Cost Per Acquisition
Overview
("CPA") is defined as the cost you incurred for every acquisition you made. Acquisitions can vary from case to case, an example of an Acquisition can be a lead or sale. The formula for CPA is Total cost of (Sale) / total number of leads recorded (Visitors, Opens, Clicks, Form Submissions, Trials, Demonstrations, etc), i.e. CPA = Total Cost / Total Number of Leads. For a lead based account you need to consider 'Converted Clicks' as the total number of leads in the formula and for online orders you need to consider 'Conversions' while calculating the CPA. As mentioned above CPA can be calculated at various levels right from campaigns to the keyword. And it is always a good practice to look at all of these levels to understand if your campaign / outbound effort is profitable to you (or not). To calculate CPA, you'll need to take cost and divide it by conversions. If you want to know the cost per converted click (as opposed to cost per conversion), you will take the cost and divide it by converted clicks.
Goals
1. Define Sales Qualified Lead (SQL)
: Many companies view 'sales' as a
one-size-fits-all department within an organization. But, it's important to understand that
in the modern age of selling, there are specialties within the sales process that help
create a more efficient and productive approach to customer acquisition and growth.
2. Define Marketing Qualified Leads (MQL)
: Marketing Activities means activities occurring
before launch, during the evaluation period, and after the purchase, and are including butare not limited to, strategic planning, and modifications to the programs KPI’s as
they’re discovered.
Observation
1. Inside Sales: SQL (CPA Lead: $5.82 / CPA Sale: $178.78)
Inside sales combines outbound and inbound sales activities with a mixture of phone calls, emails, webinars, lead generation, target research and a variety of other "in the office" activities. Inside sales professionals can generate new business, develop opportunities and move them through the sales process resulting in a purchase order. And, inside sales reps can also work with customers after the purchase to grow accounts with cross-selling, add-on sales and renewal sales.
Total Cost (monthly): $3,200+
1 employee, paid hourly + commission @ $20 per hour, 40 hours per week, 22 business days per month.
Leads Generated (monthly): 550
25 (revenue generating activities) per day
25 (revenue supporting activities) per day
Sales Generated (monthly): 18
Average: 10:1 ratio on lead to demo = 55 demos
Average: 3:1 ratio on demo to sale = 18 sales
2. Sales Development: SQL (CPA Lead: $2.91 / CPA: Sale: UNQUALIFIED)
Sales development is a subset of inside sales that focuses exclusively on generating new business and filling the pipeline with new opportunities. Sales development representatives focus on heavy prospecting, nurturing leads to stay top-of-mind, and are focused on qualifying opportunities. Sales development is a critical component for any sales team, as new opportunities are the lifeblood of any company's success.
Total Cost (monthly): $3,200+
1 employee, paid hourly + commission @ $20 per hour, 40 hours per week, 22 business days per month.
Leads Generated (monthly): 1,100
50 (revenue generating activities) per day
0 (revenue supporting activities) per day
3. Account Management: SQL (Increases LTV-Lifetime Value: CPA: UNQUALIFIED)
Account managers work with existing customers to ensure a high customer experience. They typically pick-up the relationship with a client once a purchasing decision has been made, and account managers are responsible for training, and coordinating the on-boarding process. Account managers also review product usage information, help resolve customer problems and make sure everything is working properly to guarantee the customer continues to renew.
Total Cost (monthly): $3,200
1 employee, paid hourly @ $20 per hour, 40 hours per week, 22 business days per month.
Leads Generated (monthly): 0
0 (revenue generating activities) per day
50 (revenue supporting activities) per day
4. Field Sales: SQL (CPA Lead: $16.82 / CPA: Sale: $528.58)
Field sales is the traditional approach to selling. Sales reps are out in the field, working with prospective customers and clients face-to-face. Field sales leverages the personal touch method, but can be inefficient and time consuming as the rep needs to travel from one appointment to another. Field sales is most effective for high value sales and heavy relationship sales. Field sales reps are most effective when appointments are scheduled, and much of the in-office sales work is completed for them. This means they should be partnered with an inside sales rep (at the very least a sales support staff member) to ensure the high activity work is also completed.
Total Cost (monthly): $3,700
1 employee, paid hourly + commission @ $20 per hour, (- expenses), 40 hours per week, 22 business days per month.
Leads Generated (monthly): 220
10 (revenue generating activities) per day
10 (revenue supporting activities) per day
Sales Generated (monthly): 7
Average: 10:1 ratio on lead to demo = 22 demos
Average: 3:1 ratio on demo to sale = 7 sales
5. Sales Support: SQL (Reduces Churn Rate % / CPA: UNQUALIFIED)
Every sales department needs support, and it's in the best interest of the company to make sure the field reps or inside sales reps are not the employees doing this work. Sales support includes client retention, list generation, target customer research, data analysis, data cleansing, quote generation and purchase order processing. Sales support is critical for an efficient sales team. The work is important to ensure a successful sales campaign, but it's preferred to have a staff member who's not tied to a sales number completing these tasks. Revenue generating sales professionals need to spend most of their time in front of customers (phone or face-to-face).
Total Cost (monthly): $3,200
1 employee, paid hourly @ $20 per hour, 40 hours per week, 22 business days per month.
Leads Generated (monthly): 0
0 (revenue generating activities) per day
50 (revenue supporting activities) per day
6. Inbound Marketing: MQL (CPA Lead: ____ / CPA: Sale: ____)
Inbound marketing is a technique for drawing customers to products and services via website, landing pages, email marketing, social media, paid advertising, search optimization and branding. Inbound marketing provides information, an improved customer experience and builds trust by offering potential customers information they value via company sponsored newsletters, blogs and entries on platforms. Compared with outbound marketing, inbound reverses the relationship between company and customer. In fact, while outbound marketing is going to push the product through various channels, inbound marketing creates awareness, attracts and helps new customers with channels like blogs, social media, email marketing, etc.
*An initial investment would be required to start, however once the desired strategy is planned and launched, all activities would be automated, 24/7/365
Total Cost (monthly): $0 - Investment Opportunity
No employee’s necessary, fully automated, 24/7/365.
Leads Generated (monthly): 22,590+
Unlimited potential (revenue generating activities) 24/7/365
0 (revenue supporting activities) 24/7/365
Sales Generated thru Self-Serve (monthly): 1 - Optimizing: Conversion Rate
Average: 50:1 ratio on Landing Page Signup to Sale.
Search Optimization Leads Generated (monthly): 20,000 - Optimizing: SEO
Average: 10:1 ratio from Search (20,000 ) to CTR-Click through Rate onto Website.
Website ‘Organic Leads’ Generated (monthly): 2,000 - Optimizing: CTA, Call-To-Actions
Average: 80:1 ratio on visitor to website (2,000) to form submission.
Website ‘Form Leads’ Generated (monthly): 25 - Optimizing: Content + CTA’s
Average: 80:1 ratio on visitor to website (2,000) to form submission.
Trial Program Leads Generated (monthly): 50 - Optimizing: Value Proposition + CTA’s
Average: CVR - Conversion Rate from Landing Page to Signup 2% (email marketing only)
Average: CPA - Cost Per Acquisition from start to finish is $0 (email marketing only)
Landing Page Leads Generated (monthly): 97 - Optimizing: Content
Average: CTR - Click Through Rate on Landing Page is 2:1 ratio. (email marketing only)
Average: CPA - Cost Per Acquisition from contact to LP visit is $0 (email marketing only)
Email Marketing Leads Generated (monthly): 418 - Optimizing: Content
Average CTR - Click Through Rate: 8% or 12.5:1 ratio (4,000 contacts)
Average: OR - Open Rate: 11% or 9:1 ratio (4,000 contacts)
Average: CPC - Cost Per Click to Landing Page visit is $0 (auto-responder built)
Average: CPA - Cost Per Acquisition from contact > email del. $0 (auto-responder built)
Paid Advertising ‘Search + Display’ Leads Generated (monthly): 0 - Budget Pending
Average: Search CPC - Cost Per Click to Landing Page visit is $1.78
Average: Display CPC - Cost Per Click to Landing Page visit is $0.20
Average: Search CPA - Cost Per Acquisition from start to finish is $59.18
Average: Display CPA - Cost Per Acquisition from start to finish is $60.76
Social Media ‘FaceBook + LinkedIn’ Leads Generated (monthly): 0 - Budget Pending
Average: CTR - Click Through Rate to Landing Page visit is 10:1 ratio.
Average: CPC - Cost Per Click to Landing Page visit is $1.27
Average: CVR - Conversion Rate from Landing Page to Signup 2.5%
Average: CPA - Cost Per Acquisition from start to finish is $55.21
7. Marketing Automation (Eliminates Repetitive Tasks / CPA: UNQUALIFIED)
Marketing automation refers to software platforms and technologies designed for marketing departments and organizations to more effectively market on multiple channels online (such as email, social media, websites, etc.) and automate repetitive tasks. Marketing departments, consultants and part-time marketing employees benefit by specifying criteria and outcomes for tasks and processes which are then interpreted, stored and executed by software, which increases efficiency and reduces human error. Originally focused on email marketing automation, marketing automation refers to a broad range of automation and analytic tools for marketing especially inbound marketing. Marketing Automation platforms are used as a hosted or web-based solution, and no software installation is required by a customer. The use of a marketing automation platform is to streamline sales and marketing organizations by replacing high-touch, repetitive manual processes with automated solutions. Marketing automation is a platform that marketers use to plan, coordinate, manage and measure all of their marketing campaigns, both online and offline.
*An initial investment would be required to start, however once the desired strategy is planned and launched, all activities would be automated, 24/7/365.
Total Cost (monthly): $0 - Investment Opportunity
HubSpot Marketing Professional
Leads Generated (monthly): 0
0 (revenue generating activities) 24/7/365
Unlimited potential (revenue supporting activities) 24/7/365
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