Calculating cost-per-acquisition and contribution of individual sources

In this article, will explain how we breakup the conversion cycle to measure the cost spent at each channel and applying attribution models to understand performance effectiveness of the source channel

We have broken the acquisition cycle into two sub cycles which will be

Anonymous to Lead
Definition: Visitors with no identification (unknown status) to Known status (lead). The conversion cycle holds well till we identify the touch-point users, either in the form of email id or phone number. This is the most expensive part of the customer lifecycle.
Sources:
Direct | Search (ex: Google, Bing) | Click-thru Ads (ex: Adwords) | Affiliates | Social (Ex: Facebook, Linkedin) | QR URLs (ex: QR Codes or PromoURLs)

 Lead to Customer
Definition: The conversion cycle is applied on Leads (Identifiable visitor) to Customer. As we already have the visitor identified, investment efforts to convert them to customers, will be mostly email or phone, which is cheaper than advertising sources
Sources:
Email (Ex: EDM, Mail lists, Phone)


To measure returns or to understand how each of your investments fared at various sources, it is important to consider the complete acquisition cycle. It would be of little help for the business if it were to measure based on leads generated and none of the leads converted to applicants

Aligning data for cost calculation

To get started, you can use the preset attribution models on Plumb5 to understand which source has contributed to the conversion campaigns

Attribution Models

  1. First Interaction: where all points are attributed to the first interaction only
  2. Last Interaction: where all points are attributed to last interaction
  3. Time Decay: Where an incremental scoring is done from the first to the last interaction
  4. Linear: where equal scores are given to all interactions
  5. Position-based: where 80% of the scores are equally distributed between first and last and 20% distributed between all the intermediate touch-points
  6. P5 Algo: where scores are defined based on behavior at every interaction

View this link for model comparison
http://bit.ly/1DCSFas

This will help in understanding the overall source contributions all the way till conversions

To understand CPA of each of your channels, you can input your costs and generate reports, like the below illustration

Cost Screen

Attribution % denotes the source’s contribution to conversions calculated across all interactions and assist pages,

Lead Conversion Rate is calculated by dividing total traffic from that source (specific campaign) by total leads collected

Appl Conversion Rate is calculated by dividing total leads collected (specific campaign) from total conversions (customers)

CPA (Cost per acquisition) is calculated by dividing cost by total conversions


Note:

All data used for cost calculation includes sessions where the campaign URL is the first interaction

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