On the surface, Pay-Per-Call Marketing sounds like it would be a fit for any business. If a business only has to pay for ad-generated calls without having to pay for the ads themselves, who wouldn’t want to sign up?
While this is true to some degree, let’s look at some of the factors that contribute to a successful Pay-Per-Call campaign.
First off, just like your other marketing efforts, it’s important to know the numbers in your business.
What are your profit margins?
This is important because you need to know how much you are able to spend to acquire a lead. For example if you sell flowers nationwide, but are only profiting $50 per order, it would be very difficult to make any money if each qualified call costs you $20 – knowing that not every qualified call or lead will turn into a sale.
There needs to be a good understanding on what you can afford to Pay-Per-Call based on your conversion rates. This brings us to our next point:
What are your conversion rates?
If your company does business over the phone, it’s important to know how many calls it takes before one converts into an actual customer. Is it 10 calls, 20 calls or 100 calls? Based on your conversion rate, you can figure out what you are able to pay for a lead and still make money.
Using the example of the nationwide flower shop again, if it converts 3 out of 10 calls and makes $150 total, this client can afford to pay $15/call in order to break even.
Since the primary goal is to make profit and not just break even, the floral company would want to pay their affiliates less than $15/call.
How much is a cost per call?
This is the most common question by far. It really depends on the industry you are in, whether you can sell regionally, multi-state, regionally, or nationally, as well as the average value of your customer (one time, annual, or lifetime). Lawyers, for example, may pay hundreds of dollars for a 60 second call because the value of customer could be in the tens of thousands, whereas the flower shop would only pay $10-$15 because the customer may have a value of $100. The scope of how big an area you can potentially sell in makes a difference as well. If your reach is limited to a few states, the cost per call will likely be higher than a competitor with national reach. This is because your multi-state campaign will likely generate fewer calls overall compared to a national one.
Can your business afford to offer promotions or discounts to entice callers?
A common marketing strategy is to offer discounts or promotions to encourage potential customers towards purchasing. Now, not every Pay-Per-Call campaign needs a promotion, but it can definitely help. In some cases, this can even lower the cost per call because the projection is that the promotion should produce more calls.
Advertisers should determine before starting a campaign if there are any offers they can provide and also whether they can afford to provide an offer. Some advertisers may be willing to make less per customer on the Pay-Per-Call transaction since they are not paying for advertising, and know they will always be making profit based on their conversion rates.
Other advertisers are even willing to lose money on the sale just to acquire the customer, knowing that the lifetime value of a certain type of customer will exceed the costs in acquiring the customer. This is something to keep in mind if you have the type of business or service that has a good chance of having repeat or lifetime customers.
To summarize, the better you know about your business and your goals, the better you will understand if a Pay-Per-Call campaign is a good fit for your business. Speak with one of our pay per call specialist to see if your business is a good canada for Pay-Per-Call Marketing. Contact us by email or call us toll free (855) 577-1139.