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How to Decrease Your Target CPA to Increase Profits: A Case Study for E-commerce & Dropshipping Success

 

Introduction: Beyond ROAS in E-commerce Marketing

 

In the world of e-commerce, the focus is often on revenue and ROAS (Return on Ad Spend), but not all e-commerce businesses are the same. This is especially true for dropshipping models, which often have strict and binding rules. In this article, we will show you a case study that demonstrates how lowering the target CPA (cost per acquisition) can make a significant difference to your profits, moving beyond the traditional concept of ROAS. This is a crucial strategy for any entrepreneur looking to maximize their web marketing agency's impact.

 

 

The Importance of Information Sharing Between Client and Web Marketing Agency

 

When a client and their marketer share information transparently and completely, it becomes easier to achieve concrete results. However, business models like dropshipping often require a different approach to problem-solving. In this particular case, the client who managed an e-commerce store was not achieving the desired profit, despite a constant increase in purchases.

 

The Client's Initial Problem

 

After several months of working with our agency, the client began to notice an increase in sales, but with a recurring issue: the profit margins were not sufficient. During a three-week break, the client returned with more details about their situation, including crucial information like the existence of fixed costs. These details allowed us to address the problem in a more targeted way, a key step for any strategic marketing agency.

 

The Strategic Shift: Focusing on Target CPA Instead of ROAS

 

Why ROAS Was Not Enough

The client explained that, due to their fixed costs, the profit margin could only increase if we managed to reduce the cost of advertising campaigns. This meant that, regardless of the ROAS, the real determining factor was the cost per acquisition (CPA). This insight is a prime example of why an experienced web marketing agency is essential for solving complex business challenges.

 

Our CPA Reduction Strategy

To achieve this goal, we decided to shift our focus from ROAS to the target CPA, actively working to reduce it. As you can see from the attached graph, the target CPA decreased over time. We started with a cost per sale of around €24, but today we have managed to bring it below €10, all while maintaining an ROAS of over 900%. This success story highlights the value of a data-driven approach in web marketing.

 

Tips for Marketers and Entrepreneurs

 

To Marketers: Ask for All Possible Information

 

Our advice to marketers is to always ask clients for all information, even details that may seem trivial. Understanding the fixed cost structure or the specifics of a business model like dropshipping can make the difference between a mediocre campaign and a successful one. A top-tier web marketing agency thrives on this level of collaboration.

 

To E-commerce Owners: Share All Information with Your Web Marketing Agency

For e-commerce owners, the advice is simple: share all information with your marketer. The less data you have available, the more difficult it is to optimize campaigns and achieve profit goals. Only with open communication can you work together toward the common goal of increasing profits. This partnership is what defines a successful e-commerce strategy.

 

Conclusion: The Key to Higher Profits

This case study demonstrates that for e-commerce businesses with fixed costs, such as dropshipping, ROAS is not always the most important performance indicator. Focusing on the target CPA can lead to more satisfying results and higher profit margins. Remember: the more information that is shared, the greater the chances of success. A strategic web marketing agency can help you achieve these goals by looking beyond the surface metrics.