According to INCREDIBLE research from Hubspot, the average B2C CPA is $149.
That’s slightly lower than the average B2B CPA which is $264.
The study also breaks down exactly which verticals have high and low CPAs.
The purpose of this blog is to discuss a few questions about CPA–some things we were curious about, and some questions you should ask yourself.
Why is the B2B CPA higher than the B2C CPA?
B2B customers are typically more educated and on a tighter budget than B2C customers. They take more time to make decisions and they spend more money on their purchases in many cases.
Thus, it is a bit more difficult and a bit more expensive to land a B2B customer than a B2C customer.
The other factor is the sheer pool of potential customers.
If someone has a B2C product they likely have a MUCH larger pool to market to than a B2B product. Again, this means that the audience for B2B is more specialized and thus, a bit more expensive to access.
Are you higher or lower than this number?
The question we asked ourselves internally, and the question that you should ask yourself, is this: are you above or below this average number?
If you’re a tire retailer, does it cost you more or less than $149 to get a customer? If you’re a B2B SaaS provider in Utah, does it cost you more or less than $264 to get a customer?
Every business should evaluate themselves, at least in part, based on this metric. The amount of money it costs you to get a new customer is a vital metric.
If you’re WAY over that number, take a good hard look at your marketing tactics and your sales force and determine what changes need to be made.
Exception Alert: Obviously, VERY high priced products will likely have a higher CPA. For example, if a B2B SaaS has an average MRR of $20,000, CPA will likely jump substantially. On the B2C side, a car dealership or a realtor will likely have a higher CPA than a pizza restaurant.
Do you know your CPA?
This is really the biggest question. Actually knowing what your CPA is, is more important than having a low CPA.
When we get on the phone with potential clients we are consistently stunned at how few of them know their CPA. They legitimately don’t know how much it costs them to get a new customer. That’s a startling fact. Every business should be keenly and accutely aware of their CPA.
How else will they know where to spend their marketing dollars or expend their sales resources?
How do you figure this out?
You simply add your marketing budget and your sales budget together and divide it by the number of new accounts in any time period.
That’s it.
The real trick is digging a little bit deeper and determining which tactics contribute to a low CPA (or a high CPA). This is where call tracking and web analytics are valuable. These analytics will be able to show you, precisely, which channels and ads are working and which are not.
