Understanding your cost per acquisition (CPA) is critical for any tech company. This is the make or break point for the viability of your business. Coupled with strategic marketing strategy and website analytics, fully understanding your CPA can result in a predictable sales revenue.
E-commerce websites should have a checkout page as standard. Websites which operate off leads will require a lead success page to be set up. Many WordPress form plugins such as Contact Form 7 or Ninja Forms will default to showing the visitor a “thank you” message underneath the submission form. This is no good for lead tracking. You want your visitors to be taken to a new web page with a unique URL once they submit the form, for example, this might be a “Thank you for contacting us” page on ‘yourdomain.com/thankyou’.
Before you start spending money on any digital marketing, you must first set up your tracking software for each of your campaigns, along with an overall lead tracking analysis tool. Here are the tracking requirements for the main digital marketing options:
Google Analytics goal tracking: For the finer details, conversion tracking should be individually set up on all of your marketing platforms. Google Analytics offers a “quick glance” overview of your conversions. Via the Admin section, you need to set up Goals. Typically this will be a visitor landing on a web page such as the checkout or thank you page.
Google Adwords conversion tracking: Once you have created your campaign, you need to set up your conversion tracking. This involves adding two pieces of code to your website: One which goes on every page of your site (generally added in the <head> section of your theme/template), called the Global Site Tag, the other going only on the sale/lead success page, called the Event Snippet.
Facebook (and Instagram) Pixel: Facebook and Instagram both run off the same platform, Facebook Ads Manager. From here, create your Pixel and, as with Google Adwords, you will need to add some code to the header of every page on your website. Then set the event which you want to track, this is usually a purchase or lead. You won’t need to add code to your lead success page, you’ll just need to enter the URL.
Twitter conversion tracking: Via ads.twitter.com, you’ll need to generate your conversion tracking code. Add the Universal Web Tag to all pages of your site. You’ll then need to create a Conversion Event. If you’re tracking visitors to a checkout or “thank you” page, you’ll need to simply enter the URL.
LinkedIn insight tracking: As with the other social platforms, you’ll need to add some code to all website pages. The LinkedIn code is called the Insight Tag. Once added, you can set the URL for the lead trigger.
Mailchimp: Unlike the leading social platforms, Mailchimp doesn’t offer direct conversion tracking. Thankfully, this can be done via Google Analytics goal tracking. You’ll need to connect the two accounts via the Mailchimp Integrations page.
CRM: It’s also recommended to use a CRM to capture the data from your website leads. Hubspot and Pipedrive are two of the leading solutions. They offer a centralised space for your leads to be captured, analysed and organised. Leading website CMS’ such as WordPress, Shopify etc offer simple integrations.
Now that your conversion tracking has been set up, it’s time to turn on the marketing taps! We recommend that you set a total monthly digital marketing budget, then allocate a percentage of that budget for each of your chosen campaigns. For example, 50% Google Adwords, 25% Facebook, 15% Instagram and 10% LinkedIn.
E-commerce sales and profits are more straightforward to measure than businesses which rely on website leads. We recommend that lead reliant businesses use the LAPS method:
Using your CRM, such as Hubspot or Pipedrive, you will be able to track each and every lead that comes in via the website. These will start as a Lead, as this prospect progresses, you can migrate it into an Appointment, then Proposal, and finally a Sale when the deal closes. After a few months of analysing your data, you will be able to calculate how many leads are required to make a sale. In our experience, a typical tech company would generate 30 leads, which would turn into 6 appointments, turning into 4 proposals and converting into 1 sale.
You’ll also need to calculate your website conversion rate. How many visitors become leads? A tech company website with a conversion rate of 10% is considered to be very good. Based on the example above, if 30 leads equate to 1 sale, then your website will make 1 sale for every 300 visitors (10% of 300 = 30).
Website conversion rates will likely vary across different platforms. For example, Facebook might bring you lots of traffic, but a low conversion rate compared to Google Adwords. The quality of the leads may also vary, although we don’t often find this to be the case when analysing large data sets.
As you’ve now calculated how many website visitors it takes to make a sale, you now need to calculate how much digital marketing spend is required on each of your campaigns to bring in that volume. If, for example, it costs £500 to bring in 300 visitors via Facebook ads, then you’re looking at £500 as your estimated CPA for this campaign.
Each one of your digital marketing campaigns will have its own CPA. Find out what works and what doesn’t. Ditch the underperformers quickly. Ramp up the ones returning positive results by increasing the spend. As you crank the handle, you should see predictable trends i.e. double the spend, double the leads, double the sales. If your CPA equates to decent profit, crank that handle!
If you would like further information on this topic or would like to discuss my opinion on what makes a positive CPA is for your business, please book a strategy call here.
Jan 10, 2021