How do you know if your marketing efforts are paying off? The common thought is to look at traffic. Let me provide a metric that will prove to be more valuable to watch and explain the reasoning behind it.
“Cost Per Acquisition (CPA)”
This is the metric you will use to determine if you are making a profit from your marketing efforts. This metric is not exclusive to the online world and should be monitored across all marketing channels that your business utilizes. Answer this question: “How much am I willing to pay for a customer?” Cost Per Acquisition is a metric you can consistently improve and use to increase the return on investment through analysis.
Set Up Conversion Tracking
Tracking conversions is a must to calculate your CPA. At Automatit, we define a conversion as a qualified intent to buy. In self-storage this is typically a reservation or rental. Tracking conversions takes a little extra work but can go a long ways to improve your bottom line. On marketing platforms, tracking can be set up in many different ways. You can set up conversion tracking for free in Google Analytics.
But What About Phone Calls?
It’s vital to track your phone calls from marketing efforts. Use a call tracking provider to track phone calls to your business from your efforts. If possible, use a provider able to break down the back and forth between the manager and potential tenant to identify which calls are leads and which calls are current customers
Okay...Now How Do I Find My CPA?
I will break this down to help speed up the process for you. Just follow the steps below to find your Cost Per Acquisition:
- Gather the cost of all your marketing efforts & add them together
- Add up all of the conversions you were able to track from your marketing efforts
- Now divide: Marketing Costs / Tracked Rentals
Determining Return On Investment:
Once you find your Cost Per Acquisition, you will need to decide if the number is acceptable. If you paid $100 for a new tenant, is that beneficial? What about $200? It’s very possible, but you can’t know for sure until you understand what each tenant is worth to you. This is where determining the lifetime value of the customers will help. This number is easy to obtain from most software management companies or you can follow additional steps to find this on your own:
- Find the average tenant stay in months
- Find the average rate per customer
- Multiply these two together for average revenue per customer
Putting Cost Per Acquisition Into Practice:
Once you know the lifetime value of your customer, set a goal for an ideal CPA. To do this, you will have to determine where you are in your business lifecycle.
Are you opening a facility next week?
If that’s the case, then you should be willing to spend a little more for a customer and accept a higher CPA if your ultimate goal is to fill empty storage units quickly. Next, work on building revenue through strategies like raising rent over the coming months or years.
Are you at a 90% occupancy and trying to maintain?
Then your strategy changes once again and you should start focusing on lowering your CPA to get the highest return on each and every customer you acquire. Always be ready to adjust your CPA goal based on where you are in your business lifecycle and constantly track this number to ensure success from your marketing efforts.