What if there was a way to buy your customers? I mean, picture a store where you could find your ideal customers, place your order and walk out with your sales quota for the month.
If that was real, then how much would you pay for each customer? At what price point would your eyes light up like my wife’s when she’s picking through a Lululemon sale rack? And at what price point would it actually be unprofitable for you to make the transaction?
Those are two very important questions to answer before you start advertising in Google AdWords. Your answers will ultimately determine your target cost per sale. That’s the number you’re comfortable spending to acquire (or buy) a new customer.
If your cost per sale is too high, then your AdWords campaign is unprofitable. If it’s around your target CPA number, then you know all is good and you’re profitable.
The Most Important AdWords Metric
There is a ton of data in Google AdWords. There’s number of clicks, impressions, cost per click, ad spend, click through rate, impression share, etc. Each metric is important, but at the end of the day only one number really matters for your bottom line.
I’m sure you already guessed it. I’m talking about your cost per sale or CPA (cost per action). Again, as long as your cost per sale is under your target, then you know your campaign is profitable.
How to Calculate Your CPA
The next logical question is how to calculate your CPA in Google AdWords. Unfortunately, this is not always an easy task and it depends on your sales cycle.
For example, if you have an e-commerce website where all your sales are generated via your online shopping cart within about a 30 day window, then AdWords will automatically calculate your CPA and display the number in your reports. Once you set up AdWords conversion tracking, then you can add a column in the reporting interface to display “Cost per Conversions” and that will show you your CPA for all your keywords, placements and ads.
If you don’t have an e-commerce website, then we need a few more steps. First, let’s address the situation where your customers call you before buying. In this case, you’ll obviously need to…
Track Phone Calls From AdWords
There are two types of calls from AdWords:
- Calls from the phone number listed on the ad
- Calls from your website after the prospect clicked on the ad
AdWords can track both of these calls. For the first type, you’ll use what’s called a Call Extension for your ads and make sure you use a Google forwarding number to track all calls made to the number.
For the second type of calls, you’ll need to set up a Website Call Conversion and add the code to every page on your website where your phone number is listed.
Once you have everything set up, then Google AdWords will automatically track all the calls to your business that came from the ads. Then, if you also use a unique phone number for your AdWords campaign (versus all your other marketing channels) and you keep track of the sales from those phone calls, then you’ll be able to tally up the total number of sales on a weekly or monthly basis. Simply divide the total ad spend by the number of phone call sales to calculate your average cost per sale.
Now, what about customers that first complete a form on your website like a Contact Us form, a Demo Request form or any other form that later leads to a sale? In this case you’ll need…
Google AdWords Offline Conversion Import
To clarify, we’re talking about tracking sales that occur after the customer completed a webform. For example, a customer may complete the Contact Us form, then your team follows up via phone and email and eventually the sale is made. This is what’s called an “offline” conversion.
It may sound crazy, but you can actually track these conversions and then import them into Google AdWords to see which keywords and ads your customers clicked. Pretty cool, right?
To make this work, you’ll need your web developer to edit your webforms. When someone clicks on your ad to visit your website, then Google AdWords sends a unique tracking code in the URL. Your web developer needs to “read” that tracking code and include the code in your webform. Trust me, this is not hard for a developer to do so don’t worry if this paragraph didn’t make sense to you. :)
Once this is done, your webform will send the AdWords tracking code, along with your customer’s information. Ideally, your webforms send information to a database, or CRM system and you can store the tracking code in the contact record. Then when the sale is made, you’ll be able to export the tracking codes and import them into AdWords.
Once your done with the import, then AdWords automatically matches the sales to the keywords, placements and ads that your customers clicked on. Like we did earlier with e-commerce sales, you’ll simply add the “Cost per Conversions” column to your reports to see if you’re hitting your target CPA.
Need More AdWords Help?
If you need more help with your AdWords advertising, then complete this brief questionnaire to provide us with background information about your business and your AdWords goals.
Then, we will review and follow up with more information about how we can help you get more traffic, leads, and sales from Google AdWords.