Why Measure Cost Per Acquisition?

Cost Per Acquisition is an important metric that can help you gain useful insights on true return on investment. If you haven’t already, we recommend starting off by learning why a digital measurement plan is an important first step in your marketing strategy.

One of the primary concerns facing businesses today is determining whether or not a current, or previous, marketing strategy is effective. When allocating funds and investing not only resources but time into various channels and tactics, it’s important to know if these efforts are producing tangible results. Measuring cost per acquisition is one of the ways that you can gain this insight.

What is Cost Per Acquisition?

Cost Per Acquisition (CPA) is a measurement of how much it costs you to convert a lead into a customer. When it comes to determining how much money should be allocated for certain marketing efforts, it’s important to understand where these numbers are coming from and how exactly they were created. Cost per acquisition can help to give an accurate representation of the true return on investment, which can be useful when allocating budget going forward or determining the success of a previous strategy.

To determine CPA, you’ll take the cost of your marketing tactics divided by the number of conversions (or new customers). Costs shouldn’t only encompass monetary costs that went into the production of this marketing campaign or advertisement. Consider everything from the time and energy put into developing it, to the actual cost of getting your campaign up and running.

So Why Should You Measure Cost Per Acquisition?

Measuring cost per acquisition will give you an estimate of how much your new customers are costing you and help you determine whether your strategy needs to be revised. The lower the CPA, the more effective your strategy. Whether using cost per acquisition to help determine a future budget or to help gain insight into the results of a previous investment, it can be a useful tool to help you put your best marketing strategies forward, in a way that produces results and focuses on the quality of these strategies.

When used correctly, knowing your cost per acquisition can help to narrow down your marketing strategies into a streamlined and impactful message that produces effective results, saving you both time and resources in the production of these strategies. Measuring CPA can help you look at the ways in which you can improve your current strategies to help cultivate success and create more effective, relevant, and capable marketing that shows positive results.