What Is CPA?

What Is CPA?

CPA stands for cost per acquisition. It is the cost to acquire a new customer.

It is typically used to work out the sales and marketing cost within the company, but it can also be used in a BPO, call centre or contact centre environment.

It gives a guide about how expensive it is to acquire a new customer. It also allows you to compare the cost of gaining new customers with that of retaining existing customers – which is particularly useful in a call centre. It is typically said that it is 5 times cheaper to retain a customer than it is to recruit a new one.

CPA (Cost Per Acquisition) Formula

The formula is

CPA (Cost Per Acquisition) =	Total Sales and Marketing Costs
	Number of New Customers

It can also be broken down into a more granular level.

So, to get the CPA, divide the total cost of your campaign by the number of conversions.
There is no “industry standard” for CPA as it depends very much on your sector and your type of business.

Customer Lifetime Value (CLV)

Another similar metric is Customer Lifetime Value (CLV), which is the financial benefit that is derived from a customer’s lifetime interactions with your company.

For more great articles on customer value, read these next:

• How to Calculate Customer Profitability
• How to Calculate Customer Churn Rate – the Formula