Find out how to Scale back Buyer Acquisition Prices: 9 Confirmed Methods

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

Based on Invesp, the client acquisition prices rose by between 60 and 75% between 2014 and 2019. Within the eCommerce business, 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 exhibits that CAC is skyrocketing throughout all industries?

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

What is an effective buyer acquisition fee?

An excellent buyer acquisition fee is decrease than your buyer lifetime worth. The decrease the determine, the larger your revenue margins.

That mentioned, buyer acquisition prices fluctuate considerably relying in your particular area of interest, area, enterprise sort, and different components.

For instance, one report exhibits that the jewellery area of interest has the 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 typical buyer acquisition prices throughout completely different eCommerce niches, in keeping with that report. 

As you possibly can think about, it’s tough to pin down a very good buyer acquisition price to a particular determine. That is why most eCommerce companies don’t have a look at CAC in isolation. You could examine this metric to buyer lifetime worth to find out your enterprise efficiency and the general effectiveness of your gross sales and advertising and marketing efforts.

That’s often completed by wanting on the buyer lifetime worth to buyer acquisition price ratio, i.e., LTV:CAC ratio. The final finest apply is to purpose for a 3:1 ratio. Because of this you spend $1 to generate $3 in income from a single buyer.

The three:1 ratio is an effective tenet to make sure you have enough 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 instances 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 lowering the LTV-to-CAC ratio.

Alternatively, you could have high-margin high-frequency objects like consumables. Take into consideration pet meals, child diapers, nutritional vitamins, and dietary supplements. Prospects must reorder this stuff ceaselessly. A number of the consumable manufacturers even present subscription companies. This drives the LTV excessive and will increase the LTV-to-CAC ratio. 

Due to this fact, in the event you promote low-margin, low-frequency merchandise, your finest technique is to spice up the typical order worth and buyer retention to extend your LTV-to-CAC ratio. Rising the typical order worth of the primary buy is particularly essential if you wish to shorten the payback interval. The payback interval is how lengthy it takes to get better your CAC from the client’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 prime eCommerce companies do to scale back buyer acquisition prices:

1. Prioritize conversion fee optimization

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

Conversion fee optimization reduces your buyer acquisition prices by serving to you exchange extra clients from the identical site 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 robust CRO technique that elevated the variety of clients acquired from 20 to 30. Your CAC for a similar marketing campaign will likely be $800 ÷ 30 = $26.67. That’s a 33.33% lower in CAC!

The subsequent pure query is how precisely are you able to optimize your conversion fee? 

Effectively, 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 hundreds rapidly. For some context, 53% of web site guests bounce from an internet 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 choice and full the checkout course of as easily as potential. Embody social proof on the product pages to transform clients who may nonetheless be undecided about their buy. 

You could additionally point out your return and change 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 kind fields within the checkout course of and supply an choice to pick “delivery deal with identical as billing deal with.” These small particulars can decrease cart abandonment and end in extra checkouts.

Implementing an exit-intent lead seize technique with pop-ups is one other intelligent option to scale back your CAC. This technique permits you to seize e-mail addresses of web site guests simply earlier than they abandon your web site. You may then retarget these customers by way of a personalised e-mail advertising and marketing technique. 

Although the method requires further advertising and marketing spend on retargeting customers by way of one other channel like e-mail, it’s less expensive than letting potential clients go away and having to deliver them again to your web site afresh by way of costly paid campaigns.

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

2. Leverage advertising and marketing automation

Advertising and marketing automation is one other extremely efficient technique for lowering buyer acquisition prices. For starters, automation lowers CAC by lowering the variety of workers you must run your advertising and marketing campaigns. 

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

Advertising and marketing automation additionally lowers buyer acquisition prices by way of a number of strategic campaigns. For instance, lead nurturing campaigns, similar to welcome e-mail collection, aid you nurture leads who land in your web site however should 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 appears to be like like this.

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

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

Apart from boosting LTV, automation also can improve your common order worth by way of strategic upsells and cross-sells. For instance, you possibly can configure your platform to upsell or cross-sell merchandise within the order affirmation web page. The identical might be completed in post-purchase e-mail campaigns, like order and delivery affirmation emails.

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

Automation additionally boosts AOV by supporting personalised buyer interactions at scale. Automation options can observe buyer conduct in your web site. For instance, they will 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 and marketing automation is that it helps you scale campaigns in your owned channels. Automation platforms aid you automate e-mail, SMS, and push notifications. 

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

3. Optimize your conversion funnels

A gross sales funnel exhibits 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 isn’t working because it ought to. 

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

Due to this fact, understanding and optimizing your conversion funnel is essential. It plugs leaks that trigger potential clients to depart your funnel earlier than they make a purchase order. 

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

The heatmaps instruments also can let you know the weather customers work together with in your product web page and web site basically. This could 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 e-mail buyer survey asking clients questions like:

What almost stopped you from finishing your buy?

What vital data 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 can assist you perceive the way to optimize your product web page copy for extra conversions, for instance. It might probably additionally offer you attention-grabbing A/B testing concepts to discover.

For example, some clients might level out that seeing the delivery prices on the final step of the checkout course of made them second-guess their buy. This may give you an thought of testing whether or not to show delivery expenses on product pages or at checkout to see which choice works higher. 

One other set of consumers might complain about too many kind fields or an extended checkout course of. As an alternative 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 audience and business.

4. Run personalised retargeting campaigns 

When a possible buyer visits your web site and leaves with out making a purchase order, the following neatest thing you are able to do is implement a retargeting technique to deliver them again to your retailer. This could 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 site visitors.

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

One option to increase 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 web site 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 adverts that seem in a particular order to information your prospects by way of the client journey. 

For instance, the primary advert might be deployed inside the first 24 hours to remind the client concerning the product they seen. If a buyer fails to transform, they’ll be focused with a special advert inventive that focuses on social proof, similar to buyer testimonials and product opinions, 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 completely different advert creatives. It additionally reduces reliance on reductions to transform clients. A well-orchestrated sequential advert helps deal with frequent objections to exhibit the worth of your merchandise. Typically, all it takes to transform a possible buyer is for them to see how your product has helped people, not a worth minimize. 

However paid promoting isn’t your solely retargeting channel. Actually, it shouldn’t be your solely channel. You could retarget your prospects by way of owned advertising and marketing channels like e-mail and SMS. This lets you attain your viewers at a fraction of the price of paid promoting.

Efficient retargeting by way of e-mail advertising and marketing requires a advertising and marketing resolution like GetResponse. GetResponse integrates with eCommerce shops constructed on Shopify, WooCommerce, Magento, BigCommerce, and different platforms. This permits the software program to trace buyer conduct in your retailer. It might probably see the product pages they view, the objects they add to cart, and the carts they abandon. 

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

Plus, the GetResponse platform helps you create pop-ups to seize e-mail 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, alternatively, permits you to purchase new clients at a decrease price. This program helps you leverage word-of-mouth advertising and marketing from present clients. You don’t have to pay for adverts 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 positive 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 might be redeemed for retailer credit. 

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

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

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

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

You can even point out them in your Thank-you web page after a buyer completes an order.  

6. Ship personalised product suggestions

Personalised product suggestions can considerably enhance your conversion charges. Not solely that, however they will additionally increase the typical order worth. Patrons usually tend to settle for your cross-sell and upsell efforts while you advocate acceptable objects that make sense to them.

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

The answer allows you to create personalised multi-sliders product pages, class pages, and even weblog articles. You can even ship these tailor-made product suggestions by way of automated e-mail campaigns. 

The consequence? AI-powered product suggestions can increase click-through charges on an internet site or e-mail by as much as 70%, enhance gross sales by as much as 10%, and increase the typical order worth by 33%. 

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

Be taught extra about how Poko Lorente used product suggestions to hurry up conversions and increase AOV right here.   

7. Recuperate misplaced conversions from deserted carts and searching

Cart abandonment is inevitable within the eCommerce business. The Baymard Institute estimates that 70.19% of on-line procuring carts are deserted. Much more customers abandon your web site after simply searching by way 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 resolution to trace clients in your web site and reconnect with them. Use the answer to create automated workflows which are deployed when triggers, similar to cart abandonment or browse abandonment, are activated. With the assistance of dynamic content material blocks, you must be capable to personalize these campaigns to maximise conversions. 

You can even set a collection of emails to comply with up with clients in case they don’t convert after the primary browse or cart abandonment e-mail. 

Take a look at our complete information on deserted cart emails for extra particulars on the way to implement a profitable cart restoration marketing campaign. 

8. Use associates and creators

One other intelligent option 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 in contrast to paid campaigns, the place you pay for clicks, no matter whether or not these clicks end in conversions or not. 

Equally, creators can work on a performance-based mannequin. Additionally, the very best creators will aid you attain a distinct segment viewers. Plus, they’ve already constructed a rapport with this viewers, which implies their suggestions of your product will end in a lot increased conversions. 

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

Ensure to associate with content material creators whose viewers matches your goal market. Then, use trackable hyperlinks or distinctive low cost codes for attribution functions. 

9. Run A/B assessments

Lastly, you possibly can scale back CAC by A/B testing completely different features 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 may assist plug the leak and convert extra site visitors. 

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

The aim is to establish parts that resonate probably the most along with your audience at every touchpoint to remove friction and improve conversions. 

A/B testing ought to be completed repeatedly to make sure your technique stays according to altering buyer preferences. A product bundle that labored final yr might now not be efficient at the moment. The one option to know what works is to do common break up assessments. 

One other trick with A/B testing is that you simply don’t wish to take a look at too many parts on the identical time. This could make it tough to know which change is answerable for the outcomes you see. If you happen to change the headline, worth, and CTA on the identical time, it’ll be tough to know the adjustment that precipitated an uplift or drop in conversions. 

Excessive-impact parts ought to all the time be examined one after the other. The exception is that if your retailer attracts an enormous quantity of site visitors. In such a situation, you may be capable to conduct a number of assessments with a statistically important pattern measurement on the identical time. 

In closing

Profitable eCommerce manufacturers scale back buyer acquisition prices by doubling down on owned channels like e-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 lined above will aid you with precisely that. They create a sustainable development engine that makes positive a big proportion of your web site site visitors converts, whereas the remaining is retargeted with personalised campaigns. 

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