Agency Audits

Without in-house expertise it is extremely difficult to know whether your marketing agency is doing a good job.

We delve into the data to identify solid ways to improve conversion rates and ROAS (return on ad spend). We can help you to understand where performance is being limited and help you to formulate the right questions.

No jargon, we’ll demystify digital marketing so you can confidently challenge if you need to and make the best decisions for your business.

Understanding Performance

  • Measuring marketing performance

ROAS (Return on Ad Spend) : If you spend £1k on advertising and this delivers £5k in sales then your blended or overall ROAS is 5. Set a target ROAS based on your Gross Profit to take account of wider costs.

Whilst monitoring your overall ROAS is key it is also helpful to look at the ROAS on a new customer/ first purchase to make sure new customer acquisition is profitable. If your customer lifetime value is high (lots of repeat sales) then it can make sense to acquire at a higher cost than is immediately profitable based on the return within for example 12 months.

CAC (Customer Acquisition Cost): For businesses that have little variation in average order values - or those that want to generate leads at a set cost CAC is good metric for new customer acquisition - simply the marketing cost divided by new customers. By setting a target CAC based on your gross profit and customer lifetime value you can control the cost of driving new customer acquisition.

CPA: Whilst CPA stands for Cost per Acquisition it often is calculated based on total orders so is more accurately cost per purchase.

  • How do I increase my ROAS or reduce my CAC/ CPA?

The ROI you get from your marketing ultimately comes down to the calculation between cost, conversion rate and if sales value is variable AOV (average order value). If your ROAS is too low or your CAC/ CPA too high then you need to;

  • Reduce the CPC (cost per click)

  • Increase CR (conversion rate)

  • Increase AOV (average order value)

The performance data always shows where to focus, whether that’s on reducing cost or increasing conversion rate or order values.

  • Acquisition vs Retention Marketing

    If your business is in ‘growth mode’ then the majority of your efforts and budgets should focus on new customer acquisition. Advertising campaigns should almost always exclude existing customers.

    If your forecasts are assuming a lifetime value higher than the value of the first transaction (i.e. repeat sales) then it is critical to drive retention through low cost marketing channels such as email or organic social.