How much importance should you give to your cost of acquisition?
Cost of acquisition (CPA) is one of the most important metric if not the most important metric that you track as a performance marketer. Chances are high that none of your core team meetings is concluded without mention of it and debate on how can we bring it down?
The holy grail to reduce CPA takes a significant toll on the entire marketing team and while teams try to come up with innovative ideas, many a time they end up losing on the scale or high-value customer acquisitions.
If you are part of a growing start-up/ mid-size corporate, there are chances that you often change your marketing channel mix, budget allocation, targeting and essentially most of the ingredients that go to your secret recipe.
We at Unravel Media, have seen that discussion from close quarters sometimes as team members, sometimes as consultants and sometimes as vendor and have developed our own methodology on this and we would like to give a glimpse of the same in this write-up.
We believe that for early-stage startups/ mid-size corporates, scaling fast has got clear advantages and that should not be compromised due to any other reasons. Of course, there are budget constraints that need to be taken into consideration, however, you should be looking at data deeper or slightly differently if you have to overcome the challenge of lowering the CPA.
We ate Unravel Media, take utmost care to not only look at CPAs but rather action post acquisition to derive the true CPA or relative CPAs.
We have worked extensively with gaming clients in India as a digital marketer or as a consultant and all the major gaming portals on Rummy, Poker and Fantasy where CPAs are on the higher side due to lower applicable market size, however, we have ensured that our client’s profitability is still intact by looking at post-acquisition funnel across channels.
While we allocate budget on each of the channels by taking an analytical approach, we tweak the same regularly by looking at post-acquisition activities. This gives us insight into what end customers are liking/ disliking and buying again.
This goes to the CRM team as an insight so that they can plan the activities accordingly. Many times, we suggest a different path to the customer journey post-acquisition to test our analytical hypothesis and to ensure customer longevity on the platform.
What we have observed that many times, the highest CPA channels are also the highest ROI/ ROAS channel which goes in your favour. Particularly for gaming, we have observed that search performs much better than any interest-based audience platform although CPAs are less on an interest-based platform, the incremental ROI on search campaigns are far more profitable.
Add better retention on top of it and that will ensure that your higher CPAs sometimes do not even hurt and in fact add to your overall business profitability.
There are customers who are sometimes not comfortable sharing their CRM journey, however, we ensure to share a customized journey with them so that their retention teams can ponder on such thoughts if they see the merit.
We can conclude by saying that higher CPAs are not always bad if you know what you are paying for? After all, there is always a premium and high maintenance for fast cars! Goodspeed to all your campaign!
If you would like to discuss this or any other things please reach out to us: Virtualcoffee@unravel.media