[AdWords Case Study] 33% Reduction in Cost Per Lead Using the Kaizen Approach

/[AdWords Case Study] 33% Reduction in Cost Per Lead Using the Kaizen Approach

Kaizen is a Japanese word for continuous improvement.

Ever since I studied Kaizen in a college Operations class (specifically how Kaizen has been a competitive advantage for Toyota), I’ve tried to apply the concept to different areas of my life.  And looking back on recent successes, I’ve discovered that they were all the result of this idea of continuous improvement, or Kaizen.

In our world of flashy marketing tactics like Twitter, Snapchat, mobile apps, Facebook messenger, and

[insert the new latest and greatest tactic here], it’s important to remember that strong marketing performance does not magically happen overnight.  It’s almost always the result of months and even years of, you guessed it, continuous improvement.

With this in mind, I’m going to share a Google AdWords case study that exemplifies the Kaizen approach to AdWords optimization.  I’m not going to share “the one secret that reduced our cost per lead by 36%.”  I’m also not going to share “the one trick.”  That’s because there is no one secret or one trick…

The reality with Google AdWords is that success is built on continuous improvement, month after month, and year after year.  Let’s dive in to the details so you can see this in action…

Google AdWords Case Study

The Background

Our client in this case study is a dentist in Georgia.  When we started working together, our client had been advertising himself, but with no conversion tracking.   That means he didn’t really know if the ads were working or not…

And even if the ads were miraculously working, he had no way to improve the ROI without conversion tracking.

So guess what we did first?

That’s right, we set up conversion tracking.  Since this is a dentist, the majority of the leads come from phone calls so we installed phone call tracking in addition to webform tracking on the website contact forms.

Think of conversion tracking like a required course in college. In order to graduate, you have to complete the required courses.  In order to optimize a Google AdWords campaign, you have to complete the conversion tracking setup.

Of course, setting up conversion tracking does nothing unless you actually use the data to improve your campaigns.  That brings us to our Kaizen process of AdWords optimization…

Our Kaizen Process

I’m calling this the Kaizen process because over the past 2 years we didn’t just focus on one tactic; We focused on continuous improvement in all areas of the campaign.

It’s impossible to put your finger on the one or two activities that made all the difference because with optimizing AdWords campaigns you’re dealing with a moving target. One day you need to adjust bids, while the next day you need to improve ad copy.

So what exactly did we do?

Below, in no particular order, are what I believe are the 5 most important edits we made that led to a 33% reduction in cost per lead.

1. Ad Schedule Optimization

When you think of ad scheduling, you probably think of running ads during office hours. Or maybe turning ads off during holidays. Sure, that can make sense, but I’m specifically talking about ad schedule optimization here.

With ad schedule optimization, we’re looking at the conversion data for days of the week and times of day. There are reports in AdWords that will tell you which days of the week give you the lowest and highest cost per lead. There are also reports that tell you which times of the day give you the lowest and highest cost per lead.

As you collect data, you can use this to refine your ad scheduling and adjust your bids so you’re maximizing your budget during the best times.

2. Device Optimization

This one is pretty straight forward, yet it’s often overlooked in AdWords campaigns. There are reports in AdWords that will tell you how your ads are performing across different devices – Computers, Tablets, and Mobile.

When you run those reports you will likely see a big discrepancy in performance across devices. This is especially true if you do not have a mobile optimized website!

The reality is that people behave differently depending on which device they are using. You may find that your cost per lead is perfectly acceptable for Computers, but astronomically high for Mobile, or vice versa. Whatever the case is, you clearly need to adjust your bids accordingly to get the best ROI from your ad campaign.

3. Budget Optimization

Unless you’re familiar with how this works, the phrase “budget optimization” probably sounds strange. I mean, isn’t your monthly budget simply your monthly budget?

Well, if you only have one ad campaign, then the answer is yes. However, if you break up your advertising account into multiple campaigns, then you unlock the potential to optimize your budget.

For example, our dentist has multiple different types of services like cosmetic dentistry, invisalign, sedation, implants, etc. Sure, you could have all of those services in one campaign, but that’s not ideal.

Instead, you want to break out all the individual services into their own campaigns with their own daily budgets. Then once you see your cost per lead for each service area, you’ll be able to adjust your budgets accordingly. Obviously, you’ll want to allocate more of your budget to the campaigns that drive the lowest cost leads and minimize your budget on the campaigns with higher cost leads.

It’s pretty simple, but only if you structure your account correctly.

4. Keyword Level Bid Optimization

Most advertisers understand and are familiar with this tactic so I won’t waste too much time here. If you know your keyword conversion rate is 5% (ex. you get 5 phone calls for every 100 clicks on the ad) and your target cost per lead is $50, then your max cost per click is $2.50 (conversion rate multiplied by the target cost per lead).

Using that simple calculation you can adjust your bids to ensure you’re hitting your target cost per lead.

5. Ad Copy Optimization

I’m sure you’re also already familiar with ad copy optimization. More specifically, the process of split testing two or more ad variations to determine which ad performs the best.

But what does it mean to perform the best? That’s a loaded question…

One metric is certainly click-through rate. The higher the click-through rate, the better because that leads to higher Quality Scores. However, ads with the highest click-through rate are not always the ads driving the lowest cost per lead.

With that in mind you must focus on both of those metrics. If you focus on click-through rate without any regard for cost per lead, then you’ll likely be led astray. Likewise, if you focus on cost per lead without any regard for click-through rate, you may end up with low Quality Scores and in turn, higher cost per click.

The Results

Again, I can’t emphasize enough that the above edits were continuously tweaked over 2 years.  I’m not suggesting we made the edits above and then sat back and watched the performance improve.  That’s not how this works.

The edits were made continuously, month after month.  Remember the Kaizen process!

Below is a graph showing the cost per lead and the number of leads per quarter over the past 2 years.

Dentist-2015-2017 cost per lead

As you can see from the graph above, the cost per lead was $48 in Q2 2015.  Then in Q2 2017 the cost per lead was $32.  That’s a drop of 33%!

You’ll notice the number of leads dropped in Q2 2017, but that’s only because the budget was reduced for external reasons.

To put the 33% reduction into perspective, let’s compare the number of leads that you can get with a $5,000 per quarter budget ($1,666/month).  With a 33% reduction in cost per lead, this dentist is now generating 51 more leads each quarter with the same exact budget!

Obviously this didn’t happen overnight, but I hope now you can see the power of continuous improvement in your AdWords campaigns.

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By | 2017-11-12T10:18:11+00:00 May 18th, 2017|Categories: Pay Per Click Advertising|Tags: , |

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