Cost Per Acquisition
Cost Per Acquisition or CPA is the amount of money that is invested to produce a sale. It is one of the most important marketing metrics because it determines how much investment is required to produce revenue. And how profitable a business is.
The cost for CPA is generally advertising. The acquisition is the first purchase. CPA can be further broken down by channel and campaign. And varies by industry.
However, for CPA to be really telling, it is important to view it in the context of annual purchases and Customer Lifetime Value (CLV). For example, if your Cost Per Acquisition is low, but your Customer Lifetime Value is high, you may not be investing enough.
So what is a good Cost Per Acquisition (CPA)? Here’s what 9 experts say.
Cost Per Acquisition by industry
- Travel: $7
- Retail: $10
- Consumer Goods: $22
- Manufacturing: $83
- Transportation: $98
- Marketing Agency: $141
- Financial: $175
- Technology (Hardware): $182
- Real Estate: $213
- Banking/Insurance: $303
- Telecom: $315
- Technology (Software): $395
Cost Per Acquisition for B2B
The B2B industry is heavily focused on lead generation – so the cost of getting a potential customer’s attention, as opposed to the total cost of converting them into a customer. Hubspot found that 65% of businesses consider lead generation as their biggest marketing challenge. But unfortunately, 96% of website visitors aren’t ready to purchase yet. Cost per lead in the B2B industry can vary greatly. The nonprofit sector, for example, can draw in a lead for $31, while the technology industry spends nearly $208 per lead. – Monique Danao, Flying Saucer
CPA for PPC
CPA benchmarks vary by industry and channel, but the average CPA for pay per click (PPC) search (across industries) is $48.96 while display (across industries) is just slightly higher at $75.51. If one of your primary acquisition channels is media, then calculating CPA is helpful in determining the effectiveness of your campaigns. – Geckoboard
Cost Per Acquisition for PPC by industry
CPAs have shifted quite a bit in the past couple of years. The lowest cost per action across industries is now autos, coming in at just $33 per action. B2B, real estate, and tech companies, on the other hand, confront average costs per action over $100. We generally expect costs in advertising to rise over time. – Mark Irvine, WordStream
CPA for e-commerce
A $10.00 customer acquisition cost may be quite low if customers make a $25.00 purchase every week for 20 years! However, this e-commerce company, they are struggling to keep customers and most of the customers make only one purchase. – Neil Patel
Cost Per Acquisition in Organic Search and Social
When people ask me how to evaluate the ROI of their marketing campaigns, I tell them to start with their customer acquisition cost (CAC). That metric, along with the Lifetime Value of a Customer (LTV) are your best friends in the world of B2B marketing. Once you understand your CAC within each marketing and advertising channel, you know two things: (1) Which channels to invest more and less in; and (2) your marketing department’s strengths and weaknesses. The latter can be ascertained by comparing your CACs against industry benchmarks. By “Organic,” I mean SEO and Organic Social. – Evan Bailyn, First Page Sage
Cost Per Acquisition for Facebook ads
What’s a good CPA on Facebook? The average cost per action (CPA) for Facebook ads across all industries is $18.68. – Mark Irvine, WordStream
CPA for Facebook Ads by industry
With an average CPA of $7.85, nearly all education advertisers agree that it’s a smart decision to cater to Facebook and Instagram’s relatively young audience. While Facebook may be a great place to find your new students, it can be an expensive place to find a new car, architect, or IT specialist – average Facebook CPAs for auto, home improvement, and technology services are $43.84, $44.66, and $55.21, respectively. Of course, the lifetime value of a new client in these industries is very high, making it all worthwhile in the end. – Mark Irvine, WordStream
Customer Acquisition vs Customer Retention
Did you know that it costs five times as much to attract a new customer, than to keep an existing one? The first rule of any business is to retain customers and build a loyal relationship with them, and thereby avoid customer acquisition costs. It’s a well-established fact that 44% of companies have a greater focus on customer acquisition vs. 18% that focus on retention. – Khalid Saleh, Invesp
Do these give examples give you a good idea of what the Cost Per Acquisition should be for your business. Are you ready to put a plan in place?