Special metrics help to evaluate the effectiveness of marketers. Some of them (CPA, CPC) are widely known, while others, like Cost per Order, remain undisclosed in marketers’ articles. At the same time, the value of “insignificant” metrics deserves the attention of businesses, online store or marketplace owners. What is CPO and how to evaluate it when working is important to talk about, which is what we will do.
Data on the cost of ordering a product or service is displayed in the CPO metrics. Thanks to this information, you can calculate how much money from the budget “goes” to attract one client. It is important to note that in this context, a real transaction is implied – a purchase, an application, a connection, a partnership. Other indicators show similar information, but they reflect the cost of the target action.
The CPO metric in marketing is calculated using a simple formula: the costs of an advertising campaign are divided by the number of new clients. This way, you can evaluate how much the funds spent and received correspond. Why do you need to make this calculation? The importance of CPO is as follows:
Calculation brings benefits to all participants in the sales chain, including webmasters who launch advertising.
Evaluation of Cost per Order will not provide answers to all questions, but will encourage you to find the right solution. To change the promotion strategy, you need to take into account the factors that affect the calculation result.
Market segments that are characterized by a short sales cycle will benefit the most from the calculations. This is justified by the fact that there are no intermediate links between the selling site and the buyer. CPO in advertising and its accuracy depends on the number of participants stimulating sales, for example, managers, consultants, etc.
The level of competition affects the promotion strategy, and this is a fact. To reduce the cost of an order, you can show ads less often. But there is a high probability that users will see an ad from a competitor who invests more money in the campaign. The profitability of a business depends on the balance between costs and profits, so you need to constantly reduce CPO.
You can calculate CPO if the product meets several criteria. In other cases, the formula will not bring any income. The products and services that a business sells must be:
Companies that work in the B2B sphere will also not get results by making the calculation.
A comparison of the CPO indicator will help to assess the impact of the selected promotion channels. Marketers conduct research to compare the income from each source. After that, you can choose the areas in which you need to invest in order to increase profits. To determine profitable channels, sometimes a quick glance at each of them is enough:
Also keep in mind that quick results are guaranteed with high risks.
Reducing the losses incurred by a business is not easy, but with sufficient persistence, results will appear. To do this, remember about CPO, what it is and what influencing factors there are. The next step is to choose the preferred solution from:
The form you choose to contact another person should match their preferences. What is CPO in marketing? Total costs for the number of clients, so the focus can be on two directions at once.
