CPA (Cost Per Acquisition)
Total lead spend divided by policies written — the true per-customer acquisition cost, factoring in contact and close rates.
Full Definition
Cost Per Acquisition (CPA) is calculated as total lead spend ÷ policies issued. It is the correct economic metric for comparing lead sources because it captures the full funnel: CPL × (1 / contact rate) × (1 / close rate given contact). CPA benchmarks vary widely by vertical and format: Final Expense live transfers $200–$400, Medicare MA-PD live transfers $180–$350, ACA real-time exclusive $120–$220, IUL preset appointments $500–$1,200. CPA must be compared against first-year commission (FYC) to derive gross margin, and against lifetime value (LTV) for a full profitability picture. An agency with CPA > 50% of FYC is generally unsustainable; agencies targeting 15–30% CPA/FYC ratio have the most stable economics.
Example
An agency spends $12,000 in March on shared ACA leads (800 leads at $15) and writes 48 policies. CPA = $12,000 ÷ 48 = $250. Average FYC is $520, so CPA/FYC = 48%. The margin is thin; the agency tests exclusive leads next month to lift close rate.
Related Terms
- CPL (Cost Per Lead) — The price paid for a single insurance lead, varying by format, exclusivity, vertical, and timing.
- Close Rate — The percentage of contacted (or delivered) leads that result in a sold policy — the primary profitability driver in insurance lead generation.
- Contact Rate — The percentage of leads an agent successfully reaches by phone — the first-stage conversion metric in any outbound program.
- FYC (First Year Commission) — The commission an agent receives on a policy's first year of premium — the largest single income event per policy in most insurance lines.
- LTV (Lifetime Value) — The total expected commission (FYC + renewals) from a policy or client over the full duration of the relationship.