Are costs per conversion really your most important important performance -indicator (KPI)? Many campaigns treat it that way. But when efficiency becomes the goal instead of a crash barrier, you risk starving your budget and missing the growth that your campaign is designed to deliver.
What a kpi is real
A KPI is the most important metric in a campaign. Although we follow many statistics during a campaign, the KPI is the North Star. It is the only song that tells us whether the campaign was successful or not. Even if everything else remains, if this statistics are good, we are good.
Think of your most recent campaign now. Was the goal really to get the cheapest possible conversions? You could say yes – and that makes sense. But was that the reason you led the campaign? Almost certainly not. What you wanted were the conversions themselves. You care about how much they cost, but what made it the most was getting the leads, sales or phone calls. If that is true, then the costs per conversion was not the KPI.
Why misleading statistics
Even if you believe that costs per conversion are the KPI, consider this: Imagine having an apple orchard and hiring a picker. If you asked them to return a single apple, would they climb the highest tree to get the most difficult? Maybe. But most likely they would grab the nearest, easiest apple.
If you used the picking time of that single Apple as the average for the entire orchard, it would look much faster than reality.
The same applies if you asked 100 apples. Would the picker go for the most difficult 100 – or the easiest? If you have the time for those 100 apples on average and assume that it applied to all 10,000 in the orchard, the estimate would be too low again. And while you keep asking for more apples, the average time per apple naturally increases.
How does the orchard operator minimize the costs per apple? By only choosing the easiest and calling it a day. But that would leave money – and fruit – on the table.
Advertising platforms work in the same way. When you tell them to get as many conversions as possible for fixed expenses, they will first find the easiest. Add more expenses and continue to convert – but with less efficiency than at the lower level of expenditure.
Dig deeper: 7 Reasons why your conversion statistics look great – but not your sale
Make a conversion volume your KPI
My recommended approach is to set the conversion volume as your KPI. At the end of the day you need a minimum number of leads, sales or calls for a campaign to be successful.
Use costs per conversion as a gas valve and a teacher. First calculate the maximum costs per conversion that you can allow profitable. Then make sure that your campaign does not exceed that limit. From there you conduct controlled experiments to see how incremental expenditure influences efficiency – and are aimed at terminating your campaign just below the profitability threshold.
That is how you maximize the conversions while you still remain profitable.
Why deform Full-Funnel Campaigns Statistics
The same logic applies to Roas. It is tempting to maximize the return on the advertisement, but remember that the variable that we most check in that comparison – income shared by advertisements is issued. Cut can stimulate Roas by cutting less efficient transactions. But if reducing ROAs somewhat increases the total income and at the same time keeps the campaign profitable, why do it run away from that still valuable turnover?
DIG DEPER: Why Marketing Engagement -Statistics actually matter
Now think of a full-bunnel campaign. Upstairs bunnel channels build up demand, while lower-rounding channels catch it. Back to the Orchard Analogy: One picker, Clyde, climbs the tree and drops apples to another picker, Kelly, waiting with a basket. If the basket is labeled ‘Kelly’, she will look like the Rockstar while Clyde seems to do nothing. But fire Clyde, and Kelly has to climb the tree herself – and her efficiency drops.
That is how attributing looks in campaigns with multiple channels. Upper tunnel channels may seem inefficient, with heavenly or even unpredictable costs per conversion. Channels with a lower funnel look like heroes. But the metric to gas valve is not at channel level – it is the general campaign costs per conversion or Roas.
Focus on growth, not efficiency
The use of costs per conversion or roas as a campaign -kpis can feel safe, but it almost always encourages maintenance. These statistics mislead us to leave profitable conversions on the table under the guise of efficiency.
That does not mean that efficiency does not matter. Set a limit that you cannot exceed profitable and then concentrate on maximizing the number of conversions that you can record within that limit. In this way you choose as many apples as you can rot without the fruit on the tree.
Dig deeper: CLV is the growth trick that marketing cannot fake
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