Stop making cost per conversion your KPI — here’s what to measure instead

Chasing cost per conversion or ROAS as your KPI leads to underspend. See why conversion volume is a smarter way to scale profitably. The post Stop making cost per conversion your KPI — here’s what to measure instead appeared first on MarTech.

Stop making cost per conversion your KPI — here’s what to measure instead

Is cost per conversion really your most important key performance indicator (KPI)? Many campaigns treat it that way. But when efficiency becomes the goal instead of a guardrail, you risk starving your budget and missing the growth your campaign was designed to deliver.

What a KPI really is

A KPI is the most important metric in a campaign. While we track many metrics throughout a campaign, the KPI is the north star. It’s the one number that tells us whether the campaign was successful or not. Even if everything else underperforms, if this metric is good, we’re good.

Now think about your most recent campaign. Was the goal really to get the cheapest possible conversions? You might say yes — and that makes sense. But was that the reason you ran the campaign? Almost certainly not. What you wanted were the conversions themselves. You cared about how much they cost, but what mattered most was getting the leads, sales or calls. If that’s true, then cost per conversion wasn’t the KPI.

Why efficiency metrics mislead

Even if you believe cost per conversion is the KPI, consider this: imagine you own an apple orchard and hire a picker. If you asked them to bring back a single apple, would they climb the tallest tree to get the hardest one? Maybe. But most likely, they’d grab the closest, easiest apple.

If you used that single apple’s picking time as the average for the entire orchard, it would look much faster than reality.

Apple picking efficiency

The same goes if you asked for 100 apples. Would the picker go for the hardest 100 — or the easiest? If you averaged the time for those 100 apples and assumed it applied to all 10,000 in the orchard, the estimate would again be too low. And as you keep asking for more apples, the average time per apple naturally goes up.

How does the orchard operator minimize cost per apple? By picking only the easiest one and calling it a day. But doing that would leave money — and fruit — on the table.

Advertising platforms work the same way. When you tell them to get as many conversions as possible for a set spend, they’ll find the easiest ones first. Add more spend, and they’ll keep converting — but with less efficiency than at the lower spend level.

Dig deeper: 7 reasons your conversion metrics look great — but your sales don’t

Make conversion volume your KPI

My recommended approach is to set conversion volume as your KPI. At the end of the day, you need a minimum number of leads, sales or calls for a campaign to be successful.

Use cost per conversion as a throttle and a teacher. First, calculate the maximum cost per conversion you can profitably allow. Then ensure your campaign doesn’t exceed that limit. From there, run controlled experiments to see how incremental spend affects efficiency — and aim to end your campaign just below the profitability threshold.

That’s how you maximize conversions while still staying profitable.

Why full-funnel campaigns distort metrics

The same logic applies to ROAS. It’s tempting to maximize return on ad spend, but remember the variable we control most in that equation — revenue divided by ad spend — is spend. Cutting back may boost ROAS by trimming less efficient transactions. But if lowering ROAS slightly increases overall revenue while keeping the campaign profitable, why walk away from those still-valuable sales?

Dig deeper: Why marketing engagement metrics actually do matter

Now think about a full-funnel campaign. Upper-funnel channels build demand, while lower-funnel channels capture it. Returning to the orchard analogy: one picker, Clyde, climbs the tree and drops apples down to another picker, Kelly, waiting with a basket. If the basket is labeled “Kelly,” she’ll look like the rockstar while Clyde seems to do nothing. But fire Clyde, and Kelly has to climb the tree herself — and her efficiency drops.

That’s how attribution looks in multichannel campaigns. Upper-funnel channels may appear inefficient, with sky-high or even incalculable costs per conversion. Lower-funnel channels will look like heroes. But the metric to throttle isn’t at the channel level — it’s the overall campaign cost per conversion or ROAS.

Focus on growth, not efficiency

Using cost per conversion or ROAS as campaign KPIs may feel safe, but it almost always encourages underspend. These metrics trick us into leaving profitable conversions on the table under the guise of efficiency.

That doesn’t mean efficiency doesn’t matter. Set a limit you can’t profitably exceed, then focus on maximizing the number of conversions you can capture within that boundary. This way, you pick as many apples as you can without letting the fruit rot on the tree.

Dig deeper: CLV is the growth metric that marketing can’t fake

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The post Stop making cost per conversion your KPI — here’s what to measure instead appeared first on MarTech.

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