Job Site’s Shift from CPA to CPC: Lessons in Understanding Customer Needs

Based on a report by the Staffing Industry Analysis, this week witnessed a significant buzz within the HR tech community surrounding Indeed, the dominant player in the online jobs and employment sector. The focal point of discussion was Indeed’s unexpected decision to withdraw its cost-per-application (CPA) job postings, reverting instead to the original cost-per-click (CPC) pricing model. This move comes just a year after Indeed enthusiastically introduced the CPA model, hailing it as the future of online recruiting and mandating its use for all customers, large and small, while discontinuing the CPC pricing that had been in place since its inception in 2004.

So, what led to this abrupt about-face? Why did the largest job board, boasting billions in sales and a substantial team of engineers and product managers, fail to anticipate this shift?

In theory, the CPA model seems appealing – aligning the pricing of a product with the desired outcome. This notion mirrors the longstanding goal in advertising and media of achieving a return on investment (ROI) by having advertisers pay solely for the desired results rather than mere visibility. While this concept has been an aspiration for ages, digital media has made it possible to track certain metrics as proxies for the desired outcome. For recruiters, an application serves as a lead for a potential hire, making it a more desirable way to pay for a job posting advertisement compared to paying merely for its display on a job or career-oriented site.

However, what appears sound in theory may not always be the ideal solution for the customer. Despite their best intentions, product designers can often misinterpret true customer preferences and usage processes. In the case of the CPA model, Indeed’s product designers failed to comprehend what their customers truly wanted and how they utilized the product. The ultimate outcome for a customer is a ‘hire,’ not a ‘click,’ ‘start of application,’ ‘completed application,’ or even a ‘qualified application.’ The only metric that matters is a successful hire. None of the aforementioned proxies accurately represent this outcome. Consequently, the CPA metric proved overly complex for both users (recruiters) and the supplier (Indeed), leading to both increased costs for the customer and operational difficulties for the supplier. Unsurprisingly, the CPA model failed, prompting a return to the time-tested models of duration or CPC-based job postings.

Indeed is not alone in such missteps. It’s commendable that the company is experimenting with new models in an effort to better serve its customers. However, not all endeavors will succeed, and there are valuable lessons to be learned. Before implementing new approaches, product designers must conduct a thorough sanity check, considering common areas where businesses fail to understand true customer needs. Here are some examples:

  1. Overly Complex Features: While designers may believe that adding numerous features enhances a product’s versatility, customers may find this overwhelming and prefer a simpler, more user-friendly experience.
  2. Minimalist Design Over Functionality: Prioritizing simplicity in design may compromise functionality, as customers often value features over a purely minimalist appearance.
  3. Assumption of Tech Savvy: Assuming customers are tech-savvy can lead to confusion and frustration for those with varying technical proficiency.
  4. Intrusive Personalization: While personalization is often aimed at enhancing user experience, some customers may find overly personalized recommendations invasive or have privacy concerns.
  5. Overemphasis on Aesthetics: Prioritizing aesthetics over durability or functionality may not align with customer priorities, especially for products meant for everyday use.
  6. Assuming Universal Preferences: Designers may design products based on assumptions about a specific demographic, overlooking diverse customer needs.
  7. Neglecting Accessibility: Failing to prioritize accessibility features can exclude users with varying abilities, limiting a product’s reach.
  8. Ignoring Cultural Sensitivities: Overlooking cultural nuances can result in products that may not resonate well in certain regions or among specific cultural groups.
  9. Overlooking Environmental Concerns: Focusing solely on innovation without considering environmental impact may disregard customers’ increasing preference for sustainable options.
  10. Ignoring User Feedback: Dismissing user feedback can lead to products that do not meet the actual needs or expectations of the customer base.

Innovators and product designers must carefully conduct customer research and go through a checklist before embarking on major innovations to ensure alignment with genuine customer needs.