In brief: CPA is the average cost of a defined action, for example an order or lead. Without a precise definition of the action and a check of its quality, comparison can be misleading.
How I use CPA in practice
Before I start tracking CPA, I write down its exact definition, data source and the decision it is meant to influence. I check the numerator, denominator, time window, currency and any duplicates. I then read the value in the context of margin, capacity and customer quality; one number without comparison cannot tell a company what it should change.
What to watch out for
The greatest risk is a report without a decision. When CPA is measured only because it is available in the interface, the team gains another chart, not better management. Also beware of comparing periods in which the website, tagging or counting method changed.
Questions for decision-making
- How exactly do we calculate the value, and from which source?
- Which decision changes when the number rises or falls?
- What can distort or duplicate the measurement?
- What do we compare the value with so that it has business meaning?