How do I know the cost per aquisition of a client if Google Ads is only bringing in leads?
If your Google Ads account is gathering leads (as opposed to revenue), then it will be important to manually determine the cost per aquisition of a customer. Cost per aquisition, or CPA, is your bottom line, after all.
Getting to the bottom of this number is not always straightforward, but it is always worth the effort.
THe goal is to look through your recent sales and leads, and then to try to determine the average conversion rate of a lead that comes from Google Ads. That way we can apply the conversion rate to the performance reported by Google Ads in order to determine the CPA of a customer/client.
Here is an example of the math equation that needs to be done:
If your CRM/sales reps are able to find 19 leads that originally came from Google Ads in the past 4 months.
And 8 of those leads converted into a customer/client.
Then, 8 converted leads out of 19 total leads is a 42% conversion rate from Google Ads.
If Google Ads is reporting 63 leads in the past 4 months and spent $20,000 in ad spend to do that, let's apply the 42% conversion rate to those numbers:
42% of the 63 leads gathered by Google Ads is 26.46 leads that were converted into clients, theoretically.
$20,000 spent on ads divided by 26.46 clients means each client cost $756.
Now that you know each client cost $756, you can ask yourself: Is that a profitable amount to spend aquiring a client based on how much revenue clients bring in over their lifetime with the business, on average? If so, then it's probably time to start talking about increasing the monthly ad spend to begin scaling how many leads are coming in each month.
How to find the leads that came from Google Ads
Leads that submit a form will need to be tracked using UTM parameters. This will need to be done ahead of time, so that the contacts in your CRM can be identified as having Google Ads as their source.
Leads that call your business won't have any UTM parameters attached to their contact record (and, in many cases, won't have a contact record unless the person who answered the phone added them into the CRM). In this case, we can send you a list of names & phone numbers from our call tracking app, and then you can manually match up your recent sales/new customers/new clients to the list.