The B2B marketing industry loves finding new statistics to measure success. Right now, “The One Metric That Can Determine Your Company’s Fate” is CPC (often called Customer Aquisition Cost) – we look into how you can use it best.
Normally, a new marketing metric is met with groans, each one coming complete with a brand new acronym, formula and wider context to memorise.
Luckily, CPC is actually one of the easier statistics to understand in the world of B2B marketing. It’s simply the total amount of money you spend acquiring customers split between the total number of customers you’ve acquired.
Which is great, because even though comprehending CPC is pretty simple, understanding how to use it effectively isn’t.
CPC. Completely Pointless Contextless
Let’s say you’ve spent £10,000 in a year on marketing and it’s provided 100 customers, that gives you a cost per-customer of £100.
Marketing costs (£10,000)
÷
Customers gained (100)
=
CPC (£100)
This isn’t an insight, this is an unsight, and it tells you nothing useful about your business at all. Spending £100 for every customer you capture is great if they all spend £200, it isn’t so great if they’re only spending £50. A common mistake for B2B marketers is to take “insight” like this and use it to make business decisions.
No one statistic can help you rebuild your business as some kind of magical profit factory and there are plenty of caveats to using CPC.
For example, if you spend money upfront investing in an expensive piece of marketing collateral, let’s say a high-quality video, it’s going to skew your CPC, depending on what figures you use to calculate it.
Let’s say the video costs £1000 and drives 4 sales every month, in that first month your CPC for the video won’t look very healthy:
Cost of marketing video (£1000)
÷
Customers gained (4)
=
CPC (£250)
But measure it at the end of the year, and it’ll look like a shrewd piece of business:
Cost of marketing video (£1000)
÷
Customers gained (48)
=
CPC (£20.83)
It’s also essential to understand that without context your CPC won’t help you run your business better. However, by using it to close the loop between your sales and marketing, it can help you better understand how your marketing spend is performing.
CPC. Calculating Profitable Channels
The right context can transform CPC from a vanity statistic into valuable and actionable insight, for example, calculating successful marketing attribution.
By segmenting your marketing costs and calculating the CPC for each channel, you should be able to quickly discover which marketing channels or activity is most profitable for your business. For example:
Social media costs (£1,000)
÷
Number of customers (100)
=
CPC (£10)
Email marketing costs (£1,500)
÷
Number of customers (100)
=
CPC (£15)
Clearly, in this example, email marketing is less cost-effective and this insight might inspire someone to increase social media spend to capitalise on that.
A truer view of marketing attribution would go deeper still and take into consideration the number of customers gained from each particular channel. For example:
Social media costs (£1,000)
÷
Number of customers (25)
=
CPC (£40)
Email marketing costs (£1,500)
÷
Number of customers (75)
=
CPC (£20)
Again, it’s important to note that CPC has its limits and this example doesn’t take into account how much customers from each channel are spending or whether one channel is more likely to capture repeat customers.
What should be obvious to you, is that the clearer the attribution, the better insight you’re going to receive – something that’s true of any statistic.
Currently, we’ve reduced the gap between sales and marketing from simply knowing how many customers we gained for our marketing spend, to understanding which of our marketing channels was most cost-effective.
CPC. Characteristically Pragmatic Conclusion
It’s important to keep in mind that for most businesses, especially those using inbound strategies, each marketing channel feeds into the next, working together to bring in customers – so, none of them exists in a vacuum.
Your social media might signpost your blogs, your PPC ads might reinforce your high-converting content and all your digital activity might be in pursuit of driving people to an event. If this is the case, even calculating your CPC by “last touch” (the click that directly led to a sale) isn’t ever going to provide a definitive answer.
Like any data, your CPC is only valuable if you’re able to interpret it and derive actionable insight from it. Which, ultimately is all down to you.
For more information on how you can better use your data to generate more B2B leads, download our free data ebook or contact one of our experts today.
