When it comes to online advertising for direct response, one of the most important trackable metrics is the CPA. This is your cost per acquisition. Usually, the acquisition of a new sale. Traditionally, marketers run an advertising campaign, and track the number of sales that result. They shoot for a target “Cost per acquisition” and decide to renew or cancel the campaign based on how well it performs in relation to the goal CPA. If your target CPA is $50, and you spent $1000, resulting in 20 sales, you would have hit your target CPA, and probably renew the campaign. That sounds logical. But with the introduction of more intelligent tracking in a CRM, that method is quickly becoming obsolete. But why? It seems so logical to simply divide the amount spent by the number of sales, and call it a day. Well, keep reading… you’ll understand soon.
Your Cost per Conversion is Only the Beginning
Whether you are using tracking from Google Adwords, Analytics, or other traditional tracking, you are being abandoned at the point of the sale. Sure, there is a lot to be learned from the data leading up to sale #1, and you can actually build a profitable business from that info. However, you are only finding out how much ad money you spent to get a new sale. If you run multiple campaigns, you don’t know which specific sale a campaign generated. You don’t know which customer the campaigns created. You simply know that you got “x” number of sales for “x” amount spent. That can be helpful, but there are quite a few ideas to consider, which I will discuss in the rest of this post.
But just what is the key to unlocking the best insights? Once you know it, the rest is easy. The answer is attaching your ad tracking variables or meta data to the CUSTOMER for life. You’ll need a CRM that enables this, but once you can see the tracking variables of a given customer FOR LIFE, you can attribute all future actions of the customer to the originating campaign. This functionality enables you to accomplish several critical steps which I outline shortly. The rest of this post will discuss benefits of being able to attribute an advertising campaign to a customer for life. RevCent’s platform allows me to do that. As long as I am using the RevCent platform for my sales and marketing, I will be able to permanently staple the campaign (and any meta data I want) to a given customer. Then, I can run the reports I want for each campaign or meta data set to show me vital insights. These are the exact insights I need to help me avoid pitfalls, or to aggressively hammer the best campaigns.
Avoid This Marketing Pitfall: Fool’s Gold
OK, so let’s say you have established a target CPA of $50. You looked at a large gathering of data and learned that if you spend $50 on ads to generate a sale, you will make a satisfactory profit. But what if there is a missing piece of the puzzle? Let me give an example that I like to call, “Fools gold”. These are sales that come at a relatively low CPA, but that result in a large number of refunds, chargebacks, or customer service issues. If you are using typical campaign tracking that stops at the point of the initial sale, you have no idea which sales came from which campaigns. In this case, you are at RISK. You could see that a certain ad campaign is producing a “delightful” CPA of just $20, so you spend as much as possible. A person might buy every impression this campaign will allow. You beg, borrow, and steal to max this campaign out, because it is producing such a LOW CPA. That’s what a smart business person would do. But if your ad tracking enables you to see exactly which customers your campaign generated, you can further analyze them. You will be able to see which customers were generated from a campaign, and the future actions they took, like returns and refunds. This “golden” campaign that produced a CPA of just $20 might actually be a liability because the customers it generates are troublesome. In that light, you would not spend more on the campaign, but rather, discontinue it. That’s a big difference. Analyze the customers to avoid low CPA poisonous apples.
Be Willing to Pay More for Quality Customers
Just like the “Fools gold” example in the previous paragraph, the same can happen in the opposite direction. You might find that a campaign is running at a CPA that is higher than your target. You might pause that campaign when you see the metrics. That’s fine. However, it’s vital to revisit the campaign at a later date, and check into the customers that it generated. With a CRM like RevCent, where the campaign variable is attached to the customer for life, you could be pleasantly surprised. Yes, sometimes you will see that the customers from a certain campaign have returned to order again many times in the future. Or, you might see that they place larger orders. Essentially, you could discover that a campaign you previously paused (for performing worse than your target CPA) is generating Customers that are more valuable than most. In this case, you would revise your target CPA for that campaign to a higher amount, and continue to rack up these high-quality customers. It is vital to remember that in order to be able to discover this type of insight, you need to have a CRM that attaches the campaign tracking to the customer, not just the initial sale. I can’t stress the value of this concept enough.
Don’t Set Your Marketing Targets Based on Wide Averages
After the two previous examples, the theme should be sinking in. By tracking customers for a lifetime, you are able to get a much clearer picture of the value of a campaign’s clients. This leads you away from setting advertising targets based on a company-wide average value. Instead, you’ll be able to examine each campaign individually. If a campaign generates high value clients, you can spend more per conversion. When a campaign generates low-value, or troublesome clients, you must spend less. If you were to simply take your average overall sale price, and set your advertising targets based on that, you would be short-changing your best campaigns, and falsely accelerating your poorer campaigns. Yes, there is extra work involved. You have to look at the metrics for each campaign by itself, and set marketing rules unique to each campaign. The benefits, however, are worth it, and far outweigh the hours spent doing the examination.
Customer Tracking Gets More Accurate Over Time
Since we are tagging each customer with his tracking variables for life, we naturally gather more information over time. For this reason, it’s important to revisit your campaigns, including your paused ones, every few months. Many of the campaigns you paused for failing to meet your initial metrics will prove to have deserved the cancellation. Some, however, might prove to have yielded some very high value clients. You obviously won’t know this, though, until you give them enough time to purchase again and again. So, the point is to not consider your cancelled or paused campaigns garbage. You can go back and possibly see that you can re-enable them, and pick up some nice customers. The more time that passes, the more data you can analyze. So, pay that idea some respect and sniff through the customers from your old campaigns from time to time. You’ll need a CRM like RevCent in order to do it, but I promise it will be worth it.
The wrap-up for the Customer Tracking Argument
Yes, it’s nice to track your conversions and see how many new sales you get from a campaign on any given day. However, as this post shows, that’s really just the beginning. Following the customers from each campaign is actually the key. It’s key to avoiding over-investing in “Fools gold” and it’s key to avoiding under-investing in campaigns that create high-value clients. By using a CRM like RevCent that enables this type of deep tracking, your bottom line will certainly increase and your long-term success as a marketer will be ensured.
About the Author
Brad Markin is the Co-Founder of RevCent, and a long-time direct response marketer in the competitive niches of beauty and health products. The expertise he accumulated over the past 20 years has positioned him as a serious online marketing expert. He has the book of bad beats to learn from, and the list of successes to duplicate. In a nutshell, he is the perfect founder of a cloud based CRM and subscription billing service like RevCent.