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Managing Your Cost per Call

Performance-Improvement-Gra

The world of marketing is littered with three letter acronyms. We become so inured with their usage that, sometimes, we lose sight of what they mean and how to measure them properly.

In this article we look at cost per call (CPC) and the different ways to measure and report on this that suits your business.

If generating a phone call is an important part of your business' marketing mix, then call tracking is an essential tool for measuring the effectiveness of your response.

In order to create appropriate KPI's, it's important to understand what to measure in a format that suits your needs. In the world of call tracking, this measurement is hung under the umbrella term of Cost per Call (CPC), which confusingly has the same acronym as Cost per Click. CPC can also be called Cost per Lead (CPL). In its simplest form, CPC involves dividing the marketing cost by the amount of calls generated. However, there are a number of variables that can the change the results of this data.

What is Cost per Call?

Whenever a customer picks up telephone to contact your business through a tracking number, this throws up a significant amount of data that provides the foundation of Cost per Call measurement. This data has the following variables:

  • The caller's number
  • The time they called
  • Whether the call was answered or not
  • If it was not answered, was this because it rang out or was engaged
  • How long it took to answer the phone
  • If the call was answered how long the call lasted

Additional data, such as revenue, can be added by submitting it electronically during the call using telephone key strokes. Furthermore, if the tracking number is part of a dynamic number group, this can also append significant amounts of web and visitor data.

These variables all have an impact on understanding Cost per Call.

Calculating Cost per Call

The starting point with CPC is to allocate marketing spend to the call data. Depending on the amount of tracking numbers being used, this will vary the level of granularity you'll get. For example, if only one tracking number is used across all marketing activity then you'll get a single Cost per Call across all your marketing activity. If ten different numbers are used for different media, then you'll see how each media has performed – giving you a better understanding of what activity generates calls.

The next important ingredient is deciding which calls to measure. This is where the variability of call data comes into play because measurement can be by:

  • Total calls – including missed and received calls
  • All answered calls
  • All answered calls over a certain length, say one minute.
  • Unique calls – if a caller rings more than once over a defined date range then this only counts as one call regardless of how many times they call.
  • Any other variables that may have been appended to the data during the call

Once it has been decided which variable to use this can then be divided by the appropriate marketing cost which will generate the CPC.

Reducing your Cost per Call

Once the appropriate measurement criteria has been selected, then it's important to analyse this data over time to understand trends on different marketing activity. This will allow wastage to be removed from marketing activity and refocus it into the areas that work.

If you're comfortable measuring CPC, then the next three letter acronym to introduce in measurement of marketing activity is Cost per Sale. This works on the same principle but links actual sales to calls. How to do this is the subject of my next blog...

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