What is Performance Marketing?

CPC, CPL, and CPA: The Three Models Explained

Cost per click (CPC) is the entry-level performance model: you pay each time someone clicks your ad, regardless of whether they go on to buy anything. It is measurable but incomplete — clicks do not equal customers. A campaign that drives 10,000 clicks at £0.50 each has cost £5,000. If only 50 people convert, your real cost per acquisition was £100.

Cost per lead (CPL) goes one step further: you pay when someone submits a contact form, starts a free trial, or takes another qualifying action. This ensures the click was from someone with genuine intent. CPL campaigns are common in B2B marketing and subscription businesses.

Cost per acquisition (CPA) is the most precise model: you pay only when someone becomes an actual paying customer. CPA aligns your marketing spend directly with revenue. It is also the model used by referral marketing programmes — you pay the referrer only when their recommendation converts to a real customer.

Why Community Channels Outperform Paid Social

Paid social advertising — Meta, TikTok, Google — reaches audiences who have no prior relationship with your brand. They are strangers who see your ad while doing something else. Conversion rates for cold paid social typically sit between 1% and 3%. The acquisition cost is rising every year as more advertisers compete for the same inventory.

Community channels operate differently. A referral from a friend, a recommendation in a local WhatsApp group, or an endorsement within a sports club carries social proof that no ad can manufacture. The recipient already trusts the source. Conversion rates from community referrals routinely exceed 10% and can reach 25% in tight-knit communities. The effective CPA is lower, the acquired customers are higher quality, and the channel does not rely on platform algorithm changes.

Measuring Performance Marketing ROI

The fundamental equation in performance marketing is: Customer Lifetime Value (LTV) divided by Cost Per Acquisition (CPA). A ratio above 3:1 is generally considered healthy — for every pound you spend acquiring a customer, you earn at least three pounds back over their lifetime. A ratio below 2:1 means the channel is not covering its costs when overhead and operational expenses are factored in.

The critical variable that most marketers miss is LTV by acquisition channel. Customers acquired through community referrals typically have higher LTV than customers acquired through paid search — they arrived with more trust, they have a social connection to your brand, and they are more likely to refer others in turn. Optimising for CPA alone without considering downstream LTV leads to over-investment in cheap-but-low-quality channels.

Performance Marketing at the Community Level

Community-based performance marketing connects your acquisition spend directly to trusted social networks. Rippl by MRVL enables sports clubs, church groups, local communities, and professional networks to run referral campaigns on a pure CPA model — you set the reward, members share their unique link, and you pay only when a referred person converts. No impressions, no wasted budget, no platform fees for reach you never needed.