What does it cost your business to get one customer? (Cost per acquistion)

What does it cost your business to get one customer? (Cost per acquistion)

Now before you think this is a blog about advanced equations relax, I found a really simple non Professor Hawkins way to find out what your business has to spend to find a new customer or cost per acquistion.

As an online marketing training company with our own business directories and lead sourcing, we are always using Google Adsence keyword tool to compare how many searches are done each month on any particular key phrase for ourselves and our Internet marketing training clients, in other words Google’s Pay per Click revenue (PPC) is all based on how many people click a certain key phrase in a month. The more clicks the more valuable the bid price becomes for an Adword client to get their Google advertisement to the very top of the first page.

 Using this free method to determine how much people pay to find clients on the Internet is a practical guide to what new clients are probably going to cost you to find.  Interestingly enough; I read recently that the most expensive Cost per acquistion clicks  are over $80 per click in UK Motor Insurance!

Using Google Adwords as a barometer for business, I mean tell me a modern business that does not use Google? One can see the competitiveness of your own top key phrases.

The equation is quite simple take the top 5 key phrases for your business; calculate the average price per click. Then multiple by 100 to get the 1% industry average of 100 visitors to a client.

Here is our example:

**(Clicks is the Annual amount of clicks Google sees/ 12 months to get a monthly number of clicks also we searched AdSense clicks in UK and Thailand and below is a mix of those results)

Business sourcing 50 clicks, $5 per click

Business leads 1,900 clicks, $18 per click

Business Directory 18,100 clicks, $3 per click

Free business Directory 1,900, $2 per click

Company Directory 260 clicks, $1.50 per click

In our example, as one of our main services is Buying leads through a business Directory the price of the lead varies a lot between just using PPC to get free Listing members to our Directory and finding sourcing lead buyers, but I think you get the picture.

Total cost of the clicks call it $30 x 100= $3,000 per client acquisition

Or we could say: to get only lead buyers is $1,800 per lead buyer

How does this compare to say; your sales team, Tele sales or Networking to find leads? You will need to find out what your costs are and the effectiveness of other activities to see if you are beating the Industry average on the above equation for your business.

If you can improve the conversion rate of your website then you can bring your number of visits to your site that convert to a sale down, then that drastically improves your profitability, if you could get on the higher end of conversions of say 5% of all website visitors convert to a sale, then a lead for us would cost us $1800/5 =$360 A massive improvement I am sure you will agree.

I am sure many SEO and PPC Managers will contest and argue that they can get much better conversion rates through PPC and with dynamic landing pages, some as much as 1/5 clicks to a customer, however with exclusive knowledge comes great cost, so make sure to factor their Aston Martin into your costs.

The fact is we receive around 5-8 fresh new leads a month and we do not do PPC but that is because I am publishing over 2 blogs a day on over 20 different websites in our network and sharing each piece of good content to over 30,000 on social media and 20 million people on Bookmarking sites that took over 7 years to amass!  Alas Not many businesses have that time to create my kind of online network, so then PPC then becomes a viable option for new client acquisitions.

Improving the conversion rate of your website is all about content and content marketing, It’s about making your shop interesting and making people stay, why are all top book shops making coffee and relaxing places to stay inside the shop? Why do many Toy shops have play areas? What are you doing to make people stay inside your website and thus improve massively the profitability of your online presence?

One of the reasons we did this  research and calculations is; we are starting to offer leads from our Business  Directory members to our website visitors for $10 a month, this becomes a no brainer for business to subscribe to the service, you could get many leads in a month for $10! Compare that to most lead acquisition prices and you can see why I am getting excited for 2014!

To find out how to use Google to see how much new client acquisition is costing your business and how to improve your website conversion rate:

Contact Netmedia