With growing social media influence and marketing budgets, a business needs to keep track of their clients. Clients are fundamental to keeping a business running and there must be a growing list of clients. That is where the conversion cost formula comes into play. This could also be called cost-per-result or cost-per-action. So what is the conversion cost formula and why should you begin calculating it?
The Meaning of the Conversion Cost Formula
We define the conversion cost formula as the cost of acquiring a customer. The cost is equal to the total amount spent on the digital marketing campaign divided by the amount of customers acquired. For instance, if your business spent $500 on your campaign and you acquire 50 customers, your conversion cost would be $10. This was calculated by dividing $500 by 50 conversions. The conversion cost formula can be used in all sorts of ways and you should use it to determine the productivity of your marketing.
Total Campaign Cost
Your business’ marketing cost varies by industry. A solution for one business is not the solution for yours, and that is acknowledged. Your marketing must be efficient and effective so that you feel your profits are not disappearing into a black hole. Your marketing campaigns can range from display ads to your email marketing campaigns. Decreasing your marketing campaign cost and increasing your customers acquired is the smart goal of any great marketing campaign.
Customers Acquired
The customers acquired reflects the amount of customers that decided to make a transaction with your business. Acquiring customers can be extremely difficult, but it does not have to be. Through a well-run digital marketing campaign, you can acquire a plentiful amount of customers with ease.
What is a Good Conversion Cost?
A “good” conversion cost is influenced by many factors such as the industry you are in, your target market, and many other factors. Research into conversion costs has shown that the average conversion cost of industries and display campaigns are $50 and $75 respectively. The lower the conversion cost, the better. However, you can improve this cost by pivoting and shifting your marketing material based on your previous campaigns. 
Benefits of the Conversion Cost Formula
If you are still not convinced why you should run the conversion cost formula, here are the additional benefits of the formula’s use.
Understand Your Customer
Using the conversion cost formula allows your business to understand what gets your customers to turn their heads. Your customers are who keep your business afloat and to gain a deeper understanding of them only benefits your business. So how do you use the conversion cost formula to understand your customer? The formula can be used as a way of analyzing which campaigns made an impact on your potential customers’ impressions.
Create Enhanced Targeted Content
Creating more targeted advertisements is a result of better understanding your customer. Creating campaigns that resonate more profoundly with your customer will lower your conversion cost. Resonating with your customer also creates a more efficient and effective campaign because it does not need to work as hard to acquire new customers.
Better Manage Your Marketing Budget
Understanding what your clients respond to can provide more insight into managing your marketing budget. For instance, if clients respond better to one type of marketing campaign, compared to another, it may be sharp-witted to apply additional marketing budget to the campaign with a lower conversion cost.
Interested in Decreasing Your Conversion Cost?
Looking to learn more about managing your digital marketing and decreasing your conversion costs? Blue Ridge Media Company located in Cleveland, Ohio, is here to help. BRMC is an award winning creative marketing agency that can assist you in your growing business. Lower your conversion costs today with Blue Ridge Media Company! Call us today at (216) 233-3009 and explore our portfolio to see what BRMC can do for you!
