KPI Library
Ad Spend per Won Deal
Measures your ad expenditure in relation to Won Deals.
The cost of advertising that takes the company to get a new customer.
This KPI calculates how much your company spends on ads until it gets a new customer. It does not mean that’s the amount that you should be spending, but rather your current situation in this regard. Overall, this metric gives you a better understanding of whether your ad spends to get a customer is too high. If this happens, it may mean that you are allocating too many resources in a tool that is not giving you enough benefit. Therefore, this KPI basically compares your spending in a specific tool compared with the customers you are getting from it. With this KPI you will be able to have an overview of where your budget for advertising is going, and which are the tools that are performing best - and worst. If checked regularly, you will be able to adapt the strategy in order to get better results with the same budget.
KPI Example
What is Ad Spend per Won Deal?
Ad Spend per Won Deal calculates how much your company spends on advertising until it obtains a new customer. Important! Keep in mind that this KPI indicates your current rather than optimal ad spend expenditures.
Using Ad Spend per Won Deal, you’ll have a good oversight of your advertising budget. Which of your advertising tools are viable, and which ones aren’t? How can you best modify your advertising strategy with the same budgetary constraints? Knowing your Ad Spend per Won Deal will allow you to give informed answers to these questions.
Ad Spend per Won Deal is a relevant metric for your marketing team to monitor.
Why is Ad Spend per Won Deal important?
Ad Spend per Won Deal is important, because it gives you a better understanding of whether your ad expenditures to obtain customers is too high. If this is the case, it may mean you’re allocating too many resources into an advertising tool with too little payoff.
Essentially, this KPI compares your spending in a specific tool compared with the value of the customers you get from it. For example, you might be spending 500 Danish kroner on Facebook Ads every day, and only winning a customer who’s worth 200 kroner. This certainly isn’t a good tradeoff, but having this knowledge allows you to reevaluate your advertising strategy as necessary.
How to calculate Ad Spend per Won Deal
Best practices for Ad Spend per Won Deal
The best practice for Ad Spend per New Order is to keep a close eye on the value of your orders, and where these orders are coming from. It’s up to you to determine an acceptable ratio of the amount spent on orders to the number, and value, of customers obtained from them.
If your advertising on one platform is delivering substandard results under this framework, it’s time to change strategy and advertise elsewhere. This is when knowing your ICP (ideal customer profile) comes into play – if you know this profile and where to find it, you can optimize your advertising strategy accordingly.
Other, related KPIs to Ad Spend per Won Deal include: