The one number most small businesses never check in their ad account
Cost per click gets all the attention. Cost per conversion is the number that actually tells you whether the campaign is working.
Cost per conversion, what one enquiry costs you on average, is the number that tells you whether ads are working.
Most ad accounts get judged on the two figures sitting at the top of the screen, total spend and cost per click. Both are easy to read and neither answers the only question worth asking, which is whether the money came back. A month can look busy and cheap and still lose you money.
This guide covers what cost per conversion tells you and how to work out what an enquiry is worth to your business. It also covers the awkward bit, which is that in plenty of accounts this number is either missing or quietly wrong, because nothing was ever set up to record a form or a phone call.
What cost per conversion measures
Cost per conversion is your spend divided by the number of recorded conversions. As a worked example, spend $800, get 20 enquiries, and it cost you $40 to buy an enquiry. There is no cleverness to the maths.
A conversion is whatever you decided counts as a real step towards paid work. For a local service business that usually means one of:
- a form submitted on your website
- a phone call placed straight from the ad
- a tap on your phone number on a mobile
- a quote request or a booking
- for a shop, a completed order
The test is whether you would be pleased to find it in your inbox. A page view or a visit to your about page does not pass.
Every one of those steps can be measured, but most accounts only measure the second one.
Why cost per click and total spend mislead you
Both numbers can move in the direction that feels good while the business gets worse. Cost per click tells you what it cost to buy attention, and nothing about whether that attention was any use to you.
You can halve your cost per click tomorrow by buying broader, vaguer searches. You will also end the month with fewer enquiries than you started with. Cheap traffic is cheap for a reason, usually because the people clicking are researching how to do the job themselves.
Total spend is the more dangerous of the two, because it is the number owners react to emotionally. A $300 month feels safer than an $800 month, even if the $800 one paid for three jobs and the $300 one paid for none.
Here is the same $320 budget spent two ways, as a worked example rather than figures from any particular trade:
- $0.80 a click
- 400 clicks in the month
- 2 enquiries
- $160 an enquiry
- Mostly DIY and price research searches
- $3.20 a click
- 100 clicks in the month
- 8 enquiries
- $40 an enquiry
- People searching for someone to come out
The account on the right looks dearer in every column except the one that pays your wages.
Working out what a customer is worth to you
An enquiry at $40 means nothing until you know what happens after the phone rings. You need two rough figures, the value of an average job and the share of enquiries that turn into one.
Get both from your own diary and invoices rather than an industry benchmark. Worth including:
- the average value of jobs you actually win, not your dearest quote
- repeat work, because a customer spending $300 twice a year for four years is not a $300 customer
- your honest conversion rate on enquiries, even if it is only “about a third”
- referrals, if customers like these are the ones who send you work
Rough is fine here. Being out by 20 per cent still lands you in the right ballpark, whereas having no idea at all leaves you guessing.
Here is that same $40 enquiry as a worked example, not benchmarks, in four different businesses:
| Average customer value | Enquiries that become jobs | Cost per job | What it tells you |
|---|---|---|---|
| $150 | 1 in 3 | $120 | Barely worth running, fix the offer |
| $600 | 1 in 3 | $120 | Comfortable, room to bid harder |
| $600 | 1 in 10 | $400 | The follow-up is the problem, not the ads |
| $4,000 | 1 in 10 | $400 | Very profitable, spend more |
Notice that two of those businesses have identical ad performance and completely different verdicts, and that the third one should be fixing what happens when someone lands on the site before touching the budget.
Why the number is often missing or quietly wrong
Nothing in an ad account records a conversion unless somebody set it up to. Conversion tracking is a separate job from building the campaign, and it gets skipped constantly.
Something has to sit on your site and fire when a visitor submits a form or taps your number. If that was never installed, the account will happily show clicks and spend next to a blank or a zero in the conversions column. The account is not broken, it just has nothing to report.
The worse version is a number that exists and is wrong, because that one looks like data. The usual causes, roughly in the order we find them:
- no conversion actions were ever created in the account
- the tag went on the old website, and the site has since been rebuilt
- the form was swapped out and the trigger still points at the old thank-you page
- page views count as conversions, so every visit to the contact page looks like an enquiry
- one person is counted twice, once as a form and once as a phone click
- calls from the ad are tracked but calls from the website are not, or the reverse
Any one of these turns cost per conversion into a figure that feels authoritative and is invented.
If your conversion rate looks suspiciously good, say more than a third of clicks turning into enquiries, something is almost certainly being counted that is not an enquiry.
How to check your tracking is actually firing
The quickest test is to spend five minutes being your own customer. Open your website on your phone, fill in the enquiry form properly and send it, then ring the number on your ad.
Come back to the account the next day and look for those two actions. Conversions can take a day to appear, so do not panic at an empty column an hour later.
- A conversion action exists for forms, and a separate one for calls
- Your own test enquiry appeared in the account within a day
- Each conversion action shows as recording, not inactive or unverified
- Nothing counts a page view, a scroll or a menu click as a conversion
- Calls from the ad and calls from the website are both covered
- One real enquiry counts once, not twice
Google’s own documentation is the reference for the detail here, not a forum thread. Google Ads Help explains what conversion measurement is and the different ways conversions can be tracked, covering website forms, calls and sales imported from elsewhere.
If your test enquiry never turns up, stop reading the account’s numbers until that is sorted. Every decision built on top of them is guesswork, including the ones about budget.
What to do with the number each month
Check it once a month, hold it up against what a customer is worth, then do one of four things.
- Well under what a job earns you. Lift the budget in steps and watch whether cost per conversion holds. Doubling spend rarely doubles enquiries at the same price.
- Roughly break-even. Leave the budget where it is and improve the landing page, the offer or your response time first. Spending more on a page that does not convert only loses money faster.
- Climbing month on month. Read your search terms report and add negatives before you touch anything else.
- No conversions at all after a few hundred dollars. Suspect the tracking first, the keywords second and the page third, in that order.
One habit is worth more than any of this. Write the number down each month, so you are comparing it with your own history rather than a figure someone quoted at a barbecue. If you want context on what the spend side usually looks like, what Google Ads actually costs a small business covers the budget end of it.
Judge the number over a month, not a week. Three enquiries one week and nine the next on identical spend is normal when the totals are small, and reacting to that noise is how good campaigns get switched off.
The one thing to do first
Send yourself a test enquiry today, through your own form, on your own phone. Everything else waits on that answer.
If the enquiry lands in the account, your cost per conversion is real and you can start making decisions with it. If it does not, you have just found out that every figure you have been judging your ads by was fiction, which is genuinely good news because it is usually fixable in an afternoon.
- Fill in your own form and ring your own number.
- Check the conversions column tomorrow.
- Write down what an average customer is worth to you.
- Divide, and decide.
Tracking, the website and the Google Ads side all get wired together when we set a business up on one of our plans, so the numbers mean something from the first week rather than the first year.
Frequently asked questions
What is a good cost per conversion?
There is no universal figure, because it depends entirely on what a customer is worth to you. A $200 enquiry is a bargain for a business doing $5,000 jobs and a disaster for one doing $150 jobs.
Why does my Google Ads account show zero conversions?
Usually because conversion tracking was never set up, not because nobody enquired. Clicks and spend record themselves, conversions only record if something was installed to report them.
How do I know if my conversion tracking is working?
Send yourself a test enquiry through your own website form, then ring the number on your ad. If neither action shows up in the account within a day, it is not recording properly.
Is cost per click a useless number?
Not useless, just secondary. It is handy for spotting a keyword that suddenly got expensive, but it tells you nothing about whether that traffic turned into paid work.
Should I count phone calls as conversions?
Yes, because for most service businesses the phone is still the main way people get in touch. Just make sure one person ringing once is not counted twice, as a call and as a phone click.
How often should I check cost per conversion?
Once a month is enough for most small accounts. Weekly figures bounce around too much when you are dealing with a handful of enquiries, so they tempt you into changes you will regret.
Can I set up conversion tracking without a developer?
Often yes, especially if your site uses a common form plugin or already has a tag manager installed. The fiddly part is testing that it fires and making sure nothing is double counted.
What if my cost per conversion looks too good to be true?
It probably is. The most common cause is a page view being counted as a conversion, so every visit to your contact page registers as an enquiry.
