Effective Strategies for Lowering Customer Acquisition Costs

November 17, 2015

For ecommerce businesses, online sales don’t come without a cost. Paid search, SEO, email marketing, social media and more, all require manpower and money.  

Cost Per Acquisition, or Customer Acquisition Cost is the amount of money you spend to acquire a new customer. It should be one of the critical metrics you track in order to optimize the growth of your ecommerce business. (Glew is a powerful tool to identify critical metrics for growth.)  

Acquisition costs across your marketing channels are measurable if you are tracking and analyzing customer data. First, it’s important to get an accurate view of how each marketing initiative is performing. Then you can strategize on ways to reduce how much you spend to acquire new customers.  

The following tips will help you reduce acquisition costs and increase performance across the most commonly used ecommerce marketing channels.

Social Media

Target Relevant Social Channels

Not every ecommerce business needs to be on every social media channel. Spend time on platforms that are relevant to your target buyer. For example, if you’re targeting women, your ecommerce brand should have a strong presence on Pinterest, where women are three times more likely to spend time than men.  To better determine which channels are right for your business, analyze your customer data and find out which social media channels are driving the most traffic and conversions.

Social Referrals

Think of any customer engaged with your brand online as a brand ambassador. Happy and loyal customers that influence or refer a friend via social media can cut your customer acquisition costs by 50%.  Use your data to identify your most loyal, repeat customers and provide incentives for them to refer a friend. You can also increase positive word of mouth by giving customers the ability to get questions answered on social channels. Many customers prefer this because it’s faster than email and more convenient than a phone call.

33% of customers prefer to contact brands using social media versus telephone

Insert Your Brand in Social Communities

You can reduce your acquisition costs on social channels by building a social community in each of your targeted social channels. One effective method is connecting with social media influencers specific to your industry. You can also build up your social brand by joining relevant groups on LinkedIn or taking part in Twitter chats that are specific to industries or interests connected to your brand.  

Paid Search

Monitor Campaign Settings

Campaign settings can quickly eat up your ad budget if they are not targeted and continually updated. Reduce your acquisition costs by making sure your campaigns are targeting only the locations, networks and devices that are relevant to your target market.

Run Remarketing Campaigns

Every ecommerce business will inevitably experience shopping cart abandonment. This is a perfect opportunity to re-target shoppers known as your ‘remarketing audience’. Using your data, you can show this audience targeted ads based on their past browsing behavior. Remarketing campaigns can decrease the cost of acquisition since the audience is already aware of your brand.  Expedia is a master of remarketing to would-be travelers searching for travel deals, but leaving the website without booking a room or a trip. This ‘time is ticking’ targeted ad is a perfect example.  


Email Marketing

A/B Test

Email clicks and opens are meaningless if they don’t increase the chances of a sale. Split test your email marketing campaigns to measure their effectiveness. By reducing guesswork, you’ll get better results at a reduced cost.

Segment Email Marketing Lists

Don’t take a one size fits all approach to email marketing. Email messaging and offers will vary for different groups of customers.  Rather than blasting out a mass email to your entire subscriber list, segment your list based on purchasing behavior. For example, the objective for messaging to first time buyers will be to increase brand awareness and encourage a second purchase. For loyal, multiple purchase buyers, your email campaign may be more focused on up-sell and cross-sell opportunities.  As you implement these tips for reducing how much you spend to bring in new customers, focus on what works best and monitor the effectiveness of each initiative. The use of customer data to back up what is working will make improving your efforts and reducing costs much easier.  

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