How to Reduce Customer Acquisition Costs: 9 Proven Strategies

Buyer acquisition prices (CAC) decide the profitability of your online business. In case your on-line retailer spends extra money attracting clients than it generates in income from these clients (buyer lifetime worth), then your online business is working at a loss. 

In accordance to Invesp, the shopper acquisition prices rose by between 60 and 75% between 2014 and 2019. Within the eCommerce trade, CAC rose by 60% within the 5 years main as much as 2024.

So, how precisely are you able to decrease buyer acquisition prices when analysis reveals that CAC is skyrocketing throughout all industries?

This text shares 9 inventive methods you should use to cease the rising buyer acquisition prices from consuming into your margins.

What is an efficient buyer acquisition price?

A great buyer acquisition price is decrease than your buyer lifetime worth. The decrease the determine, the larger your revenue margins.

That stated, buyer acquisition prices differ considerably relying in your particular area of interest, area, enterprise kind, and different elements.

For instance, one report reveals that the jewellery area of interest has the very best CAC at $91. In the meantime, the meals and drinks area of interest had the bottom buyer acquisition prices at $53. 

Here’s a breakdown of the common buyer acquisition prices throughout totally different eCommerce niches, based on that report. 

As you’ll be able to think about, it’s troublesome to pin down a superb buyer acquisition price to a particular determine. Because of this most eCommerce companies don’t take a look at CAC in isolation. You could evaluate this metric to buyer lifetime worth to find out your online business efficiency and the general effectiveness of your gross sales and advertising efforts.

That’s often achieved by wanting on the buyer lifetime worth to buyer acquisition price ratio, i.e., LTV:CAC ratio. The overall finest observe is to purpose for a 3:1 ratio. Which means you spend $1 to generate $3 in income from a single buyer.

The three:1 ratio is an efficient guideline to make sure you have adequate cushion to construct a worthwhile eCommerce enterprise. Nonetheless, some industries must make do with a 2:1 ratio or decrease, whereas others may even generate as much as 5 occasions the quantity they spend on buyer acquisition, so 5:1.

For instance, low cost low-frequency commodities like low cost electronics see fewer repeat purchases and decrease common order values. This retains the LTV low, thereby decreasing the LTV-to-CAC ratio.

Alternatively, you might have high-margin high-frequency gadgets like consumables. Take into consideration pet meals, child diapers, nutritional vitamins, and dietary supplements. Clients must reorder these things steadily. Among the consumable manufacturers even present subscription companies. This drives the LTV excessive and will increase the LTV-to-CAC ratio. 

Subsequently, should you promote low-margin, low-frequency merchandise, your finest technique is to spice up the common order worth and buyer retention to extend your LTV-to-CAC ratio. Increasing the average order value of the primary buy is particularly vital if you wish to shorten the payback interval. The payback interval is how lengthy it takes to get well your CAC from the shopper’s purchases.

A brief payback interval enhances your money move, permitting you to reinvest and scale enterprise development.

Alternatively, manufacturers promoting high-margin consumables can leverage subscription companies to lock in clients and optimize the LTV-to-CAC ratio past the usual 3:1. 

Let’s break down all these CAC optimization methods beneath.

9 methods to decrease buyer acquisition prices (CAC)

Here’s what high eCommerce companies do to cut back buyer acquisition prices:

1. Prioritize conversion price optimization

Probably the most efficient methods to decrease buyer acquisition prices is by optimizing the proportion of people that convert after touchdown in your eCommerce web site. This course of is called conversion price optimization (CRO).

Conversion rate optimization reduces your buyer acquisition prices by serving to you exchange extra clients from the identical visitors. 

Here’s what I imply. 

Let’s say you spent a complete of $800 in a single paid advert marketing campaign. This marketing campaign drives 200 individuals to your web site. In a single situation, 20 of the 200 individuals convert. That brings your CAC for that marketing campaign to $40, i.e., $800 ÷ 20 = $40. 

Now, let’s assume you had invested in a strong CRO technique that elevated the variety of clients acquired from 20 to 30. Your CAC for a similar marketing campaign will probably be $800 ÷ 30 = $26.67. That’s a 33.33% lower in CAC!

The following pure query is how precisely are you able to optimize your conversion price? 

Properly, there are alternative ways to go about it. You can begin with fast experiments and fixes like ensuring your eCommerce web site is responsive, mobile-friendly, and masses rapidly. For some context, 53% of web site guests bounce from a web site if it takes longer than 3 seconds to load. You don’t wish to lose clients due to a sluggish web site.

Subsequent, make it simpler for purchasers to make a shopping for resolution and full the checkout course of as easily as potential. Embody social proof on the product pages to transform clients who would possibly nonetheless be undecided about their buy. 

You could additionally point out your return and trade insurance policies on the product pages to provide your clients peace of thoughts. Much like what Chewy does, proper subsequent to their autoship CTA.

Lastly, improve the checkout course of by offering choices like a visitor checkout, so clients don’t must create an account to finish their orders. 

Scale back the variety of type fields within the checkout course of and supply an possibility to pick “transport deal with identical as billing deal with.” These small particulars can decrease cart abandonment and lead to extra checkouts.

Implementing an exit-intent lead capture strategy with pop-ups is one other intelligent technique to scale back your CAC. This technique lets you seize electronic mail addresses of web site guests simply earlier than they abandon your website. You may then retarget these customers by means of a personalised electronic mail advertising technique. 

Although the method requires further advertising spend on retargeting customers by means of one other channel like electronic mail, it’s less expensive than letting potential clients depart and having to convey them again to your website afresh by means of costly paid campaigns.

In the long run, experiment with totally different pricing factors, product bundling, and subscription choices. Small modifications in how your merchandise are priced and bundled can have an effect on conversions by loads. 

2. Leverage advertising automation

Advertising automation is one other extremely efficient methodology for decreasing buyer acquisition prices. For starters, automation lowers CAC by decreasing the variety of employees you must run your advertising campaigns. 

Marketing automation platforms like GetResponse allow you to arrange automated workflows that work identical to your advertising and gross sales representatives. These flows will monitor and reply to buyer conduct, upsell and cross-sell merchandise in your behalf, and nurture buyer relationships to spice up retention.  

Advertising automation additionally lowers buyer acquisition prices by means of a number of strategic campaigns. For instance, lead nurturing campaigns, reminiscent of welcome email series, allow you to nurture leads who land in your web site however are usually not but prepared to purchase. These workflows will educate your potential clients and current your merchandise as an answer when the time is true. 

The workflow seems like this.

Publish-purchase automation workflows are additionally actually good at boosting buyer retention. 

Publish-purchase campaigns like replenishment reminders and subscription upgrades assist convey first-time clients again to your website. These campaigns encourage repeat purchases, which drives your buyer lifetime worth up. As LTV goes up, your CAC drops. 

Moreover boosting LTV, automation may improve your common order worth by means of strategic upsells and cross-sells. For instance, you’ll be able to configure your platform to upsell or cross-sell merchandise within the order affirmation web page. The identical could be achieved in post-purchase electronic mail campaigns, like order and transport affirmation emails.

Crate & Barrel does this by means of a “You’ll Additionally Love” part in their order confirmation emails.

Automation additionally boosts AOV by supporting customized buyer interactions at scale. Automation options can monitor buyer conduct in your website. For instance, they’ll see the merchandise a buyer views. These platforms can use that knowledge to ship related product suggestions.

I’ll speak extra about product suggestions beneath. 

One other benefit of utilizing advertising automation is that it helps you scale campaigns in your owned channels. Automation platforms help you automate email, SMS, and push notifications. 

These channels are thought of owned media as a result of you might have full management over the message, timing, and viewers. It’s less expensive and extra sustainable to attach together with your potential clients by means of these channels versus third-party platforms the place pay-to-play is the secret. 

3. Optimize your conversion funnels

A sales funnel reveals each step a buyer takes from after they uncover your model to after they place their first order and past. Having full visibility into this buyer journey can present you the place your funnel shouldn’t be working because it ought to. 

For instance, it might present that almost all potential clients drop off on the checkout level. This highlights a possible downside with the checkout course of. 

Subsequently, understanding and optimizing your conversion funnel is essential. It plugs leaks that trigger potential clients to go away your funnel earlier than they make a purchase order. 

Use options like Google Analytics and heatmaps instruments like Hotjar to grasp how customers navigate your web site. Look into the steps clients take till they both full a purchase order or abandon your website. As talked about above, should you discover that too many individuals abandon the positioning at a specific level, e.g., on the checkout web page and even the product web page, look into what is perhaps lacking. 

The heatmaps instruments may let you know the weather customers work together with in your product web page and web site on the whole. This may spotlight potential distractions inside your product pages or within the checkout course of that pull customers away from the first goal, i.e., finishing a purchase order. 

Complement your insights from these instruments with qualitative knowledge from buyer surveys. Run a post-purchase email customer survey asking clients questions like:

• What practically stopped you from finishing your buy?
• What important info did you not discover on our web site when making your buy?
• What would have made your shopping for expertise higher?

Solutions to those questions will help you perceive learn how to optimize your product web page copy for extra conversions, for instance. It will probably additionally provide you with attention-grabbing A/B testing concepts to discover.

For example, some clients could level out that seeing the transport prices on the final step of the checkout course of made them second-guess their buy. This can provide you an thought of testing whether or not to show transport costs on product pages or at checkout to see which possibility works higher. 

One other set of consumers could complain about too many type fields or an extended checkout course of. As a substitute of merely altering this, run an A/B take a look at for a one-page checkout vs a multi-step checkout. See which one works higher to your particular target market and trade.

4. Run customized retargeting campaigns 

When a possible buyer visits your web site and leaves with out making a purchase order, the following smartest thing you are able to do is implement a retargeting technique to convey them again to your retailer. This may decrease your buyer acquisition prices as a result of the prospect has already proven curiosity in your merchandise. Which means they’ve the next chance of changing right into a paying buyer in comparison with chilly visitors.

You’ll want to put in a monitoring pixel in your eCommerce web site to trace website guests and retarget them by means of Google Advertisements and Fb Advertisements. This lets you show dynamic advertisements that includes the merchandise a buyer was viewing in your website. 

One technique to enhance the effectiveness of your retargeting campaigns is to phase your viewers primarily based on the shopping for intent degree. How far a buyer has progressed within the shopping for course of can point out their degree of buying intent. For instance, a buyer who left your website after including merchandise to the cart has the next shopping for intent than one who solely browsed a product class. 

Goal these potential clients with sequential promoting. This entails planning a number of advertisements that seem in a particular order to information your prospects by means of the customer journey. 

For instance, the primary advert could be deployed throughout the first 24 hours to remind the shopper in regards to the product they considered. If a buyer fails to transform, they’ll be focused with a distinct advert inventive that focuses on social proof, reminiscent of buyer testimonials and product critiques, within the subsequent 24 to 48 hours. The final advert can use a time-limited low cost.

Sequential promoting reduces advert fatigue by exposing potential clients to totally different advert creatives. It additionally reduces reliance on reductions to transform clients. A well-orchestrated sequential advert helps deal with widespread objections to show the worth of your merchandise. Typically, all it takes to transform a possible buyer is for them to see how your product has helped folks, not a value reduce. 

However paid promoting shouldn’t be your solely retargeting channel. In reality, it shouldn’t be your solely channel. You could retarget your prospects by means of owned advertising channels like electronic mail and SMS. This lets you attain your viewers at a fraction of the price of paid promoting.

Effective retargeting through email marketing requires a advertising answer like GetResponse. GetResponse integrates with eCommerce shops constructed on Shopify, WooCommerce, Magento, BigCommerce, and different platforms. This enables the software program to trace buyer conduct in your retailer. It will probably see the product pages they view, the gadgets they add to cart, and the carts they abandon. 

GetResponse can then retarget these clients with customized browse and cart abandonment emails. Use this alongside your sequential paid advertisements to succeed in your clients throughout a number of channels. 

Plus, the GetResponse platform helps you create pop-ups to capture email addresses for these remarketing campaigns.  

5. Create a compelling buyer loyalty and referral program

An efficient loyalty program encourages repeat purchases. This implies you generate extra income from every buyer, leading to the next LTV. A excessive LTV optimizes your LTV:CAC ratio, which lets you generate the next ROI out of your buyer acquisition efforts. 

A buyer referral program, then again, lets you purchase new clients at a decrease price. This program helps you leverage word-of-mouth advertising from current clients. You don’t have to pay for advertisements or use different costly channels. 

You merely want to supply distinctive merchandise and buyer relationship administration. Then, create a easy referral program that incentivizes each the referred and the referee. A double incentive makes certain each events really feel rewarded. 

An efficient buyer loyalty program makes use of a points-for-purchase and tiered rewards system. This implies clients earn factors for each buy they make. These factors could be redeemed for retailer credit. 

In the meantime, a tiered rewards system means clients progress by means of a number of tiers primarily based on their spending in your retailer. The tiers could begin with a Bronze degree, progressing all the best way to Gold or Platinum. Larger rewards, reminiscent of entry to limited-edition merchandise and early entry to new gadgets, can be found in greater tiers.

Right here is an instance of the perks H&M loyalty program members obtain, for instance. 

This loyalty system presents each instantaneous gratification by means of factors and encourages long-term loyalty by means of its tiered system. 

Promote these applications extensively. You may embody them in key emails like your transactional emails, as proven beneath. 

It’s also possible to point out them in your Thank-you web page after a buyer completes an order.  

6. Ship customized product suggestions

Customized product suggestions can considerably improve your conversion charges. Not solely that, however they’ll additionally enhance the common order worth. Patrons usually tend to settle for your cross-sell and upsell efforts while you suggest applicable gadgets that make sense to them.

GetResponse’s AI-powered product recommendation software program tracks buyer conduct and makes use of AI to match predicted buyer wants together with your product choices. This answer tracks particular person buyer preferences and habits. It then recommends appropriate merchandise with the very best probabilities of changing to ship a really customized buying expertise that reinforces gross sales. 

The answer allows you to create customized multi-sliders product pages, class pages, and even weblog articles. It’s also possible to ship these tailor-made product suggestions by means of automated electronic mail campaigns. 

The consequence? AI-powered product suggestions can enhance click-through charges on a web site or electronic mail by as much as 70%, improve gross sales by as much as 10%, and enhance the common order worth by 33%. 

For instance, the style model Poko Lorente noticed a 14.29% conversion price after clients considered their product suggestions. The month-to-month worth of product suggestions added to cart stood at $49,000. This was achieved inside 28 days. 

Study extra about how Poko Lorente used product recommendations to hurry up conversions and enhance AOV right here.   

7. Get well misplaced conversions from deserted carts and searching

Cart abandonment is inevitable within the eCommerce trade. The Baymard Institute estimates that 70.19% of on-line buying carts are deserted. Much more customers abandon your website after simply searching by means of product classes and pages. 

Recovering even a small fraction of these cart and browse abandoners could make an enormous distinction in your buyer acquisition prices.

Join your retailer with the GetResponse automation answer to trace clients in your web site and reconnect with them. Use the answer to create automated workflows which can be deployed when triggers, reminiscent of cart abandonment or browse abandonment, are activated. With the assistance of dynamic content blocks, it’s best to be capable to personalize these campaigns to maximise conversions. 

It’s also possible to set a collection of emails to observe up with clients in case they don’t convert after the primary browse or cart abandonment electronic mail. 

Take a look at our complete guide on abandoned cart emails for extra particulars on learn how to implement a profitable cart restoration marketing campaign. 

8. Use associates and creators

One other intelligent technique to scale back CAC is to associate with associates and creators. Associates earn commissions each time they refer a buyer who makes a purchase order. That is not like paid campaigns, the place you pay for clicks, no matter whether or not these clicks lead to conversions or not. 

Equally, creators can work on a performance-based mannequin. Additionally, one of the best creators will allow you to attain a distinct segment viewers. Plus, they’ve already constructed a rapport with this viewers, which suggests their suggestions of your product will lead to a lot greater conversions. 

That stated, a purely performance-based compensation mannequin could not work for all creators. You’ll want a hybrid system that mixes upfront fee with a fee primarily based on efficiency to draw high creators. 

Make sure that to partner with content creators whose viewers matches your goal market. Then, use trackable hyperlinks or distinctive low cost codes for attribution functions. 

9. Run A/B checks

Lastly, you’ll be able to scale back CAC by A/B testing totally different facets of your buyer acquisition and retention methods. As I discussed above, you’ll want to research your conversion funnel to see the place most clients drop off. A/B take a look at these touchpoints to see what changes might assist plug the leak and convert extra visitors. 

You could additionally A/B take a look at your buyer acquisition methods, like your advert creatives, touchdown web page design, presents, pricing, product bundling, and even electronic mail campaigns.

The objective is to establish components that resonate essentially the most together with your target market at every touchpoint to get rid of friction and improve conversions. 

A/B testing ought to be achieved constantly to make sure your technique stays according to altering buyer preferences. A product bundle that labored final yr could not be efficient in the present day. The one technique to know what works is to do common cut up checks. 

One other trick with A/B testing is that you simply don’t wish to take a look at too many components on the identical time. This may make it troublesome to know which change is answerable for the outcomes you see. In case you change the headline, value, and CTA on the identical time, it’ll be troublesome to know the adjustment that induced an uplift or drop in conversions. 

Excessive-impact components ought to at all times be examined one after the other. The exception is that if your retailer attracts an enormous quantity of visitors. In such a situation, you would possibly be capable to conduct a number of checks with a statistically vital pattern dimension on the identical time. 

In closing

Profitable eCommerce manufacturers scale back buyer acquisition prices by doubling down on owned channels like electronic mail and prioritizing high-value clients. In addition they deal with buyer retention to make sure each greenback spent on buyer acquisition ends in a excessive AOV, repeat purchases, and long-term loyalty. 

The 9 methods I’ve coated above will allow you to with precisely that. They create a sustainable development engine that makes certain a major share of your web site visitors converts, whereas the remainder is retargeted with customized campaigns. 

Put money into the proper instruments and use these techniques to show your first-time clients into loyal model advocates.