5. First-Year Attrition by Source
This is the ultimate measure of quality. This tracks the percentage of placed candidates from each source who leave their new role within the first 12 months. High attrition from a source can damage your agency's reputation and jeopardise client relationships. It's the most powerful indicator of a poor-quality source, regardless of how low the initial cost-per-hire was.
The problem? Tracking all this usually means endless spreadsheets. But it doesn’t have to. Platforms like Talisman give you a single dashboard to see every stage of the candidate journey, from application to post-placement milestones.. Instead of guessing, you can see with clarity on a single dashboard. This is how you move from reactive spending to a proactive, data-driven marketing strategy.
Stop asking how much a hire costs. Start asking how much value a hire brings.
Focus on these five metrics and your marketing spend stops being an expense, it becomes your agency’s growth engine.