Solved: High CPA & Checkout Abandonment Issue in November

Hi there,

Thanks for reaching out! I've had a look at the situation you've described with your campaign performance, and I'm happy to give you some of my initial thoughts on whats going on. It sounds incredibly frustrating, especially when the platform itself is telling you to keep spending money while your costs are going through the roof.

The short answer is that the rocketing CPA is almost certainly a symptom of a much deeper problem, and that problem is happening right at the very end of your sales process. Let's get into it.

Let's ignore the CPA for a moment...

Right, this might sound a bit backwards, but the first thing we need to do is stop obsessing over the Cost Per Acquisition (CPA). I know it's the headline number and it's flashing red right now, but focusing on it is like a doctor focusing on a cough without checking the patient's lungs. The cough is a symptom, not the disease. Your disease is a 72.3% checkout abandonment rate.

You said you had 599 checkouts initiated but only 166 purchases. That's a massive leak. It means for every four people who have their wallet out, ready to give you money, three of them are changing their minds at the very last second. That's where all your profit is evaporating. Your ads are clearly doing their job; they're getting interested people with high purchase intent all the way to the final step. The problem isn't the traffic, its what happens when the traffic arrives at the most critical point of your store.

Think about it this way: your CPA is calculated by `Total Ad Spend / Number of Purchases`. When three-quarters of your potential purchases disappear, the denominator in that equation shrinks dramatically, which mathematically forces your CPA to skyrocket. So, if we can figure out why those 433 people didn't complete their purchase and fix it, your number of purchases will go up without you even touching your ads. More purchases from the same ad spend means your CPA will naturally come crashing down. See? The CPA isn't the problem to solve; it's the reward you get for solving the *real* problem.

So, why are 72% of your customers abandoning their carts?

This is the million-dollar question, or in your case, the question of the 433 lost sales in November. We need to put on our detective hats and scrutinise every single element of your checkout process. At this stage, a customer has already decided they want your product and they are ready to buy. Something in that final process is scaring them away. It's usually not one big thing, but a combination of small frictions that add up to a "You know what, I'll just leave it" moment.

Here are the most common culprits I see time and time again:

-> Surprise Costs: This is the number one killer of conversions, hands down. A customer sees a price on the product page, agrees to it, and then gets to the final step only to be hit with an unexpected £10 shipping fee or a mysterious "tax and handling" charge. It feels like a bait-and-switch. It breaks trust instantly and they'll abandon the cart out of principle, even if they can afford the extra cost. You absolutley have to be upfront about all costs as early as possible.

-> Forced Account Creation: Nobody wants another password to remember. Forcing a user to create an account before they can buy is a huge barrier. It adds extra steps, asks for more information than they want to give, and makes them feel like you're more interested in their data than their purchase. Always, always, *always* offer a guest checkout option. Make it the most prominent and easiest path.

-> Lack of Trust: The checkout page is where a customer hands over their sensitive payment information. If your page looks even slightly unprofessional or untrustworthy, they will hesitate. Are you showing trust badges (Visa, Mastercard, PayPal)? Do you have a secure lock icon (SSL certificate)? Is your branding and design consistent with the rest of the site? Do you have links to your privacy policy and returns policy clearly visible? Any small doubt can be enough to kill the sale.

-> Complicated Process: How many fields are you asking them to fill out? Name, email, address, payment. That should be it. Are you asking for their phone number when it's not needed? Are you making them enter their billing and shipping address seperately even if they are the same? Every extra click, every extra box to fill, increases the chance of them giving up.

-> Poor Mobile Experience: More than half of online purchases happen on mobile. Have you tried to go through your own checkout process on your phone? Is it clunky? Do the input fields bring up the right keyboard (e.g., number pad for card numbers)? Is it easy to navigate without having to pinch and zoom? A bad mobile checkout is a guaranteed way to lose sales.

Here’s a typical journey and where things can go wrong. We need to figure out which of these steps is your breaking point.

About that platform warning... Don't listen to it

Now, let's talk about the message you're seeing: "CPA may be high now but it'll be better if you keep this set on". This is one of the most misunderstood and dangerous pieces of advice from ad platforms, especially for accounts with underlying issues.

Here's what's actually happening. When you launch a campaign optimised for purchases, the platform's algorithm enters a "learning phase". During this phase, it's spending your money to explore different types of users within your target audience to figure out who is most likely to convert. This phase is inherently volatile and often has a high CPA. The platform's message is a generic one, designed to stop advertisers from panicking and turning campaigns off too early, thus preventing the algorithm from gathering enough data to exit the learning phase and stabilise performance.

However, this advice assumes one critical thing: that your funnel is actually working. The algorithmn is smart, but it's not a business consultant. It doesn't know your checkout page is broken. It only knows that it's sending people there, and very few are converting into a purchase. So, it keeps spending your money trying to find that one-in-a-million user who is willing to jump through all the hoops you've set up. You are paying a premium for the algorithm to find highly, highly motivated buyers to overcome the flaws in your store.

Tbh, it's a bit like having a shop with a broken door that only bodybuilders can open. You could tell your marketing guy to stop advertising to the general public and only put up flyers in gyms. It might "work" in that you'll get a few very strong customers, but it's going to be incredibly expensive and inefficient. The sensible thing to do is to fix the bloody door! In your case, continuing to run the "scale campaign" is just paying Facebook to find the bodybuilders. It's burning cash to solve the wrong problem.

You MUST pause that scaling campaign. Right now. You are just feeding good money into a broken machine. We fix the machine first, then we can talk about giving it more fuel.

You need to fix the leaky bucket before buying more water

So, your immediate priority is to stop all scaling efforts and become obsessed with your checkout experience. You need to go through the purchase process yourself on multiple devices (desktop, iPhone, Android) and with different browsers. Better yet, get a friend or family member who has never seen your site before to do it while you watch them. Don't guide them. Just observe where they get stuck, what questions they ask, and what makes them hesitate. You'll be amazed at what you uncover.

Here's a checklist of things to investigate and fix:

• Shipping Costs: If you can't offer free shipping, make the cost clear on the product page or in the cart. Don't hide it until the final step. Consider a "free shipping over £X" threshold to increase average order value.
• Guest Checkout: Implement it immediately. Make it the default, most attractive option.
• Payment Options: Offer multiple ways to pay. PayPal is a must-have as it's a huge trust signal for many buyers. Express checkout options like Apple Pay, Google Pay, and Shop Pay can reduce friction dramatically.
• Simplify Forms: Remove every single non-essential field from your checkout form. Use address auto-complete features to make it even faster.
• Add Trust Signals: Place logos of payment providers, security seals (like Norton or McAfee), and customer testimonials or reviews near the final "Pay Now" button to reassure anxious buyers.

The financial impact of this leak is probably bigger than you think. Let's quantify it with a quick calculation. If you'd converted even half of those abandoned checkouts, your entire month would look different.

Once the funnel is fixed, we can talk about scaling...

Only when you've got that abandonment rate down significantly (a "good" rate is under 40-50%, so you have a lot of room for improvement) should you even think about turning the ads back up. When you do, you can't just go back to what you were doing before. You need a more structured approach.

For most e-commerce stores, a simple but effective structure involves separating your campaigns by the user's temperature: Cold, Warm, and Hot. This is often refered to as Top of Funnel (ToFu), Middle of Funnel (MoFu), and Bottom of Funnel (BoFu).

• ToFu (Top of Funnel - Cold Audience): This is your prospecting campaign. Its job is to find new customers who have never heard of you before. Here you'd test broad audiences and interest-based targeting. The goal is to drive traffic to your product pages and get them into your funnel.
• MoFu (Middle of Funnel - Warm Audience): This campaign targets people who have shown some interest but haven't got close to buying. This could be people who have watched your video ads, engaged with your social media posts, or visited your website but didn't add anything to their cart. You'd show them different ads, maybe testimonials or highlighting unique features, to bring them back.
• BoFu (Bottom of Funnel - Hot Audience): This is your highest-leverage campaign. It targets people who are on the verge of buying. For you, this would be the 433 people who initiated checkout but didn't purchase! You can run specific retargeting ads to them with a strong call to action, maybe even a small discount code like "COMEBACK10" to get them over the line. This is also where you'd target people who added to their cart but didn't get to checkout.

By structuring your campaigns this way, you can tailor your message and budget to where the user is in their buying journey. You can afford to have a higher CPA in your ToFu campaign because its purpose is acquisition, while your BoFu campaign should have a very low CPA and a high ROAS (Return On Ad Spend) because it's just recapturing sales you almost had.

I remember one campaign we worked on for a subscription box client where we achieved a 1000% ROAS, and another for an apparel brand where we hit a 691% return. This kind of structured approach works because it's logical. You don't shout the same message at a stranger on the street as you do to someone already in your shop with items in their hand.

What should you expect to pay? Let's do the maths.

This brings us back to the question of CPA. What is a "good" CPA? The answer is: it depends. A $55 CPA might be a disaster for a business selling £20 t-shirts, but it could be an incredible bargain for a company selling £1,000 mattresses. The only way to know if your CPA is sustainable is to understand your Customer Lifetime Value (LTV).

LTV tells you how much profit a customer is worth to you over the entire time they do business with you. If customers often come back and make repeat purchases, your LTV is high, and you can afford to pay more to acquire them in the first place.

Calculating a precise LTV can be complex, but we can make a simple estimation:

1. Average Order Value (AOV): What's the average value of a single purchase? Let's use your CPA of $55 and assume a 1:1 ROAS for now, so AOV is $55.
2. Purchase Frequency (F): How many times does a customer buy from you in a year? For a new business, we might estimate 1.5.
3. Gross Margin (GM): What's your profit margin on each sale? Let's say it's 60% (0.6).
4. Customer Lifetime (T): How many years do you retain a customer? Let's estimate 2 years.

Simple LTV = AOV * F * GM * T

Simple LTV = $55 * 1.5 * 0.6 * 2 = $99

In this rough example, each customer you acquire is worth about $99 in profit. This means your current CPA of $55 is actually profitable! It's eating up more than half your profit margin, which isn't great for scaling, but you're not losing money on each new customer. This context is vital. It changes the conversation from "my CPA is too high" to "how can I improve my LTV:CPA ratio so I have more room to scale profitably?".

A healthy business typically aims for an LTV to CPA ratio of at least 3:1. This means the customer is worth three times what you paid to acquire them. Your current ratio is $99:$55, which is about 1.8:1. We need to improve that. We can do that by either a) increasing LTV (through email marketing, subscriptions, etc.) or b) decreasing CPA (by fixing the checkout funnel and optimising ads).

I'd say you need a clear action plan

I know this is a lot to take in, especially when you're feeling the pressure of rising costs. But the good news is that your problem is very clearly defined, which means it's solvable. You don't have a fundamental issue with your product or your marketing; you have a technical/usability issue in your checkout. That's a much better problem to have.

This is the main advice I have for you:

Following these steps will shift your focus from the symptom (high CPA) to the cause (checkout abandonment). It’s a more methodical approach that will not only solve your current problem but also build a much more resilient and profitable foundation for your business moving forward.

Navigating these issues, especially the technical aspects of funnel optimisation and the strategic nuances of campaign restructuring, can be daunting. It often helps to have an experienced pair of eyes to look over things and guide the process. A lot of our work with clients involves this exact kind of diagnostic and rebuilding work.

If you'd like to chat through this in more detail, we offer a free, no-obligation initial consultation where we can take a closer look at your ad account and website together. It might help clarify the next steps for you.

Regards,

Team @ Lukas Holschuh