I'm sure you have all heard of PPC or pay per click and you might have even heard of CPA or cost per action, it has become a popular way of paying for advertising. Some companies will have you pay them for a CPA instead of for the cost of an ad, they will advertise however much it takes to get you the desired action and then you pay them for that. This can be a great way to advertise but you need to know what your CPA is and that's what this post is about finding out your CPA.
CPA is cost per action that action could be a number of different things and you will likely have several different CPA's for your business. The two most common are a sale and then collecting contact data for a potential customer, maybe you want someone to join your mailing list, that would be an action. If you want to pay a CPA or affiliate network you may want to start with a mailing list and not sale and build from there. So once you have the set action in mind that you want to calculate for then you need the formula which is below.
CLV or customer lifetime value ____
X Times
PRR or project rate of return ____
= Equals
CPA ____
If you don't know your CLV or PRR check the previous posts to calculate them. Even if you have know plans of paying a CPA or Affiliate marketing it is still valuable to know your CPA. It gives you a clear idea of how much to spend on your marketing efforts to create a certain result and then you know whether to stop doing something or do more of something else.
If you have read this series then you have an idea of some of the most commonly used KPI's in marketing. These are not the only ones out there and you may want to even make up your own for your business. A KPI is really just a metric that allows you to measure a result and good business is all about getting results.