What does Cost per Acquisition (CPA) measure?

Cost per Acquisition (CPA) specifically measures the cost incurred to acquire a customer. It quantifies the expenses related to acquiring new customers through various marketing strategies, including advertising, promotions, and sales initiatives. By calculating CPA, businesses can better assess the effectiveness of their marketing campaigns and determine the return on investment for their acquisition efforts.

For example, if a company spends $1,000 on a marketing campaign and successfully acquires 100 new customers, the CPA would be $10 per customer. This metric is vital for understanding how much businesses are spending to gain new customers, allowing them to optimize their marketing strategies for better cost efficiency.

In contrast, other options focus on different aspects of business performance. Total revenue generated from a customer refers to the income earned throughout the customer’s relationship with the business. The cost associated with website maintenance pertains to expenses tied to keeping a website functional and does not directly relate to customer acquisition. Lastly, the overall budget spent on marketing encompasses a broader spectrum of expenses, not limited to customer acquisition alone.