No matter how big or small your business is, you will be banking on your digital marketing plan to bring in results. It’s not just about getting clicks anymore. Do you know how many of those clicks have continued to stay loyal to your business? You’re investing in bringing in customers, but at what cost?
Let’s look at key components in your customer acquisition strategy and break down what cost per acquisition means for you.
What is Cost Per Acquisition?
The Cost Per Acquisition (CPA) is a marketing metric that calculates the aggregate cost of acquiring and converting a customer. A conversion could be a click, a download, a purchase, submission of a form or a purchase, and it depends on what you have set your goal as. Your CPA is how much you choose to pay for each of these acquisitions.
In digital media campaigns, there are three main ways you can get charged for acquisition:
- Cost per acquisition: You pay this only when the desired action (or conversion( is undertaken after a user clicks on your ad
- Cost per click: You pay for every single click generated
- Cost per mille: You pay per thousand impressions or views
Making sure your cost per acquisition is low or optimised is key to increasing your return on investment (ROI), and is crucial for scaling up your campaigns.
How do you reduce your Cost Per Acquisition?
Keeping your acquisition costs to a minimum from the outset will ensure that your resources, time and funds are not wasted in the long-run. Look at the below to get the most value out of your acquisition plan.
- Focus on targeting. Look at where your target audience is based and what demographics to target. Do you need to focus on a specific geographical area, or are you happy to explore across borders? Eliminate areas that have not generated new sales in the last 3 months.
- Consider remarketing campaigns. Research shows that retargeting can increase conversation rates by 150%. Retargeting gives you the opportunity to reach out to people who previously showed interest in your brand or came to your website. These leads are more likely to go return to your website and convert to a paying customer.
- Improve your quality score. Ads with higher quality scores are more likely to be given preference by Google. You can ensure this by using relevant keywords in your ad, making sure your website is optimised for search engines and by providing a clear CTA and link to the user.
- Make your checkout process seamless. There is nothing worse than acquiring a customer, enticing them with your service and convincing them to go through with a purchase only to lose them at checkout. Look for cart abandonment trends and see how you can fix any issues with the payment gateway, slow website, site downtime, security concerns or unsuitable shipping options.
Use Cost Per Acquisition efficiently
The above methods can help you reduce your acquisition costs, but you also need to conduct frequent quality check scores to ensure the best decision for your business. Having a loyal customer base is more important than constantly acquiring new ones, so always look out for ways to keep them happy.
There is no absolute benchmark on what a good CPA is. Each business will have its own margins and expenses, and averages vary by industry. Figure out where you are in your plan, what your expectations are and how much you are willing to spend on customer acquisition, and then build your strategy from there.