Krishen Iyer Discusses the Importance of Cost-Per-Acquisition

4 Mins read

Krishen Iyer works with small business owners at all stages of ownership as the CEO of Mais Consulting. He is often surprised that his clients do not understand the true cost of acquiring a customer. Also known as cost-per-acquisition (CPA), this figure has a dramatic impact on a company’s profit margin. Even so, too many business owners ignore or underestimate it.

What Does CPA Mean?

As Krishen Iyer explains to his clients, the CPA can cover a range of activities required to attract a new customer. For example, a person might download a free eBook, sign up for a newsletter, or make a purchase. Some activities result in leads and others result in direct sales. Iyer knows from experience launching his own business that brands need to be efficient with their CPA.

Small business owners should not consider the CPA as the only measure of success. Instead, Iyer recommends using it as more of a milepost when measuring return on investment (ROI). The CPA is merely a starting point when determining the lifetime value of each customer.

Krishen Iyer Advises Against Using the CPA as a Standalone Measure

Too many small business owners fail to consider the context when looking at the CPA. The true purpose of determining the CPA is to see which marketing campaigns are effective and which need some tweaking. When working with clients on their marketing campaigns, Krishen Iyer urges them to consider the following questions:

  • How many new customers have the business acquired in the last day, week, or month?
  • How much money did the company spend locating each new customer?
  • How long does it take on average to convert a lead or click into a paying customer?

Achieving a low CPA is nice, but it is not the primary goal of any marketing campaign. Rather, a CPA is a business outcome, since a click is not valuable on its own. However, companies increase efficiency when marketing departments figure out the cost to achieve each click.

Krishen Iyer is also quick to point out to his clients how much marketing changed due to the coronavirus pandemic. Not only do people have shorter attention spans, but they also have more choices than ever. Connected devices have also grown.

Marketers who hope to succeed in a post-pandemic world cannot afford to ignore CPA and other campaign metrics. Every dollar spent on a marketing campaign must produce results because businesses cannot afford a lengthy trial and error process.

CPA Provides an Important Focusing Point

Paying attention to the CPA allows small businesses greater control of their marketing spend. Krishen Iyer has seen the relationship between CPA and marketing budgets becoming increasingly important over the course of his career. Determining the tactics that work well in campaigns makes it easier to plan the next marketing budget.

One challenge that nearly every small business has faced is balancing high customer expectations with the CPA. Marketers need to work hard to produce excellent results while ensuring that customers keep their expectations realistic.

According to Krishen Iyer, marketers can have unrealistic expectations when it comes to CPAs as a key performance indicator (KPI). He has worked with several clients who apply KPIs in lower funnels to top-of-channel funnels. This is typically an honest mistake due to having too little data to analyze. Unfortunately, it can be a costly one.

Krishen Iyer Discusses How Brands Can Increase Efficiency with CPA

Working to make conversions early in a buyer’s journey is a good way to improve the CPA. Marketers should look at simple solutions first, such as:

  • Connecting with customers who abandoned their shopping cart
  • Retargeting customers based on past purchases
  • Increasing the size of retargeting pools

The key to any marketing action is to achieve full-funnel support. For example, spending more at the upper funnel level to create new retargeting pools can save money on lower-funnel activities.

Having worked with businesses in a variety of industries, Krishen Iyer knows that ideal CPAs can be subjective. He has often seen clients have unrealistic expectations about their CPA but they quickly settle on something more realistic. Marketers must remain flexible enough to rework their CPA goals mid-campaign once new data becomes available.

Optimizing acquisition requires a commitment to capturing and analyzing data. Iyer works with clients to generate a pixel for the company website. The pixel captures website visitor demographics along with form fills, information requests, and sales. Knowing how visitors found the website is also critical to finding the CPA.

Checklist for Setting and Adjusting CPA Goals

The CPA will always be ambiguous on a marketing campaign launch day because there is simply no data to analyze. Krishen Iyer urges marketers to keep the following tips in mind to achieve a desirable CPA:

  • Tag all events and pass them back to the vendor.
  • Remember that orders are the primary KPI but events leading up to orders also hold significant analytical value.
  • Each step should align with the sales funnel to create a seamless user experience.
  • Use retargeting tools and first-party customer relationship management (CRM) data.
  • Refresh creatives to remain relevant and maintain customer interest.
  • Increase the loading time of landing pages and make sure the checkout process is simple.
  • Eliminate targeting tactics, placements, and demos that do not produce consistent conversions.

Business owners must know the company’s true CPA and aim to reduce it as much as possible to achieve revenue goals. Krishen Iyer can help them get there.

About Krishen Iyer

Krishen Iyer earned a bachelor’s degree in Public Administration at San Diego State University before starting his career. He first worked in the insurance industry after launching a business called Name My Premium (NMP). He led NMP to incredible growth, and Inc. 5000 included it on its list of successful new businesses in 2015.

Iyer’s next career move was to sell NMP and open Quick Link Marketing, later known as Managed Benefit Service. MBS operates as a licensed insurance and marketing agency.Iyer and his staff worked with clients to find leads at the far end of the buying journey.

As the founder of MAIS Consulting, Krishen Iyer provides marketing, strategic growth, company policies, and contracting services. He meets with clients in the morning and then spends the remainder of the day creating solutions for them. He also enjoys working with several charitable organizations in the Carlsbad and Encinitas areas.

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