How much does it cost to acquire a customer? This differs, of course, from one industry to the next. Yet, companies – from marketing heads to top leadership – need to know what it commonly takes to win their next customer. Krishen Iyer of MAIS Consulting, Inc. works closely with his clients to ensure they have a comprehensive understanding of how to grow their business. A core component of that is knowing how to invest in customer acquisition.
Understanding the Figures Is Step One
To develop the best strategies for tracking and then optimizing your ROI in customer acquisition, you need to first understand what you are looking for in the process. Generally, this is the cost-per-acquisition (CPA). It is one of the most important ways for a company to measure how efficient they are in acquiring a customer. The goal is always to spend the least amount of money necessary to acquire a targeted, high-spend customer.
CPA on its own does not measure success. It does provide a nice milepost, though, to help you determine what your ROI is on any type of marketing spend you have.
So, what is CPA? It covers a wide range of factors. That may include buying online, downloading an app, buying an ebook, or signing up for a newsletter, for example. It is the actions that a customer takes in order to make a purchase. These are the actions that can build sales, generate leads, and lead to conversions.
Krishen Iyer makes it clear, CPA matters, but it is not the only factor. “When working with my clients to build a strong foundation for growing their business, CPA is a starting point. It also isn’t necessarily just a figure. Rather, the figure on its own does not help if you do not know the context of it,” says Krishen Iyer.
The use of CPA is helpful because it can help measure how efficient a marketing campaign is. It may help with answering key questions like:
- How many leads did a campaign create?
- How many conversions did it lead to?
- How long did it take you to convert that lead into a customer?
- How much did it cost you to do that?
Krishen Iyer on Tracking Metrics
Many factors contribute to how well a business is doing, of course. Yet, tracking metrics matter more so than ever before. Of course, it is also easier to do, thanks to the wide range of software solutions available to help facilitate the process. Metrics remain critical. It is harder than ever to get a message to a consumer – people do not invest the time to watch commercials, and they also don’t want to watch ads in their social media feed. That compounds the risks over time. People have numerous connected devices, so they learn about companies and products in many ways.
Metrics provide a bit of a view into what they see and how they react to it. When it comes to tracking CPA, companies need to know where every dollar is going, and paying close attention to how much it costs to get a customer, is a valuable number to watch. “It’s not ideal to just throw a lot of money into a marketing strategy and hope it works. Today more than ever, every dollar a company has to put towards their marketing needs to amount to something. That’s why metrics like these matter,” says Krishen Iyer.
How Can You See Improvement in CPA?
Monitoring CPA may seem like a tedious task for some. However, just like every other metric out there, it adds up and tells a story.
Consider this example of how it may work to support your business’s next campaign. Imagine launching a company in 4 channels. You’re getting leads, so that shows that your campaign is working. Yet, do you know where those leads are coming from? The second wave of your campaign allows you to better target those funds for what’s going to drive the best outcome. Do you want to put your money across all 4 channels again, even if 2 of them were ineffective and yielded very few leads? Of course not. There’s no way to know this information if you are not tracking metrics like CPA.
More so, it’s possible to tweak and update campaigns to better meet the goals of the company. Often, it is possible to see the opportunities present when comparing companies based on the industry or even the size of the organization.
Creating a Plan for Success – What Krishen Iyer Recommends
For marketers working for businesses, CPA is likely a well-understood term. How do you apply it to the scenario you are facing right now?
First, start with a focus on expectations. It is not likely that companies are able to spend next to nothing and walk away with the highest leads of their existence. It is important to have solid expectations when it comes to managing these first steps. A good way to consider this is to learn the CPA of various industry competitors – what are they paying for customers?
Second, it is also important to grab the low-hanging fruit. That is one way to become more efficient. Brands that work and focus their efforts on these opportunities in the buyer journey tend to lower their CPA substantially. This may include taking steps to retarget past purchasers to bring them back to the company or to reach out to those who abandoned a cart of goods.
It’s also important for organizations to be willing and ready to work through existing campaigns to make adjustments. Sometimes companies get set on a specific goal or expectation, but they don’t put the time in to see what is working and what is costing too much. Be willing to bend and flex as the market does so you can consistently meet your goals.
Data can be a key player in the process, says Krishen Iyer. At increasing rates, data is a tool to answer questions such as how you can lower your costs and how you can improve engagement. Take the time – and spend the money – to find out what is happening with the specific campaigns run.
A big component of this is working to maximize customer experience. Companies that are better able to engage with consumers in a meaningful way are most likely to get the sale. By investing in campaigns that create better engagement, organizations are better able to achieve the goals they set. A component of that is reducing what it costs to bring in customers.
About Krishen Iyer
Krishen Iyer is the founder and CEO of MAIS Consulting. Located in Encinitas, California, the business provides consulting services and contracting while working to build business relationships. The company applies a results-driven approach to enable businesses to build success. Krishen Iyer is an entrepreneur with ample experience working with a wide range of businesses to help them reach their full potential. Through MAIS Consulting, he works to help companies manage their contracting, marketing, strategic growth initiatives, and company policies through proven and effective strategies.