Why your marketing data might be misleading

If you are only looking at the Cost Per Click & Conversion Rate you’re missing part of the story.

Last week I was reviewing data with one of my clients – the owner of a group therapy practice. We looked at her data in July compared to the August data to date. What we saw was that her cost per lead had increased. At first glance this may have looked alarming. It could be an indicator that her ads are less effective at targeting the right traffic for conversions. But, we looked a little further. We reviewed her lead data and saw that her conversion rate to sale had increased. That means more of the leads turned into real, paying clients. And that rate had increased dramatically. Most importantly, her cost per acquisition (her cost of a new client) had decreased. In fact, the cost of a new client in August was ⅓ the cost it was in July.

This was great news! The cost per acquisition (CPA) was incredibly revealing. It showed us that the ads were bringing in more relevant leads. So, once they contacted the practice they were more likely to convert to a client. There were far fewer people who called looking for irrelevant services or who didn’t have the right insurance coverage. Now, we are prepared for this client’s practice to have their most successful month of 2020.

So what happened? How can the data be so misleading? Data is telling us a story. So it is important we understand what each of the different points mean and look at what they are telling us.

The difference between cost per lead and cost per acquisition

The cost per lead is the cost it takes to get someone to contact you – to reach out via form or email or call. The cost per acquisition is the total cost it takes to turn that person into a client. There are a lot of variables that affect each of these costs but they are both pretty simple formulas in the end.

Cost per Lead = total marketing spend / the total number of leads

Cost per Acquisition = total marketing spend / the total number of new clients

To decrease the cost per lead you can redistribution funds. You can also work on using better creatives or keywords to reduce the cost per click. You can also decrease the cost per lead by working on landing page optimization. There are so many different ways to make your ads better! It all depends on what your data is telling you to do.

Which one is more important (CPL or CPA)?

When it comes to private practice, the cost per acquisition (CPA) is, arguably, the single most important variable. This number is used to measure how well the entire sales operations process is going start to finish. It rates the process from the moment that ad shows up on google to the second the client walks in the door for the first time. The cost per acquisition also gives practice owners control. Once you know your average cost per acquisition you can use it to dictate your marketing. Say your average is $100 and you want 10 new clients in the next 2 weeks. You know you will need to spend $1000 in 2 weeks to get those clients. Of course you need to distribute that spend wisely across platforms and campaigns. But the basics are that simple!

Moral of the story

If you log into Google Ads and look at the CPC (cost per click) or the cost per lead and then call it a day, you aren’t looking at the whole story. You need to look at your entire SALES OPERATIONS PROCESS start to finish. Invest in your data so you don’t miss the full picture.