Cost Per Conversion

Posted in Marketing and Strategy Terms, Total Reads: 492

Definition: Cost Per Conversion

It is the total cost of the generic traffic divided by the total number of conversions. The total cost includes the traffic during that period when conversions were not possible along with traffic during the conversion period.

For example: Only 2 sales took place for an investment of $200 on advertising for (200 visitors at a rate of $1).Thus we can say that Cost per conversion was $200/2=$100.

It can also be considered as a measurement for the success of the advertisement in reaching it goal as it is the ratio of the no.of advertisement views to the no.of successful conversions resulting from those ad views. According to the Web advertiser, it is the metrics that is required to identify how much it actually costs to acquire each real customer.

Service Based Products Cost Per Conversion

Calculating CPC for a company that sells an intangible product is relatively difficulty.

First, in order to understand that a visitor is more interested in your service than another visitor, consider an indication by deciding on a goal. This can be done by going deeper into the site.

Second, try to understand that when someone is more likely to become the customer after completing the goal.

Third, calculate the returns that the company will make if that [person becomes a customer.

Cost per Conversion for Tangible Products

Things that you can consider to adjust that amount:

1. Customers Lifetime value: Calculate from the order history average lifetime value for a customer replacing average order value.

2. Return visitors: In order to determine the return rate of visitors look for the analytics and apply it on CPC.

3. Offline sales: Adjust your Average order value for the people who are more likely to complete their purchase offline, through a telephonic transaction or by visiting the store.


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