How can businesses use CPA data to inform their marketing strategies?
Here is how businesses utilize CPA data in their marketing campaign:
- Be strategic: Identify what marketing approaches bring in customers at reasonable costs.
- Fix campaigns: Adjust your campaigns to reduce the CPA and increase ROI on your marketing spending.
- Spend wisely: Protect your budget by putting more money into the channels that give you the lowest CPA and the greatest number of customers.
- Set goals: Leverage CPA statistics to define pragmatic goals of how many customers you wish to acquire.
What is a good CPA?
Determining an ideal CPA can be challenging because it is subjective and depends on various factors, such as:
- Your industry
- Campaign goals
- Customer lifetime value.
Generally, a good CPA should be lower than the expected revenue generated from each customer.
Are there typical CPA benchmarks by industry?
There are no universal answers, however, there are specific CPA benchmarks for different industries. It is fair to assume that a clothing retailer would have a lower CPA goal than a software engineer selling high-end subscription packages. Why? Because the value of a conversion (a sale) is different.
Resources like WordStream, Store Growers, and AdClicks analyze data from various industries and compile it. They classify it using several factors such as:
- Industry: Do you operate in e-commerce, B2B, or elsewhere?
- Network: Different campaign types, such as Search, Display, and Shopping have their own CPA benchmarks.
- Location: Prices and competition differ by region.
These benchmarks serve as references, not a rule set in stone. Defining your CPA goals will depend on the singularities of your business, profit margins, and campaign strategies. Nevertheless, these benchmarks can serve as a reference point for comparison when entering the marketing industry, regardless of the chosen niche.
How can I improve (lower) my website’s CPA?
Evaluate the following practices and consider their influence on your website and marketing efforts:
- Focus on website flow: Prioritizing a user-friendly interface with clear CTAs may affect the conversion rate of website visitors.
- Communicate to your target audience: Focus your marketing to capture the attention of those most likely to respond positively.
- Deliver compelling ads: While designing captivating and engaging ads, consider the potential impact they will have on users’ decisions on clicks and acquisition.
- Try retargeting: Show ads to people who visited your site before but did not complete a purchase; the goal is to bring them back and increase the chances of them becoming buyers.
- Test everything: Tweak your website and promotional materials and find out which one is more suitable for your business needs.
What are some common challenges in measuring CPA accurately?
Here is how you can overcome the complexity of measuring CPA accurately:
- Determining where the credit belongs: Understanding the specific marketing activity that led to the acquisition of a new customer can be complex, particularly when the customer has engaged with your brand through different channels.
- Tracking data consistently: Keep in mind that each platform performs distinct ways of recording data, which may lead to different retrieval processes and generate a fuzzy picture.
- Delayed conversions: Sometimes people don’t become customers right away but return eventually and make a purchase in another opportunity. This may be harder to link them to a specific campaign but does not exclude the effectiveness of past campaigns.
- Indirect expenses: Account expenses like website hosting and employee wages. These can significantly impact your effective CPA.
What are some of the limitations of CPA as a metric?
While the CPA provides essential insights on customer acquisition costs, it may overlook the CLTV, and attribution is likely to pose a challenge. A low CPA does not automatically translate to success, therefore, it is best practiced alongside other performance indicators.
Conclusion
The website CPA serves as an indicator that tells you how much you are spending to sell a product to a new client on your platform. Because of the importance of CPA in determining the trajectory of your marketing efforts, it is proper to monitor and improve it. Just remember to consider other factors, like customer value over time.
