Emilio GarciaManaging Partner, Boundify · Demand Gen Advisor

The cost of acquiring new customers on different channels.

19 Feb 2024 · 1 min

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In this segment, Emilio Garcia advises marketers that when testing a new acquisition channel, the cost per acquisition (CPA) metric is a practical starting point. He explains that early on you often lack channel‑specific data on average revenue per customer and customer lifetime value, and using averages from other sources can be misleading. Because the channel is new and the number of customers is low, CPA provides a reliable way to gauge performance without needing detailed revenue or retention figures.

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Well, and will end up happening is that your cost of acquisition at customer level will be too high for that channel, but it is a great start. Again, a great way, especially if you don't have the numbers for average revenue that a client will bring and for the average time that customers spend with you, or even if you have those, when you don't have that information for the channel that you are testing, that's the other reason you might use CPA. And it's because maybe at the beginning you don't have a lot of clients from that channel because exactly that's what you're doing. You're launching this new initiative. You have no idea how much revenue will bring per client and you have no idea how long they're going to stay with you and you don't want to use averages from other sources, or this is the first time that you're truly measuring those KPIs and therefore you don't have a good reference. CPA will be a great way to start.