CPA optimization – How to reduce cost per acquisition

Last Updated: May 20, 2022

CPA Optimization methods – Following are the 12 guaranteed methods to reduce your cost per acquisition and improve business bottomline:

  1. Get rid of no sales zones
  2. Stop running ads on mobile devices
  3. Optimize your paid campaigns’ settings
  4. Pause all unprofitable paid campaigns
  5. Run remarketing campaigns
  6. Always retarget users who abandoned the shopping cart
  7. Fix tracking issues ASAP
  8. Grow your email marketing list
  9. Fix website technical issues
  10. Reduce checkout abandonment rate
  11. Practice 80/20 rule
  12. Avoid random optimization at all cost

I am a big fan of reducing acquisition costs. Just by doing that I can greatly increase the ROI in a short period of time without spending a penny more on traffic acquisition.

Unlike sales, optimizing cost is relatively easy and it doesn’t require a great deal of analysis and expertise.

Cost optimization is like a very low hanging fruit (almost touching the ground) which you should grab asap. Thus my first priority has always been to reduce marketing and conversions cost.

When I get a new project, I don’t first think about, how can I make my client more money. I first think about, how can I make my client lose less money.

It is a no brainer, that making more money has always been more difficult and time-consuming than controlling cost whether it is for yourself or the others. Your working hours would be better spent prioritizing the tasks which bring quick wins esp. during the early stages of a project.

In this way, your client will quickly acknowledge your expertise and start taking your recommendations seriously which is so much important to move the corporate needle and improve the business bottom line.

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#1 Get rid of no sales zones

Check your Facebook/Google Ads/Bing or any paid advertising platform which lets you target users by location and see whether you have been targeting any location which has generated little to no sales in the last 3 months.

If you find such locations then exclude these locations from targeting for now (until you figure out how to make money from these locations).

I am a big fan of city level targeting, no matter how big my client’s market is. Even for international campaigns, I always aim to target at the city level whenever it is possible.

I rarely target the entire country for any campaign unless I am not getting much traffic in the region or city level.

There are almost always some cities/regions which generate more sales than others:

find top selling locations

To find your top selling locations, check out this article: 6 data drill downs for improving Ecommerce Products Sales

By focusing your marketing efforts and budgets on these cities you can greatly reduce your cost per Acquisition.

Remember the Pareto principle, 80% of sales come from 20% of the locations. The other 20% of sales come from 80% of the locations.

Often businesses spend 80% of their budget to get that 20% of sales from the remaining 80% locations which lead to high cost per acquisition. Don’t make this mistake.

Yes, you are getting that 20% sales but at what cost. If you are spending $100 to sell a $50 product then is it worth it? No.

#2 Stop running ads on mobile devices

If your website is not mobile-friendly or mobile has not resulted in any sales in the last 3 months and/or is not assisting in conversions, you should stop spending money on mobile ads (until your website is ready for mobile and/or mobile experience is optimized for conversions).

Make sure you are not running any Facebook/Google Ads/Bing ads on mobile devices.

I often hear this argument that our website is mobile friendly and therefore we should run ads on mobile devices but website analytics tells a completely different story.

Just because your website is rendered correctly by a mobile browser does not automatically mean it is mobile friendly.

There is a common misconception among business owners that mobile friendly means a website that looks good and works well on mobile devices.

If the website is mobile friendly then how come it didn’t generate any sales or lead in the last 3 or 4 months?

I have seen a lot of so-called ‘mobile-friendly’ websites that render correctly on mobile browsers (and are thus labeled mobile friendly) but provide an awful user experience. Because of such user experience, there is often little to no sales.

You need to make sure that your mobile website is optimized not just for mobile devices but also for conversions.

Run a series of usability tests before you start spending money on mobile advertisements.

#3 Optimize your paid campaigns’ settings

Campaign settings can eat a lot of your budget if you have not set them up to align with your business goals.

Make sure that your campaigns are targeting only the locations, languages, networks and devices that are relevant to your target market. 

This is usually the case with PPC campaigns like Google Adwords, Bing PPC, Facebook, etc which could be targeting all devices, languages and sometimes even the entire world.

Optimizing the settings of paid marketing campaigns is a very easy and quick method to stop money wastage.

To learn more about paid campaigns’ settings optimization, check out this article: 10 golden rules to manage your PPC Campaigns

#4 Pause all unprofitable paid campaigns

Pause all those paid marketing campaigns/ ad groups/ keywords/ ads which have generated little to no sales in the last 3 months and/or have not assisted in conversions in the last 3 months (until your campaigns/ ad groups/ keywords/ ads have been optimized for conversions).

Do not keep running all of these campaigns while you optimize a few of them for conversions.

Un-pause a campaign only when you are absolutely ready to optimize it for conversions.

Remember with each passing minute, your client may be losing tons of money on such dud ads.

#5 Run remarketing campaigns

Every single day without remarketing campaign is a ‘money going to drain’ day.

There is hardly any ecommerce website on this planet that does not experience shopping cart abandonment on a daily/weekly/monthly basis. Therefore there is no excuse, why an ecommerce website should not run remarketing campaigns.

Yet so many businesses spend little to no time and money on re-targeting.

Start running remarketing campaigns on all the advertising platforms (like Google Adwords, Facebook, Bing, etc) which provide re-targeting facilities.

In this article: 100+ Google Analytics Remarketing audiences for Retargeting I have shown more than 100 different ways to remarket to your target audience. So make sure you read it.

Remarketing campaigns are almost always profitable and will greatly reduce your cost per acquisition.

If you have already been running remarketing campaigns, then further optimize them for conversions and increase their ad spend.

Related Articles:

Using Enhanced E-Commerce segments for Remarketing in Google Analytics

Guide to Dynamic remarketing in Google Analytics & Adwords

#6 Always retarget users who abandoned the shopping cart

When it comes to retargeting there are several ways you can retarget people:

  • You can retarget all the people who visited your website.
  • You can retarget all the people who visited a particular product/category page.
  • You can retarget all the people who started any shopping activity on your website.

But no matter what retargeting options you use, make sure that it always include retargeting users who abandoned the shopping cart.

This is the most important retargeting segment of all because people who abandoned the shopping cart showed a strong interest in making a purchase on your website and are most likely to convert if re marketed with the right offer.

#7 Fix tracking issues ASAP

You may never know how, why, when and where your website and campaigns are leaking money if you have got tracking issues in your Google Analytics account, if you are not collecting data accurately or if you are not collecting all of the data. So you need to fix your tracking issues asap.

A website may have got a lot of data collection issues. But few, which are worth mentioning and which should never be ignored are:

Ecommerce tracking

There are so many ecommerce websites that still do not have ecommerce tracking installed. They just rely on shopping cart data.

The disadvantage of not installing ecommerce tracking in Google Analytics is that you can never effectively correlate ecommerce data (like sales) with website usage metrics (like pageviews, bounce rate, etc) and dimensions (like location, source/medium, etc) and thus can never effectively optimize your campaigns for ROI because the majority of the time you won’t know what works and what doesn’t work for your online business.

Enhanced ecommerce tracking

If you manage a medium to large size business then not having an enhanced ecommerce tracking setup will continue to keep your cost per acquisition high and will also put you at competitive disadvantage.

Your cost per acquisition will remain high because you won’t be able to do effective remarketing via Google Analytics.

Enhanced ecommerce provides a lot of useful ecommerce segments (including the people who abandoned the shopping cart) through which you can do effective remarketing.

Enhanced ecommerce provides many more ways to collect and analyze ecommerce data than traditional e-commerce. So you get more insight which helps in controlling marketing costs better.

You will have a competitive disadvantage because your competitors are most likely leveraging the power of enhanced ecommerce to optimize marketing campaigns and control cost, while you are not.

Conversion tracking

You as a marketer need to know what happened after a user clicks on your paid or organic listing.

Did he purchase your product? If yes, then which keyword, ad, ad group or campaign triggered the conversion.

By getting such insight, you will know which ads, placements and keywords lead to conversions and are worth bidding on and which are not.

You are losing money on the campaigns, keywords and ad copies which are consistently underperforming and you need to either pause them or reoptimize them for cost and conversions.

Make sure that you setup conversion tracking not only in Google Analytics but on all advertising platforms (Google Adwords, Bing, Facebook, Twitter, etc) which allow conversion tracking.

Untagged marketing campaigns

Whenever a marketing campaign is not tagged with campaign tracking parameters there is no guarantee that Google Analytics will attribute conversions accurately to your campaigns.

And you need to know which campaign is working, or not working for your business, in order to control ad spend.

Enable auto tagging wherever it is possible like in the case of Google Adwords, Bing, etc. Manually tag all other marketing campaigns (like email campaigns, affiliate campaigns, etc)

Custom alerts

Custom alerts in Google Analytics can save you a lot of money, provided they can be triggered on a daily, weekly and monthly basis. For example, you can get an email alert, whenever your shopping cart breaks and you can then quickly fix the cart, to minimize shopping cart abandonment.

Without such alerts, you may not know about such an issue for several days and end up losing a lot of potential sales.

Similarly, you can set up alerts that monitor sales, of each of your campaigns and get alerts whenever there is a sharp decline in sales/conversion rate.

Without custom alerts, you will need to manually monitor the performance of each and every campaign and your website traffic, which will eat up a lot of your valuable time, and time is money.

#8 Grow your email marketing list

Marketers globally rate email marketing as the most effective digital marketing tactic and the one which delivers the best ROI.

There is a reason, why your inbox is always full of emails. Email marketing works and it works wonders.

The cost per acquisition is the case of email marketing is lowest. In other words, it is very cheap to acquire and retain customers through emails in comparison to all other marketing channels.

Bigger your email list, the less you need to depend upon rented advertising platforms (like Google, Bing, Facebook, Twitter, etc) which is a good thing as it reduces your ad spend.

Take advantage of your existing website traffic to collect email addresses.

Your success with email marketing is directly tied to your ability to collect and nurture email addresses. You are wasting money if you are buying traffic every day but not leveraging it to collect email addresses.

#9 Fix website technical issues

79 percent of online shoppers who experience a dissatisfying visit are less likely to buy from that site again.

This Akamai study is old but still relevant. If your website has got technical issues, it is going to create bad user experience which in turn put off potential buyers from making a purchase on your website.

So by not fixing your website technical issues, you are losing money every single day.

Related Article: Website Errors that kill your Conversions and how to fix them

There can ‘N’ technical issues with your website but the one which is worth mentioning and should never be ignored are:

Website Speed

Increase website speed for both desktop and mobile devices.

Faster the speed across devices, better the user experience.

If an e-commerce site is making $100,000 per day, a 1 second page delay could potentially cost you $2.5 million in lost sales every year.

It is a no brainer that slow website speed creates bad user experience and bad user experience means loss of potential sales.

Cross-device compatibility

  1. Go to Mobile Overview Report (under Audience menu) in your GA account.
  2. Set time period to the last 3 months
  3. Click on compare to site average button
  4. Select revenue from the drop-down menu.
  5. Determine how the website is performing in terms of sales on desktop, mobile and tablet devices.

If the website is losing money on mobile and tablet devices then you need to look at the data at the browser level to diagnose the issue.

Ideally desktop and tablet should have a similar conversion rate. If this is not the case then you need to look at the data at the browser level for tablet devices in order to diagnose the issue.

Cross-browser compatibility

  1. Go to Audience > Technology > Browser & OS report
  2. Set time period to the last 3 months
  3. Apply mobile traffic advanced segment
  4. Click on compare to site average button
  5. Apply browser version as the secondary dimension.
  6. Select revenue from the drop-down menu.
  7. Determine how the website is performing in terms of sales on various browsers.
  8. Select bounce rate from the drop-down menu.

404 errors

This website error occurs when a user accesses a web page that no longer exists.

This error creates an impression that your website is outdated and not well maintained and may not be suitable for making a purchase. In fact, even trivial website errors (like spelling mistakes, missing images etc) can ruin your conversions.

In order to get the maximum possible conversions out of your existing traffic keep your website error-free. This is one of the easiest ways to reduce cost per acquisition.

#10 Reduce checkout abandonment rate

According to 29 different studies containing statistics on e-commerce shopping cart abandonment, the average online shopping cart abandonment rate is 68%. So for every 100 potential clients, 68 of them may abandon your shopping cart today.

Now calculate how much money you are losing each day in terms of lost potential sales.

This abandonment can be minimized if you direct your efforts in optimizing your checkout process.

According to Statista, the following are top reasons for people abandoning your shopping cart:

Reasons for checkout abandonment cpa optimization

From the chart above we can conclude that the number 1 reason for checkout abandonment is “hidden charges”.

Any extra charge/ fees during the checkout process can immediately put off a visitor and can cause him to abandon the shopping cart straightaway. Therefore be upfront with your prices including shipping fees.

From the chart, you can also see how website technical issues (website crashed, website timeout) are costing you money.

Most of these checkout abandonment issues are easy to fix and can quickly reduce your acquisition cost.

#11 Practice 80/20 rule

According to Pareto principle (or 80/20 rule):

  • 80% of your sales come from 20% of the products.
  • 80% of your sales come from 20% of the locations.
  • 80% of your output comes from 20% of the input.

So you need to find and focus on that 20% which generates 80% of the results. Often businesses focus on the remaining 80% that generates 20% of the results. This results in money wastage and loss of potential sales.

As long as you don’t understand and apply the 80/20 rule to your marketing and optimization efforts, you will keep losing money.

You would keep spreading your marketing efforts and budget too thin by trying to be visible for everything you sell, by trying to sell everything instead of just focusing on top revenue-generating products.

So start selling more of top revenue-generating products. If a product is selling like hot cakes then sell more of it. Your top priority as a marketer is to increase sales.

Direct your marketing efforts and resources towards selling more of the top revenue-generating products.

Do not waste time and resources beating a dead horse i.e. trying to sell the products which nobody wants to buy or which are not in demand (unless of course if you have only one product to sell).

#12 Avoid Random optimization at all cost

Random optimization means optimizing a website without any clear objective.

Random optimization occurs when every second or third day you ask yourself this question “what should I do next?”

While random optimization free you from weeks /months of painstaking planning and preparation, it comes with a heavy price: loss of potential sales, and money and time wastage.

You need a plan and a process in place before you start website optimization. Your process must be well defined, must have a clear start and clear end and it must align with your business goals. You must plan out in advance your daily, weekly, monthly, quarterly and yearly goals and tasks.

It is only through meticulous planning you can streamline your time and resources and effectively manage risks and uncertainty. For example, if you start planning your marketing strategies for the next holiday season today, you are most likely to capitalize each day in the holiday shopping period.

You may also get a competitive advantage over those online retailers who leave everything to the last minute and lose potential sales while they optimize the website for the holiday season.

Every person/ business on this planet has got same number of 24 hours available to them. Then how come some are able to achieve more than the others?

It is not because they work harder. It is because they have got a better plan and a better process in place through which they can achieve more in less time.

Related Article: How to Start Conversion Optimization like a Pro

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